Paying for protection: How to cut your insurance costs

Are you wasting money on insurance you don’t need, or getting ripped off by expensive policies? Here’s what to check.

It’s one of the few things we pay money for but hope we never use.

Insurance policies that protect our homes, cars and families are among the biggest household costs, and many Australians are spending much more than they need to.

An average family spends between $500 and $1000 a month on their various insurance policies, so it’s worth comparing costs at least annually to make sure you’re getting the best deal.

That’s what Elanya van Heerden has been busily doing in the past month, and is saving big bucks.

“We have recently put in an offer to purchase a home that was accepted, and thought it was a good idea to look at the budget and see if we can trim costs,” she says.

Switching health insurance providers resulted in a 9 per cent drop in the monthly premium, and van Heerden has also found cheaper home insurance.

“And we just did car insurance and managed to save a whopping 20 per cent with the same cover but slightly more excess,” she says.

“We should all check insurance at least on a yearly basis, comparing what is available for all situations – peoples’ situations do change.”

Elanya van Heerden, pictured with husband Grant, children Erryn, 13 and Liam, 12, saved money switching some insurance products. Photo: Liam Kidston.

Here’s how consumers can cut the cost of paying for protection.

CAR INSURANCE

New research by comparison website Mozo shows car insurers increased their premiums last year despite many peoples’ cars staying home during lockdowns.

It says annual savings of up to $900 are available for comparable cover by shopping around or asking your insurer for a better deal.

Mozo director Kirsty Lamont’s top tip is to contact your insurer if you’re driving less and clocking up fewer kilometres.

“Some insurers like Youi have introduced temporary COVID discounts for new and existing customers, so why shouldn’t your insurer do the same?” she says.

“Switching from monthly to annual payments and restricting the number of drivers on your policy can also get your premium down.”

Lamont says choosing a higher excess can reduce premiums, but make sure you can afford it if you have to make a claim.

Finder.com.au spokesman Taylor Blackburn says people should not be tied to an insurance brand they know, and should read an insurer’s product disclosure statement before switching.

HOME AND CONTENTS COVER

Compare policies online. Some websites have tools allowing people to examine benefits side-by-side, but the only way to find the exact cost is to request a personalised quote.

“We recommend requesting a few and comparing,” Blackburn says.

“Some insurers have sign-up deals for new customers which could save you as much as 30 per cent – always check before purchasing”.

Consumers should spend time accurately valuing their belongings. Understandinsurance.com.au has tools and calculators to help with this.

And look for ways to personalise your cover to deliver the best value for money, Blackburn says.

LIFE INSURANCE

Life insurance is an umbrella term for four types of protection: Term life (or death) cover, total and permanent disability, income protection and trauma/critical illness.

All have their own rules, costs and complexities, so getting professional advice may help.

Make sure you are not paying for cover you no longer need – for example, if the children are older or you’ve paid off most of the mortgage.

Blackburn suggests checking what cover you have in superannuation, which may offer cheaper premiums but may not provide adequate cover.

“An online life insurance calculator is a good starting point if you’re unsure where to begin,” he says.

“Some funds offer a discount if you already have your health policy with them.”

HLB Mann Judd Insurance Services key risk adviser Andrew Kennedy says life cover should be reviewed regularly.

“It’s not a set and forget strategy and instead needs to change over time to reflect your changing circumstances,” he says.

“Structural changes to life insurance policies have resulted in many policy definitions changing.”

HEALTH INSURANCE CHECK

Health fund premiums will rise an average 2.74 per cent on April 1, so try these tips to save money.

• Always compare policies and don’t be afraid to switch each year.

• Look for sign-up deals that save you money.

• Pay your premium in full before April 1 to avoid the price rise.

• Don’t pay for cover you don’t need, especially with extras – if you don’t use them, you lose them.

• If you have a couple policy, consider two individual ones instead if that’s cheaper.

Source: Finder