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How to Save Money on Car Insurance

Cars cost money – there's no way around it! And while Car Insurance may just feel like another cost, there are ways to keep the cost down and potentially save money on your premiums.
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Updated 14/08/2023
What changed?
Updated to include a list of top ten tips and sources.
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Written by

Mel Basta

Updated 14/08/2023

What changed?

Updated to include a list of top ten tips and sources.
Our aim is to help you make better informed decisions. That’s why iSelect’s content is produced in accordance with our fact-checking and editorial guidelines.

Edited by

Laura Crowden

Find out more about how we make money.

View our Privacy Policy.

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Read on to understand the factors that can affect the cost of your Car Insurance premiums and learn from our tips to see how you can look to reduce them.

1. Look for discounts 

Many insurers offer incentives to attract new customers to sign up for one of their policies. Yep, it can get competitive out there… 

These incentives may include things like a discounted first year’s premium, a cheaper premium if you bundle policies, or something known as a no claims discount. 

  • A no claims discount is a discount to reward safe drivers who don’t make a claim on their Car Insurance, typically increasing up to a maximum of five years for Comprehensive Car Insurance policyholders.1

    You can check your rating with your insurer. Generally, ratings start at 6 and drop down by 1 for each year you don’t make a claim. For example, a ‘Rating 1’ driver generally means they haven’t made a claim for at least the past five years.|

  • Multi-car discounts can also be a great way to save. If you’ve got more than two cars or you have adult children living at home with their own cars, you could save on your premiums by combining all the cars under one Car Insurance policy. 

  • Unadvertised discounts such as discounts for long-term customers or pensioners may apply to you. Many insurers don’t advertise these types of discounts, so it’s always worth a shot to ask your insurer to see what they can do for you, especially if you’ve been loyal to them for some time.

    In addition, pensioners, Health Care Card holders and Veterans may be able to get a reduced rate on their car registration, such as the discount offered by VicRoads.2 Check with your state or territory’s road authority to see if you can save on your car registration, too. 

2. Raise your excess (if you can afford it!)

Simply put, your excess is the out-of-pocket amount you would need to pay in the event you need to make a claim on your insurance policy.3 

If you choose to assume greater risk by taking on a higher excess, it will likely bring the cost of your Car Insurance down.  

Many insurers provide the opportunity for you to choose your excess, so if you choose to increase your excess, it’s definitely one way to save on your Car Insurance premiums.  

If you’re a safe and confident driver, you may be able to afford the greater risk that comes with a higher excess in exchange for enjoying lower ongoing premiums.

3. Drop the extras you don’t need

While extras can give you the opportunity to boost protection to your car and tailor your Car Insurance policy to suit your lifestyle, they can also come at an extra cost.  

Optional extras can include things like cover for personal effects, hire cars, roadside assistance, windscreen cover, no claims bonus protection, or the option to choose your repairer. 

For example, your policy might automatically include some (or all!) of these items, but if you choose to remove some of them, it could help you reduce your premiums. 

Let’s say you’re a safe and confident driver, and you use your car to commute to work five days per week, and for the occasional weekend outing or country road trip.  

You might want to keep extras like roadside assistance and windscreen cover, which could come in very handy on a road trip, but choose to remove cover for belongings in your car (personal effects) and the option for a hire car.  

You could save on your premiums simply by choosing to go without them – it’s that easy!

4. Restrict other drivers

In a 2021 survey conducted by the TAC, findings showed that drivers aged between 18 to 25 were more likely to have been involved in a car accident than drivers aged over 60.4 

Unfortunately, drivers under 25 are generally considered more likely to make a claim, since younger drivers are less experienced on the roads and are therefore more likely to be involved in an accident. 

So if you declare that there are no drivers under 25 on your policy, this can be one way you could save on your premiums.5

5. Park your car in a secure area

If you live in an area with a high incidence of accidents, theft, or vandalism, it’s possible that you may pay more for your Car Insurance.6 This is because areas with a higher rate of claims are seen by insurers as high-risk! 

If you can park your car in a secure area, ideally somewhere off the street and/or under cover like as a garage or carport, this can help reduce your premiums.

6. Pay annually

Paying for your Car Insurance in monthly instalments is a tempting option, because you won’t have to part with a significant sum of money all in one fell swoop. 

But did you know that paying for your Car Insurance in an annual lump sum can help you save? That’s if you have the means to do so, of course! 

