advice on car insurance

Choose your wheels wisely and save
by Jane-Anne Lee

If your car insurance has been steadily rising each year, Jane-Anne Lee has some tips on how to save.

If your car insurance has been steadily rising each year, Jane-Anne Lee has some tips on how to save.

CONSIDER WHERE YOU LIVE

IF you want to reduce your car insurance premiums dramatically, you can always move house.

Country towns are cheaper than cities because the likelihood of the car being involved in an accident, damaged while parked or being stolen is higher in the city. You can save as much as 40 per cent, depending on where you move to.

A move from higher-risk Cabramatta to lower-risk Collaroy in Sydney or from St Albans to Lilydale in Melbourne will make a big difference, says Graeme Adams, head of product and underwriting at NRMA insurance.

KEEP 18-YEAR-OLDS AWAY

Adding an 18-year-old driver to your car insurance policy can add 25 per cent or more to your premium.

"You will pay more than for a 25-year-old because one in every three 18-year-olds is likely to have an accident in any given year," Adams says.

IMPROVE YOUR DRIVING RECORD

Your likelihood of being involved in an accident is a key factor that determines your car insurance premium.

"The one factor that really stands out is the likelihood of customers having a prang," Adams says.

"A young person is three times more likely to have an accident than a 45-year-old. As people get into the 75-plus bracket, they tend to have more accidents because their reflexes can be a bit slower and their peripheral vision may not be as good as it used to be.

"Insurance becomes cheaper in the 30-65-year range and gradually gets worse from there or before that."

BEWARE OF REPAIR COSTS

About 85 per cent of your car insurance premium goes to repair or replace cars damaged in crashes or through other causes such as hailstorms. The other 15 per cent is to pay for stolen cars, says Ray Carroll, executive director of the National Motor Vehicle Theft Reduction Council.

What determines the cost of repair will depend on parts, the cost of painting the car and the uniqueness of the car.

Cars that are rather special may have complex construction techniques which add to the cost of repairs, Adams says. And parts made from plastic, which comes from oil, are rising in price.

"These days, some cars have alloy front ends and there are a lot more electronics on cars which adds to the cost of repair."
If your car insurance has been steadily rising each year, Jane-Anne Lee has some tips on how to save.

He says Australian-made cars are generally cheaper to repair than complex European cars which come with more built-in technology.

KEEP IT PRIVATE

Premiums are about 10 per cent higher for cars insured for business rather than private use.

Research shows that the more you drive a car the more likely you are to be involved in a car accident, Adams says. "Business cars are driven more, so the premium is higher."

DRIVE AN OLDER CAR

The age of a car will also make a difference. Older cars are cheaper to insure because they are worth less. Of course, they may be more likely to be stolen.

"But not too many people choose a car because it is cheaper to insure," Adams says. "They look at running costs, family needs or whether it's the car they want to be seen in."

FIT AN IMMOBILISER

A vehicle is stolen every six minutes in Australia, which adds up to almost 85,000 thefts a year.

This is one of the highest rates of motor vehicle theft in the Western world and the Australian community bears the cost of this theft through higher insurance premiums, says CARSAFE, the online home of the National Motor Vehicle Theft Reduction Council.

Three out of every four vehicles stolen in Australia are used to commit another crime.

If you have an older vehicle, fit an electronic engine immobiliser that costs between $160 and $200 and is designed and fitted to Australian standards, Carroll recommends.

SHOP AROUND

You can save hundreds of dollars with a little research. Different insurance companies use varying criteria to assess annual premiums and this can change from year to year, says Michael Weston, chief executive of Budget Direct.

The internet is also a simple way to research insurance premiums. Many insurers provide fast quotes online.

"Look for companies that have policies specifically designed for your needs," Weston says. "Some companies offer special rates for women and retirees."

Combining your car with your home and contents insurance may also entitle you to a discount. Paying a lump sum annual premium rather than monthly instalments may save you money too.

And if you have been loyal to the same insurer for a decade or more, find out if you are eligible for a discount on your premium.

DRIVE SAFELY

By driving safely, you can protect your no-claim bonus or rating status. This means you are given a large discount for not making an at-fault claim against your policy.

If you have a Rating 1 status - offering up to 60 per cent discount on your premium - for three consecutive years, you may be entitled to have your rating protected for life, depending on the insurer. This is well worth shopping around for.

Your next best bet may be to pay a small fee (typically less than $50) each year to protect your Rating 1 status against making one at-fault claim.

Thanks to Jane-Anne Lee, Sun Herald