Think twice before making small claim with your car insurer
A CHOICE review of 44 car insurance policies has found that making small claims can end up costing you more money, as it often results in lost discounts and higher excess charges.
Sixteen insurers told CHOICE they would increase premiums after drivers made a small claim, even if it was under $1000, and many refused to answer the question when asked.
“A policy with less features and a high excess will save you money up front, but could cost you more in the event of a claim. Putting aside an emergency fund can help fill in the gaps,” says CHOICE spokesperson, Ingrid Just.
Despite the market becoming increasingly complex, the people’s watchdog says there are opportunities for consumers to find a better deal. Drivers who pay careful attention to policy options and who shop around will make the biggest savings.
For example, CHOICE’s comparison of car insurance policies shows that, on average, customers can potentially save the following amounts per annum without compromising cover:
- Young drivers – $2202
- Older drivers $1607
- Driver with a history of accidents – $2200
- Standard cover – $1648
- Top cover - $2080
“But keep in mind that a low cost policy with a lower premium can also mean foregoing things like a 24-hour helpline for towing or choice of repairer,” says Ms Just.
CHOICE recognises that car insurance in Australia is dominated by a small handful of large underwriters producing multiple brands. The review found however, that despite a number of insurers having the same underwriter, their policies are not necessarily the same.
“It’s the policy details that matter when it comes to claim time, or if you end up in a dispute. CHOICE customer satisfaction data indicates very different result between insurance brands, even if there is only one underwriter,” says Ms Just.
CHOICE’s top five car insurance tips:
- Before you make a claim, find out what impact it will have on your ongoing premiums. It may be worth paying for repairs out of your own pocket if your premiums are going to rise substantially.
- Get at least three quotes before you renew your policy – include your existing insurance provider as they may have cheaper offers online.
- Consider the cover you need before bundling car insurance with other policies. Discounts for combining policies are appealing, but it's pointless paying for insurance that doesn't deliver the right cover.
- Understand what excess you will have to pay if you make a claim, including for young drivers or people that aren’t listed on the policy.
- Opt for agreed value over market value. Some online insurance processes automatically default to market value, which can put a much lower price on your vehicle than you think it is worth.
You can access the CHOICE report
into car insurance.
Media contact: Ingrid Just, CHOICE, Head of Media and Spokesperson: 0430 172 669