By paying for your Car Insurance one time per year, you can avoid paying for pesky instalment processing fees and potentially get a lower premium, too!7 

Paying for your insurance policy annually is well worth considering if you’ve got the money saved up. That extra cash you would then have throughout the year could go towards groceries, bills, or some fun options like movie tickets or a dinner at your favourite restaurant!

7. Choose a low-risk car

The make and model of your car indicates the repair and replacement costs to your insurers, so these factors can affect your premiums.  

On one hand, if you’re driving a car with a number of modifications (we’re looking at you, fellow rev-heads), be aware that you may need to pay a higher premium to accommodate for the higher risk your car poses on the roads. 

On the other hand, if you’re driving a car that’s packed with safety features like a reversing camera or electronic stability control, you may even qualify for some discounts with your insurer. It pays to be safe! 

In a 2007 study conducted at Monash University, findings showed that white cars were significantly less likely to be involved in a car accident than cars of other colours like black, blue, grey, green, red and silver.8 That’s right – even the colour of your car can affect risk on the road (and your premiums!). 

The TAC provides a list of recommended safety features that can help reduce your level of risk whilst driving. So the more of these features your car has, the safer you are likely to be in your car on the roads:9 

  • Low Speed Auto Emergency Braking 
  • High Speed Auto Emergency Braking 
  • Vulnerable Road User Auto Emergency Braking 
  • Lane Keep Assist 
  • Reversing Camera 
  • Side Curtain Airbags Front Row 
  • Side Curtain Airbags Second Row 
  • Electronic Stability Control 
  • Front Airbag Driver 
  • Front Airbag Passenger 

See how many of these features your car has. The more your car has, the more you could save on your insurance premiums.  

8. Think about when it’s actually worth claiming

Let’s say someone backs into your parked car when doing a three-point turn and they leave a tiny dent in your driver’s seat door. Woops! 

While any damage to your car can be a real buzzkill, think about whether it’s really worth making a claim and paying your excess for something so small.  

This scenario is a bit of an exaggeration, but it’s important to remember that it’s possible for small claims to run up your premium. 

So if you find yourself with a tiny bit of superficial damage to your car that’s barely noticeable, think about whether it’s really worth claiming for it and having your premiums potentially increase as a result.  It may instead be cheaper in the long run to just pay for these kind of minor repairs yourself, or if it’s just superficial damage, simply learn to live with it!

9. Reduce your risk to insurers

Another way to potentially lower your premiums is to reduce your risk to insurers. You could do this by: 

    • Prove you’re a good driver through a driver safety app10 
    • Installing a security system in your car. 
    • Parking your car in a driveway or garage instead of on the street. 
    • Using a carpooling service to reduce your annual mileage. 
    • Restricting the age of drivers on your policy to people over 25. 

As always, be sure to update your policy whenever you make changes that affect your car, as they could also affect the price of your premium.  

For example, if you were moving house and your new neighbourhood had a lower rate of car accidents, thefts or vandalism, your premium could reduce.  

Of course it doesn’t always work this way, but letting your insurer know about any changes will help ensure your policy remains valid, and that you’re maximising your chance to get the best premium possible for your budget and lifestyle. 

10. Compare policies

While different insurers use similar risk factors for pricing their policies, you might find that there can be significant price differences between insurers for the same make and model of a car. 

The only way to make sure you're getting the best possible deal on your Car Insurance is to shop around and compare quotes. 

We understand you have better things to do than spend hours searching for an insurance policy. At iSelect, our friendly team members have the tools to help you compare from our range of providers, and find a policy. 

Get a quick and easy quote online with iSelect’s Car Insurance comparison tool, or call iSelect on 13 19 20 and let one of our team members help you. 

1 Moneysmart - No claim bonus on car insurance

2 VicRoads - Registration concessions
3 Moneysmart - Excess

4 Transport Accident Commission - Road Safety Monitor 2021 Report, page 78.
5 Consumer Affairs Victoria - Car insurance for new cars
6 ABC News - Insurance costs rise, regional Queenslanders say they’re paying the price for youth crime, last updated 4 May 2023.
7 Budget Direct - Paying for car insuranceING - Car insurance FAQsCarpeesh - Payment plans

8 Monash University - An Investigation into the relationship between vehicle colour and crash risk, Stuart Newstead & Angelo Delia, 2007, page vii.
9 TAC - How safe is your car? Safety features

10 Carpeesh – Premium and Excess Guidepage 4.