If your car insurance is due to lapse, it could be worth looking at your insurance policy and deciding whether you need to make any changes before you renew the cover.
Disclaimer
This article is over two years old, last updated on August 18, 2022. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent car insurance articles.
Several factors affect the premium you pay for an insurance policy. These include your age, the number of kilometres you drive, the area where you live and even where you park your car.
If your policy is up for renewal soon, it could be helpful to review your situation and confirm whether your cover is adequate and you are only paying for the extras you need. Here are some factors you may want to consider before renewing your car insurance policy:
Many people have switched to working remotely, and are driving far less than they did prior to the COVID-19 pandemic. If your car usage has decreased, you may be able to save some money by updating the number of kilometres you drive.
Some insurers offer you a discount on your premium if your car usage is below a specified threshold. If you don’t get behind the wheel too often, you could also consider a pay-as-you-drive insurance policy to pay a premium based on your car’s usage.
Your insurance policy must list the people who drive your car regularly. However, listing an additional driver could increase your premium, especially if you add young drivers to your policy. However, it may also reduce your risk should there be an accident involving somebody else driving your vehicle.
Conversely, if you are an empty nester and your kids are still listed on your insurance policy as additional drivers, you may want to remove them to reduce your premium.
If you recently shifted to a new locality, your new address could affect your insurance premium. Different postcodes are associated with varying levels of risk. If you live in an area with a high crime rate, the insurer is likely to charge you a higher premium as there’s a greater probability of your car being stolen or vandalised in such an area. Where you park your car also impacts your insurance premium. Generally, you’ll pay more if your vehicle is parked on the street than in a locked garage or carport.
Even if you move house when your policy is not due for renewal, make sure to update your address with the insurer to continue receiving important documents in a timely manner. Having an incorrect address on your policy could lead to a claim being refused in some cases.
One way you can reduce your insurance premium is by selecting a higher excess amount. Your excess is the amount of money you pay from your pocket if you need to make a claim. Typically, the greater the excess, the lower the premium you pay. However, increasing the excess amount isn’t suitable for everyone. A higher excess amount means you’ll be paying more out-of-pocket expenses at claim time. Therefore, it’s important to consider whether you’ll be able to afford a higher excess payment if you do need to make a claim.
It’s quite convenient to set your insurance policy to auto-renew and not do anything to enjoy continued coverage. However, a set and forget attitude isn’t always good for your wallet. Even though you may be led to believe that your car insurer values your business, don’t be surprised if you find the premiums for a renewal to be higher than those for a new policy.
If you’re looking for a simple way to save some money, consider shopping around before you renew your insurance policy. You can go online and check your insurer’s quote as a new customer and see how it compares with your renewal premium. You could also compare deals from other insurers before renewing your policy. Many insurers have special offers or discounts for new customers that could help you save money if you switch your service provider. You could also find bundled deals for all or some of your insurance policies at competitive rates.
Yes, your insurance policy can renew automatically if you choose the auto-renew option when purchasing the policy. However, your insurance provider will generally send you a renewal notice informing you of the date and charges for renewal. You can find more details about your car insurance renewal notice period in your product disclosure statement (PDS). If you don’t want your policy to renew automatically, you could update your preferences online or ask your insurer not to renew your policy. However, it’s important to have a new car insurance policy in place before the existing one expires to avoid a gap in coverage.
It’s worth noting that you don’t necessarily have to wait for renewal time to change your insurance provider if you are getting a better deal elsewhere. If you do change car insurance companies before renewal, you will most likely be refunded for unused premiums if you paid your entire premium as a lump sum at the beginning of the policy term. However, your previous insurer may charge you exit fees and administration costs.
Learn how to calculate car insurance premium and what factors impact the premium
Learn MoreThis article was reviewed by Georgia Brown before it was published as part of RateCity's Fact Check process.
