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The car insurance price gap

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Comparing policies from different insurers can be a time-consuming, confusing process. Is it worth going to all that trouble?

Yes! A recent study by Cannex (2) found the price gap between the minimum and maximum average insurance policies was as highest in NSW at $973.50, and came in at $572.10 nationally, suggesting shopping around could be well worth the time and effort, especially as your circumstances change

Car insurance pricing
The price you are quoted for your car insurance will vary between insurers for two main reasons; your risk indicators, and the level of cover on offer.

Risk indicators
When giving you a quote for insurance, the insurance company considers a number of risk indicators that estimate the likelihood of you making a claim in the future, and estimate how much your average claim might be. Different insurers sometimes take into account different indicators; or assign them a different importance, leading to differences in the price you’ll be quoted.

Here are some of the indicators an insurer will consider:

  • Your suburb, how risky it is and whether your car is garaged.
  • Your age, or the age of the youngest driver on the policy.
  • The type of car you’re insuring, it’s value, and how it has been modified.
  • Your driving history, including recent insurance claims, license suspensions or driving offences.
  • How much you drive your car, whether you use it for work and the number of nominated drivers.
  • The excess on the policy.

Level of cover
Insurers will also offer different levels of cover and extras such as you receive for your money if you do need to make a claim can vary.

The price gap for your situation

While your exact personal circumstances will determine the premium you pay with different car insurers, the Cannex Car Insurance Report gives information on which insurer offers the best value for money. They even have a handy reference that shows the best value insurer for different types of consumers by state – well worth a look if you’re considering switching.