Naturally, we think insurance is a good idea. It’s a cost-effective way to take away the pain of replacing expensive things, like your your car or your phone, when things go wrong. But while the right insurance is worth the cost, you don’t want to overpay, and end up with more insurance than you need. With this in mind, we thought we’d put together some tips on how you can save on your car insurance.

(Just here to check if you’re paying to much? Get a quick quote from Cove)

Raise your excess

The excess is the portion of your insured amount that you need to pay yourself. If you have a car worth $7,000, and your excess is $400, then in the event of a claim you’ll need to contribute $400 towards the repairs.

Your excess and premiums are connected. The lower your excess, the higher your premiums – and the other way around is true too. That’s because lower excess means the insurance company is taking more risk – it means you’re more likely to make a claim, and the claims you do make will cost them more.

For example, if you have $500 excess on a $1,000 phone, then the insurer is only on the hook for $500. If you had $250 excess on the same phone, the insurer is on the hook for $750.

So by saving the insurer money in the future, the insurer will charge you lower premiums today. If you don’t mind taking a bit more risk, this can be a good way to save money on your insurance. It’s particularly good for things that are really expensive – like a new car, or a house. If you write off a $35,000 car, then there’s not much difference for you between $500 and $1,000 excess – either way, it’s a fairly small portion of the car’s total value.

Actually, speaking of cars . . .

Think about the insurance when you buy a car

It’s easy to get carried away, and buy an expensive car, especially if the dealer is offering to finance it at a low interest rate. And there’s nothing inherently wrong about doing this – it is your money, after all. But make sure you think about the insurance, because your choice of car can play a major role in the premium you pay for your car insurance.

As with everything in insurance, car insurance is about risk. Insurance on a $30,000 Audi is going to cost more than insurance on a $10,000 Toyota, because the insurer is on the hook for a bigger amount if you write it off, and the cost of repairs to an Audi will in most cases exceed the costs to repair similar damage on the Toyota. So the more risk the insurer is taking, the more the insurer will charge you.

In fact, this goes beyond the value of the car. Insurers use all kinds of other information to estimate how much risk they’re taking. For example, car thieves tend to like some makes and models more than others. If you buy a car that’s likely to be stolen, then bad news – you’re probably going to pay higher premiums. Insurers also use the kind of car to make some assumptions about how you’re going to use it. That’s why you’ll probably pay less in premiums for a minivan than you would for a souped-up sports car.

So the best thing to do is to get a quote before you buy your car. You might be surprised at how different premiums can be between different cars. You can get a car insurance quote from Cove in as little as 2 minutes.

Only insure what you need to insure

Another way to save on your insurance is to limit your coverage to your expensive things. For example, you could get a contents insurance policy, which tends to cost a few hundred dollars a year. This would insure everything you own – from your laptop to your knives and forks – up to a total value, often well into the tens of thousands.

But lots of people – particularly younger people – don’t have very many valuable things, beyond their computer and phone. So an insurance policy for $20,000 or more may be overkill. By insuring just a few expensive things, rather than having a blanket policy, you can come closer to only paying for as much insurance as you need, rather than too much.

It’s about risk

Fundamentally, insurance is about risk, and saving money on insurance is no different. The more you pay, the more protected you are, and the less you pay, the less protection you have. The challenge is in setting up your insurance so you have just enough. You don’t want to be underinsured, but you also don’t want to pay for insurance that you don’t need. So have a think about your insurance, and see how you can strike that balance to get some great deals.


The content presented on this page is provided for informational purposes only. Cove Limited makes no representations or warranties as to the accuracy, completeness or timeliness of the information. Each person should consult a qualified advisor for advice specific to their circumstances. Cove Limited assumes no liability for actions taken in reliance upon the information contained herein.