Although wage price index, according to the Insurance Council of Australia, is above the increase of car insurance this has increased by 66% over the past 10 years. This means that car insurance is becoming unaffordable to many, especial generation X people who are burdened by loans, low wages, and high living costs.

Even with escalating insurance costs, cancelling your policy is not the ideal response. If you are in an accident you could lose a great deal of money. Instead, you need to understand your risk profile, thereafter working out where you can make changes to obtain discounts.

The risk factors the insurance companies use to determine your rate.

Your car insurance premium is dependent on various factors, which are seen as part of your risk profile. These factors can include:

What can you do to reduce your monthly insurance costs?

Besides going for a new policy, one that makes use of tracking technology to monitor your driving, and if you are driving less than the average Australian driver who drives 14 000 kilometres a year, there are many steps you can take to obtain discounts.

Firstly, you can increase your security by adding a car alarm and immobilizers. You can also park your vehicle in a secure garage instead of out on the street.

Secondly, you could limit the number of people permitted to drive your car. You should especially not allow anyone below the age of 25 to drive your vehicle.

Thirdly, you can obtain a safe-driver discount if you have completed a defensive driving course.

Fourthly, it will be cheaper if you add your car insurance to your household insurance. In fact, you could get 10% or even more off your policies, if you make use of the same insurance company.

Fifthly, if you increase your excess, your monthly costs could be lower.

Lastly, if you have a no-claims history, you could mention this to your new insurer. You could have 20% taken off your insurance costs.

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