Money Matters

‘Fixed’ expenses health check: car insurance

We all know that saving money requires sacrificing luxuries such as nice shoes, restaurant meals, and nights out on the town. But saving money isn’t just about cutting back on one-off items, it’s also about minimising monthly expenses.

In my first post, I listed some of my ongoing expenses: landline, mobile, internet, home insurance, car insurance, work indemnity insurance, council rates, car registration, gas, electricity, water, and petrol. Some of these are non-negotiable (council rates, car registration), some are based on household usage (gas, electricity, water, petrol), while the rest are ‘fixed’ (phone, internet, insurance).

Despite incurring the same charge each month, I use scare quotes for ongoing expenses such as phone, internet, and insurance because I can either downgrade such services to suit my needs or switch to a cheaper provider. For instance, I used to pay $85.95 per month for my ADSL2+; it was cheaper for me to agree to a $199.95 cancellation fee and churn to a different provider who offered a similar plan for $39.95 per month than wait another year for my contract to end.

Insurance was another place where I was haemorrhaging money. Even though my car was depreciating, my car insurance fees were increasing by $60 each year. An online quote from the same insurer revealed that I was being overcharged. So much for customer loyalty!

Several angry phone calls later, I switched to another company that offered much more affordable car insurance, saving myself roughly $250 per year. $250 per year sounds like peanuts (or a nice pair of boots), but as extra mortgage repayments, it will save me thousands of dollars in interest.

So how do you save on car insurance? Before each policy renewal, try to:

  • shop around

The internet makes getting car insurance quotes painless and instant. Compare policies with the same features, otherwise consider whether you’re happy downgrading on certain features like free car hire. Infochoice and iSelect are useful comparison tools but keep in mind that their product list is never comprehensive.

  • buy in bulk

Insurance debited month-by-month usually costs more than insurance paid in an annual lump sum. Insurance companies also usually offer a multi-policy discount, so ask for home insurance quotes while you’re rejigging the car insurance.

  • increase the excess

How to Save Money states that increasing the car insurance excess from $200 to $500 can shave off 15-25% per year on car insurance costs. ‘The money you save each month on the car insurance premiums can then be put aside to ensure that you have this deductible excess amount on hand if it is ever required.’

  • get brownie points for driving less

So you’ve ditched the car in favour of PT or a push-bike? Tell your insurance company. Some insurance companies will factor this in and offer you a more competitive price for their policies.

  • be defensive.

If you fall within the high-risk category, a defensive driving course can sometimes reduce the cost of your cover (via Insurance Compared). Also, ask your car insurance provider what discounts you’ll receive for parking the car off-street in the garage or in the driveway or for adding extra anti-theft and safety features to the car itself.

Whatever you do, make sure you’re adequately covered with the right insurer. There’s nothing worse than having a car accident and finding out that you’re under-insured or that you have to fight for your claim.

22 years and 6 months* to go,


*My minimum mortgage repayment has just increased. Where’s that RBA rate cut when I need it?

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