According to the Australian Bureau of Statistics, there were 19.5 million registered motor vehicles as of January 2019. However, around 2.5 million of these vehicles are not insured. This is alarming since statistics from the Department of Infrastructure and Regional Development indicate that car accidents are becoming more frequent.
The high premium cost is the primary concern of the uninsured. However, not everyone is aware of the ways to reduce the premium. According to finance companies like TYG Finance, there are ways to reduce the cost of car insurance.
Different Levels of Coverage
Most people spend most of their time looking at car models instead of checking for car insurance. However, the truth is picking the wrong insurance will be more costly.
The different kinds of car insurance:
- Compulsory Third Party (CTP) protects you if you kill or injure someone in an accident. It does not cover the cost of repairing your car or the other party’s car.
- Third-party property damage covers you if you damage someone else’s car, not the person. This coverage includes any legal expenses in case there are court proceedings as a result of the damage.
Similar to CTP, it does not cover the cost of repairs or replacement of your car.
- Third-party fire and theft cover your car if it is stolen or damaged by fire. It does not include the cost of repairing your vehicle in case of accidents.
- Comprehensive car insurance is the most expensive. It covers everything mentioned above, including any damage to your car, no matter who caused the accident.
Comprehensive insurance, however, does not cover damage caused by someone using your car unless this was specified beforehand. If the accident were caused by driving above the legal alcohol limit or by drug use, the damages would not be covered.
Here’s the scary part. If you only have CTP and you damage someone else’s expensive car, you have to pay them yourself. If your coverage is only for third party fire and theft, and the damage is flood-related, this is also not covered.
Companies like TYG Finance recommend car owners to discuss their options with finance companies before deciding on a car insurance package.
Find Out Factors Affecting the Premium
Insurance companies base their premium computations on a per-case basis. Aside from your preferred level of coverage, here are other factors affecting the premium:
Based on the car:
- Expensive cars will automatically have higher premiums. Generally, if the vehicle is difficult to replace or with a high likelihood of being stolen, like in the case of vintage or imported cars, they will be costlier.
- Cars that are costlier to repair will have higher premiums.
- The overall safety of the car is another consideration. Product Safety Australia notifies the public about vehicle recalls caused by faulty parts.
- High-powered vehicles, especially those associated with racing or risky driving, are more expensive to insure.
Based on the driver:
- The age will determine a driver’s proficiency and years of driving experience. Those who are 25 and under will pay more premiums than older drivers.
- Women have lower premiums than men based on statistics that show men are riskier drivers than women.
- Insurers will ask for your postal code. If you belong to neighbourhoods with high crime rates, expect higher premiums.
Similarly, your state’s driving population will affect premium costs. Small cities with many drivers generally have more accidents.
If you live in cities with a high incidence of car theft, expect the premium to be higher.
- You will be paying more premiums if you park your car outside in unsecured areas like streets. Park your vehicle in covered areas, like garages and secure parking bays, to reduce the cost.
If your circumstances change and you move to a safer neighbourhood or city, you can apply for reduced premiums.
- Your driving records are essential. If you have caused many accidents in the past, you will most likely have a higher premium. On the other hand, if you have a clean driving history, you may even ask for a discount.
If you have not made any at-fault claims within a specified period, this will qualify you for a “safe driver” or “no claim” bonus. Insurance companies will grant reduced premiums.
- Those who drive in nearby areas will have lower premiums. For example, retirees and those who live in the city spend less time driving and are therefore unlikely to have accidents.
- If you use the car for business purposes, there will be higher premiums. Likewise, your occupation will affect the calculation of premiums.
Consider these tips before buying a new car. Also, consult finance experts. They will guide you in choosing suitable car insurance.