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The benefits of shopping around for your car insurance

It pays to shop around for car insurance... some companies will charge you more if your car has been stolen or side-swiped.
News Corp Australia network

11 Jan 2016 • 3 min read

Australia's largest car insurer is charging drink-drivers less than customers whose cars are stolen or sideswiped by other motorists.

A News Corp Australia investigation into the way car cover is calculated has revealed Insurance Australia Group — which controls brands including NRMA, RACV, SGIC and SGIO — imposes no premium increase on motorists who have recently returned from suspension. However, a customer who used their cover for an event beyond their control could expect to pay an extra 13 per cent.

"If your insurer is charging you more than a drunk driver because you had an accident that wasn't your fault, it's time to move on," said Erin Turner, spokeswoman for consumer group Choice. "Shop around and get a better deal."

IAG's chief rival Suncorp takes a starkly different approach, with its AAMI brand adding a loading of nearly 50 per cent for a suspension but increasing charges by less than three per cent for a theft claim.

IAG reaps about $2.6 billion a year in motor insurance premiums, making it the industry no. 1 with 33 per cent of the market, closely followed by Suncorp at 31 per cent, according to data from investment bank UBS. Third, on 9.4 per cent, is Allianz, which doesn't even cover drivers who have recently returned from suspension or cancellation.

IAG spokeswoman Amanda Wallace said customers who have had their license suspended or cancelled face an additional excess of up to $1200 if they claim.

On average, drivers who have had their licence suspended are a "significantly higher risk than those who have not"

"This means other drivers who may be included in the policy — including co-owners — are not penalised by other individuals driving offences or driving history," she said.

IAG does however penalise co-owners for an at-fault accident because it increases the overall premium due to the actions of just one driver.

Suncorp spokeswoman Angela Wilkinson said that on average, drivers who have had their licence suspended are a "significantly higher risk than those who have not".

"If we did not charge these customers a higher premium we would need to pass on the cost to other customers who have not had their licence suspended," she said.

Allianz spokesman Nicholas Scofield said motorists suspended for drink-driving or speeding "are not within Allianz's risk appetite".

The Australian Automobile Association did not respond to requests for comment.

Do you think to shop around for your insurance when it's time for renewal? Tell us in the comments below.