Aussies driving less could be paying too much for car insurance

Australians could be missing out on big savings on their car insurance by not reviewing the number of kilometres they’re driving during the pandemic, insurance experts say.

Repeated lockdowns and big increases in the number of people working from home over the past 18 months has seen many commuters driving far less than pre-pandemic.

Recent data published by the Australian Bureau of Statistics (ABS) shows that in June 2021 a far greater number of people worked from home one or more times a week (37 per cent), compared to before COVID-19 restrictions began in March 2020 (24 per cent).

The number of kilometres driven in a year plays a crucial role in how your insurance premiums are calculated, so if you’ve found yourself driving less recently it pays to speak to your insurer about your options.

“If you suspect the number of kilometres you travel in a week has reduced for whatever reason, you could be in a position to be paying much less for insurance,” says Stephen Zeller, general manager of general insurance at Compare the Market (CTM).

Read: Car insurance costs don’t add up

“It’s important that when the time comes to renew or compare for a new policy, that you provide details that are as accurate as possible. Simply renewing a policy without checking it can mean you are throwing hundreds of dollars down the drain.”

The CTM research showed that a customer driving a 2016 Mazda CX-5 in Victoria with an annual mileage of 10,000 kilometres could reduce their comprehensive insurance premiums by an average of $257 compared with if they drove 30,000 kilometres.

In a similar comparison, the premium for a 2016 Toyota Hilux yielded an even bigger reduction – $297.

“Should motorists dramatically reduce the number of kilometres they travel [even further], savings up to $454 could even be possible, in this instance based on a Toyota Hilux in Victoria being driven just 5000 kilometres instead of 50,000 kilometres,” CTM says.

Consumer advocacy group CHOICE says that it’s not only reduced driving that could lower your premiums, but also parking your car in a much safer place than usual – in your driveway or garage.

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“Being at home during the day can help reduce your risk of burglary, since an unoccupied home is an easier target for burglars than an occupied one,” says CHOICE insurance expert Daniel Graham.

But it’s not entirely about getting a better deal as customers actually have a legal obligation to inform their insurer when circumstances change, as this affects individual risk levels.

“As an insurance customer, you have a duty of disclosure to your insurer – if your circumstances change, you’re required to tell them,” Mr Graham says.

“Let the insurer decide if it’s relevant information.”

But he also advises that this disclosure presents the perfect opportunity to renegotiate your deal.

Read: How to avoid being car insurance poor

“Absolutely leverage your responsibility to your insurer to get a better premium if you can,” Mr Graham says.

“The best way to go about it is to call your insurer and tell them your circumstances have changed. You can then say, ‘Because my risk is lower, I’d like to renegotiate my premium’. They should have discretion to give you a discount.

“The threat of cancelling is always a good way to get your insurer into gear. As long as you’re prepared to walk, by all means threaten to,” he concludes.

Have you been driving a lot less during the lockdowns? Did you negotiate a cheaper car insurance premium last year? Will you check in again this year? Why not share your experience in the comments section below?

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