Take control of your car insurance and save a small fortune

Car insurers sometimes try to sneak a 20 or 30 per cent increase into your annual bill, but there are ways to fight the price gouge.

Driving a hard bargain is something many motorists avoid with their car insurance, and it’s potentially costing them hundreds of dollars a year.

Misguided loyalty towards existing insurance companies and unwillingness to switch are key reasons why people end up paying much more than necessary, finance specialists say.

Comparison website Mozo.com.au examined 35 car insurers and 9500 customer scenarios and found an average price difference of $303 a year between quotes for comparable cover.

However, some consumers are saving twice that much through simple research and a phone call or two, with the difference between the cheapest and most expensive policies more than $800 a year.

“Insurance companies often reward customers who want to switch to their services, so if you’d like a better deal, it’s worth shopping around,” said Mozo spokesman Tom Godfrey.

“It can pay to get in touch with your insurance provider and push for a better deal,” he said.

“Doing a quick comparison of policies online to arm yourself with the data you need, can help to make your case.”

Pay-as-you-drive insurer KOBA’s founder, Andrew Wong, says people should shop around.

Mr Godfrey warned choosing the cheapest car insurance could be a “costly trap”, because the lowest-priced policies might not provide the necessary cover, so people should read its product disclosure statement.

Pay-as-you-drive insurer KOBA’s founder, Andrew Wong, said there were many new insurance products on the market offering flexibility and value.

KOBA uses a small device plugged into a user’s car to monitor their distance travelled. After paying a flat rate for parking insurance, customers then pay per kilometre, and the company says some have halved their bills after switching.

Mr Wong said car insurance was seen as a “necessary but grudge purchase” and people often did not review their policies.

“There’s also a consumer perception that people are locked into their insurers … that there may be cancellation fees, you’re locked into a contract, or it’s difficult, time-consuming to move insurers,” he said.

This was not the case, Mr Wong said, and people should never just accept their renewal.

“Actively look at your current policy and shop around for a better deal,” he said.

Compare the Market general insurance manager Stephen Zeller said simply turning 26 could deliver insurance savings, because statistically drivers aged over 25 were less likely to be involved in accidents.

Mozo’s Tom Godfrey says don’t always choose the cheapest cover. Picture: Supplied

He said other valuable savings and benefits might fly under the radar of motorists.

“Some insurance brands are a part of a supermarket network, like Woolworths Car insurance,” Mr Zeller said.

“Customers who insure their car through Woolies can get a monthly discount on groceries just for having a Woolworths insurance policy,” he said.

“Reward programs are a great example of potential savings that we often forget about. Many insurance companies provide discounts on food, shopping, movies and other experiences as an incentive.”

CHASE CHEAPER CAR COVER

• Shop around for a better deal, using comparison websites and insurers’ websites for free quotes.

• Switch insurers if your cover is no longer competitive.

• Consider choosing a higher excess to lower your premiums.

• Check who is on your policy – younger drivers will increase the cost.

• Look for discounts for signing up online, or bundling multiple kinds of insurance with the same provider.

• Locking up your car in a garage at night can lower your premiums.