Car insurance costs: the price of loyalty can be painful

Motorists shouldn’t drive without car insurance, but they should make sure they’re not being ripped off by insurers. Here’s how.

Loyalty to car insurance providers could be costing motorists hundreds of dollars a year as new research finds many are struggling to pay premiums.

An analysis of 35 insurers and more than 9500 customer scenarios by comparison website Mozo.com.au has found big differences in premiums, with comparable cover for a Toyota Corolla costing some consumers more than $400 a year extra.

It also found more than one third of car insurance customers have always been with the same providers, two-thirds have never contacted their insurer to ask for a discount, and 46 per cent say they are struggling with the cost of comprehensive car insurance.

Mozo’s Tom Godfrey recommends checking your premiums annually. Picture: Supplied.

“Customers often stay with providers because they feel a sense of loyalty or they just couldn’t be bothered spending the time to bank a great deal,” says Mozo spokesman Tom Godfrey.

“Loyalty can prove costly when it comes to car insurance, so a good option can be to get in the habit of comparing policies each year to help ensure you’re getting the best deal possible.”

Godfrey says consumers should also:

• Check if there are discounts for buying insurance online.

• Bundle different types of insurance with the same company to take advantage of multi-policy discounts.

• Check if the insurer offers lower premiums if the vehicle is being driven less during the pandemic.

“Of course you’ll need to check what is and isn’t covered under each policy when comparing prices,” he says.

MyBudget director Tammy Barton says some people are willing to pay higher premiums for peace of mind with an insurer they trust, but they shouldn’t just automatically believe they are being looked after.

MyBudget founder Tammy Barton says your insurer might match a competitor’s price.

“The insurance market is very competitive, so get quotes from different insurers to see if you are getting the best available deal,” she says.

“You don’t necessarily have to change insurers when you shop around. Quite often your current insurer will price match a competitor’s quote – saving you money while still being a loyal customer.

“You need to be careful though and compare apples with apples. Ensure your new policy covers everything you are currently insured for.”

Barton says some customers can save money by paying annually rather than through monthly instalments, and can also consider agreeing to a higher excess that may lower their premiums.