Finance Your Budget Drivers could save hundreds in car insurance due to the pandemic

Drivers could save hundreds in car insurance due to the pandemic

Empty roads during the pandemic suggest thousands of drivers could save on insurance. Photo: TND
Twitter Facebook Reddit Pinterest Email

Cars across the nation have gathered dust as coronavirus restrictions put limits on travel.

But in welcome news for drivers, reducing your expected mileage can save you hundreds of dollars in lower premiums.

Recent analysis by consumer comparison site Finder found that drivers can pocket nearly $300 a year by switching to a more competitive insurer.

And with a separate survey finding that more than one in four Australians has spent less time behind the wheel during the pandemic, hundreds of thousands of drivers could be primed for some much-needed savings.

Paying per kilometre could pay off long term insurance specialist Taylor Blackburn said the working-from-home boom is unlikely to be a “passing trend” and drivers should proactively shop around for a better deal.

“If you are driving less, reducing your expected mileage on your policy is a good way to put a bit of extra cash back in your pocket,” Mr Blackburn said.

“Opting for higher excess, adjusting your mileage, installing a security alarm or parking your car in a garage instead of on the street can all help you save on your premiums.”

For drivers who expect their driving to be reduced long term, switching to a pay-as-you-drive policy – also referred to as pay per kilometre – could net them $293 in savings, Mr Blackburn said.

But only if the car is driven less than 7000 kilometres per year.

Few drivers have seen scenes like this during the pandemic. Photo: Getty

Although specific pay-as-you-drive policies are advertised by a handful of insurers (Real Insurance, Poncho and Woolworths are on the list), drivers can also obtain a cheaper premium by negotiating a lower estimated mileage on their existing policy.

Drivers who race beyond that amount, however, could be prone to an untimely price pinch, Mr Blackburn said.

“Remember to keep your insurer updated if your driving habits change – if your insurer thinks you deliberately underestimated your usage, you risk having to pay extra fees or even a denied claim,” Mr Blackburn said.

More savings to be had

Mozo research manager Peter Marshall, who has worked in Australia’s finance industry for more than two decades, told The New Daily that many drivers will be hesitant to take full advantage of premium reductions, as they may have not qualified previously.

Beyond limiting mileage, Mr Marshall said the best way to drive down the cost of a policy was to narrow down its restrictions.

“For example, if you are confident and can restrict the drivers named on your policy, or if no one under 25 will drive the car, that will usually get you a good discount,” Mr Marshall said.

“But make sure you cover for most driving situations, because you don’t want to loan your car in an emergency situation and that person – driving in an unfamiliar vehicle – has an accident.”

Unlike the UK and US, where insurers were quick to offer policy holders a rebate in response to less frequent driving, none in Australia have shown the same generosity.

Drivers hopeful of receiving a refund on car insurance have been left wanting. Photo: Getty

Instead, some insurers offered three and six-month discounts for new customers early on in the pandemic, while the majority offered payment deferrals through hardship policies.

Many have also allowed customers to switch from annualised lump sums to monthly repayments.

But customers anticipating a refund may have a long wait ahead, Mr Marshall said.

“We’ve experienced the terrible bushfire season over 2019-20, so insurers themselves have had large claim volumes not related to car insurance, but still experienced a major hit,” Mr Marshall said.

“But although they may be less forthcoming to offer a refund, that’s not to say you shouldn’t contact them to see what other kinds of assistance is available.”