Why Has My Car Insurance Gone Up?

Find out what might be causing your car insurance rates to rise and how you could save with Savvy's informative guide.

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, updated on February 16th, 2024       

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Car insurance provides peace of mind, protecting you financially in the event of accidents, theft or damage to your vehicle. However, you might be wondering why your premiums always seem to be on the rise, even if your driving habits haven’t changed. In this handy guide, we explore the factors influencing car insurance premium increases in Australia and offer tips on getting a better deal on your policy.

What is a car insurance premium?

A premium is the amount you pay an insurance provider to cover your vehicle against a variety of risks. The premium is calculated based on the perceived likelihood of you making a claim and is tailored to your unique risk profile. This means that the amount you pay for coverage is determined based on various factors related to you and your vehicle.

What factors influence car insurance premiums?

The cost of insuring your vehicle can vary significantly from person to person, with insurers taking a range of factors into account. This includes:

  • Details about your vehicle: this includes your car’s make, model, age, whether there is any outstanding finance and any modifications you’ve made.
  • Level of coverage: car insurance cover in Australia ranges from basic third party property damage to comprehensive insurance. The more comprehensive the coverage, the higher the premium is likely to be.
  • Location: where you live and where your car is parked overnight can impact your premium. Insurers consider crime rates in your area, so parking in a locked garage may lead to lower premiums compared to parking on the street.
  • Personal information: your age, gender, driving history and claims history all play a role. Younger or less experienced drivers and those with past accidents or claims may face higher premiums due to increased risk perception.

Why has my car insurance premium increased?

Even if you’ve maintained a good driving record, you may find your insurer has increased your premium when your car insurance policy comes up for renewal. Here are some common reasons why this may be the case:

  • Changes in personal circumstances: factors such as changing your driving habits or moving to an area with a higher crime can influence your premiums.
  • Inflation: as with most goods and services, inflation can affect the cost of cars, car parts and repairs, prompting insurers to adjust premiums to reflect these rising expenses.
  • Costs to the insurer: Just like individuals facing an increased cost of living, insurance companies may raise premiums to cope with the rising costs of running their business.
  • Increase in natural disasters: periods with higher occurrences of floods, fires, storms (including hailstorms) and other natural weather events lead to a surge in insurance claims, which can contribute to premium increases in subsequent years.
  • More risk to insurers: if there is an increase in car-related crimes, road fatalities or other risk factors, insurers may adjust insurance prices to protect themselves.
  • Government taxes and levies: changes in government taxes, state or territory duties or levies can also impact the overall premium cost.

How can I reduce my car insurance premium?

While some factors are beyond your control, there are steps you can take to reduce your car insurance premium. This could include:

  • Increasing your excess: you may be able to opt for a higher excess amount to reduce your premium – though keep in mind this means higher costs in case of a claim.
  • Limiting drivers: limiting the number of drivers using your car, particularly young or inexperienced drivers, may lower your premium.
  • Parking securely: storing your car in a secured parking area, such as a locked garage, can reduce the risk of theft and vandalism, leading to lower premiums.
  • Maintaining a safe driving record: maintain a good driving record to be eligible for a no-claim discount, which can lower your premium.
  • Evaluating optional extras: consider whether you need all optional extras included in your policy, as they can increase your premium.
  • Shopping around: review your policy annually, comparing quotes from different providers to ensure you get the best coverage at a competitive rate.

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Savvy’s comparison service includes selected products from a panel of trusted insurers and does not compare all products in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy. We always recommend readers to consult the Product Disclosure Statement (PDS) of different policies before purchasing your car insurance.

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