Why Is My Car Insurance Going Up?

Does your car insurance go up every year? Australians often wonder the reason for their car insurance premiums increasing. And with costs from many insurance and other service providers getting higher, it’s no wonder that we want to save wherever possible.

If you’ve noticed your car insurance is needing more of your budget to afford, this could be why.

What contributes to your car insurance premiums?

Put simply, all insurance is based on risk. Car insurance, home insurance, life insurance, you name it.

Firstly, the more likely you are to make a claim (and the predicted expense of your claim), the higher your premium will be. For insurers, a customer’s policy pricing comes down to that customer’s risk rating.

Each insurance provider has different criteria (weighted in different ways) to determine how risky you are to insure as a customer. Things like your driving history, the safety status of the type of car you drive, the value of that car, where you park it, and a vast array of other factors all contribute to your premium.

Other people’s claims make a difference too – the more claims insurance companies need to pay out the higher their business costs become. This means they need to re-evaluate their premiums to take into account what they can absorb versus what they need to price into premiums due to market changes.

Some of these factors are things you can control – like the car you drive and where you park it – and some are things that you can’t – like flood-related claims the last time La Niña hit. The good news is that, to a certain extent, this does mean you have some influence over why your car insurance premium is going up. We’ll get into that in a second.

So, exactly why would your insurance be going up? It’s likely because of one of the reasons below, or a combination thereof, and potentially others. Of course, this will depend on your insurer and your individual circumstances.

1. You’re a higher risk than before

Have you been in an accident lately, changed where you live or work, bought a new car, or something similar? Sometimes, premiums can fluctuate with big life changes.

You might love your new wheels, but your insurance provider may not as much as the last car you drove. Or your switch to parking street-side instead of in a secure garage at work could add a few dollars each month.

Perhaps you’ve made a claim in the last 12 months. That’ll do it. Again, the bigger risk you are on the road the greater your insurance price rise.

2. Things have changed since COVID

The COVID pandemic might have something to do with your car insurance going up.

While it was in full swing, lots of Australians were largely confined to their homes. Obviously, there were some increases to risk. Cars being parked outside are more susceptible to theft and accidental damage, for instance. Especially in an environment where plenty of people were out of work (some resorting to not to nice activity to pay the bills) or more distracted on the road due to stressful life circumstances.

Overall though, there were far fewer cars on the road, less people driving under the influence, and fewer road accidents in general. As you can imagine, this made the COVID lockdowns a lower risk period for many car owners.

Some insurance providers offered discounts, refunds, or reduced premiums for “COVID cars” which were being driven very infrequently. But as the pandemic has changed, behaviours have changed too. People have started travelling back to work, have moved in with family in response to changing circumstances, have taken on new jobs, and so on.

All of this can have an effect on your premium, even if your insurance provider didn’t offer any specific COVID-related premiums.

3. Rain, rain go away

Some areas of Australia have been subject to extreme weather conditions over the last few years. From the catastrophic floods in New South Wales to the fires in Victoria, weather events have increased risk for plenty of Aussies.

If your insurance provider was exposed to these adverse weather events – and by that we mean they had lots of customers claim on their car insurance due to these events – they may’ve had to re-price their premiums. Providers do this to recoup unexpected losses and/or to account for the greater risk in future of cars being damaged or destroyed in such situations.

One way we can all work together on keeping premiums down is educating ourselves on how to best protect our vehicles. The fewer car owners who make claims, the reduced likelihood of insurers needing to re-price. For example, do you know what to do if you’re caught in a flood? We have plenty of advice in our article on driving in wet road conditions during La Nina events. While on that, also read our pointers on what to do if you find a lost pet in a fire or flood.

4. You’re not taking advantage of discounts

How do you stop your car insurance going up? While some factors might not be in your control, you can definitely lessen the impact of the pinch by taking advantage of discounts and savings available to you.

For instance, your insurance company might be able to give you a discount if you pay your annual premium upfront, if you don’t share your vehicle with other drivers, or if you’re insuring multiple vehicles.

More info on your car insurance premium

Want to know more about insurance premiums, saving money, and the all-important discounts? Here are a few articles you might want to read through:

• 5 ways to lower your car insurance premium
• How to save money on car insurance
• Understanding the different types of car insurance
• How to choose your excess: high vs low
• Are older cars more expensive to insure?
• No claim bonus….is it a bamboozle?
• Do women really get cheaper car insurance?
• Car insurance for young drivers: why is it more expensive?

And while you’re at it, why not get a comparative quote from PD insurance? Comprehensive car insurance doesn’t have to cost a fortune; trust us!