In order to find out if you’re paying too much for car insurance, and if so how to secure a better deal, you first need to understand how car insurance is calculated.
First of all, there are a number of factors that determine the cost of your car insurance premium and excess, including your:
● Age – Younger drivers, especially newly licensed drivers between the ages of 20 to 25, are most likely to be in a fatal crash according to road crash statistics.
● Driving history – You may be required to pay a higher excess if you’ve been at fault for an accident or had your license suspended, canceled, restricted, or limited in the past three years. Likewise, you may be entitled to a discount off your premium, excess, or roadside assistance if you have a spotless driving record.
● Type of vehicle – Newer and more expensive vehicles cost more to bring in for smash repairs and replacements so this may reflect in the cost of your premium.
● Where you park – Street parking poses a greater risk of being hit by another vehicle or suffering from hail damage. Having access to a garage or an indoor parking lot, however, will help you out with costs.
● Insurance perks – Many insurance policies justify a higher price because they offer extras. These may include roadside assistance, a free replacement key, hire car after theft and/or accident, trailer cover, and emergency transport and accommodation. Whether or not these extras are worth it will depend on your preferences.
Aside from these details, there’s another key factor that could lead you to pay more for car insurance than what you need.
What could it be? Simply put, you’re either: not gathering multiple quotes, or you’re not negotiating a better deal. Yes, that’s right – you CAN negotiate the cost of your car insurance.
Unlike other common daily expenses, such as your utility bills, groceries, rent or mortgage, car insurance is one of the few expenses that you have the power to negotiate on. But why would an insurance provider let their customers do this? There are a few good reasons why:
● The car insurance market is a highly competitive industry: Car insurance providers are everywhere these days. Even national supermarket chains like Coles and
Woolworths have jumped on the bandwagon. For this reason, insurance providers will go above and beyond to win new customers and keep existing customers happy.
● Insurance providers want to reward loyalty: They do this is by offering a discount if you bundle all your insurance policies with one provider. So, if you have car insurance with one provider, but home and contents insurance with another, you could score a great deal if you combine them into one provider instead.
How to overcome ‘negotiation anxiety’
Let’s face it, not everyone is comfortable with negotiating. After all, as a society, we’re almost expected to say ‘yes’ to whatever fixed price a seller has to offer. Yet, while this is the case for many goods and services, car insurance is not one of them. To overcome the potential embarrassment of negotiating, remember this: insurance companies get asked by their customers for better deals all the time. In fact, they almost expect you to ask these days. So, you can bet that whoever you speak to over
the phone will be ready to fine-tune the details of your policy and negotiate within reason a
deal that suits you. Some providers even jack up prices a little bit with the expectation that potential customers would want to haggle, so it’s still best for you to compare quotes from multiple providers.
When is the right time?
In all honesty, you can revise or transfer to a new car insurance policy at any time. That’s because, if you transfer to a new provider, your old insurance provider will reimburse you for the cost of the time leftover. So you can easily switch without fear of losing any money. Sometimes it’s worth waiting until your renewal period. Here, you can call your insurance provider, say you have found a better deal, and claim that you’re ready to switch – unless they can match or offer a better deal.
By adding a sense of urgency into the mix, your current provider may negotiate to keep you as a customer.
What to look for in a car insurance policy
Keep in mind that price should not be the only deciding factor. Sometimes, it’s worth paying a little extra upfront now, so that you enjoy greater convenience and peace of mind later.
When searching for an insurance provider, consider the following:
● Does your provider let you choose your car repairer?
● Do you get a free hire car while your car is being repaired or replaced?
● Up to how many Km’s do you get free towing?
● Do you get free replacement keys if they are lost?
● Will your insurance cover the cost of windshield repairs or replacements?
● Will you be reimbursed for the loss of personal items in your car?
By taking into account these factors, you will be able to narrow down your options and settle on an insurance policy that’s right for you.