How to reduce your car insurance premium

Car insurance policy prices are determined by a range of factors, the driver, the vehicle, the phases of the moon... ? and knowing your way around them can save you bigtime.

So how do they figure out policy prices?

The cost of your car insurance policy is based on the average cost of covering actual losses, spread out over your particular 'rating group' as a whole. Of course, you may never have an accident or have your car stolen, and therefore will never need to be compensated. But others in your category may not be so lucky.

Car insurance prices are determined by:

• Sex - Auto insurance cares not for our enlightened age of non-discrimination. So insurers take advantage of the somewhat sexist statistic that men have more accidents than women, and charge young males higher premiums.
• Age - Crusty old insurers resent youth and beauty. Also, drivers under 25 have a higher risk of accidents, and many insurance companies offer increasing discounts for drivers aged 30 and above.
• Marital status - Perhaps because they pay less attention to the roads and more to dishy passers-by, single drivers have statistically more accidents than their married peers.
• Driving record - A secret recipe weighs up such ingredients such: number of years driving; accident history; speeding tickets and other driving offenses.
• Driving habits - More secret auto insurance herbs and spices, but in general: peak hour driving results in more car accidents than weekend shopping trips; using your vehicle for business also incurs more risk.
• Parking habits - Where you live, and where you park your car during the day will affect the risk of theft. Garages = good; Gotham City streets = bad.
• Vehicle type - Obviously a more expensive car will cost more to insure, but other factors include:
• • the size and weight of your car (larger, heavier vehicles are rated lower risk than smaller, lighter cars)
  • the age of your vehicle (older = accident-prone)
  • the cost of repairs and replacement parts (European models can be more expensive for bits and pieces or gereneral tinkering)
  • theftability ? fast cars get stolen more than station wagons with religious stickers

Cheaper car insurance premiums

Yes, you want a cheaper premium, but it's important not to sacrifice your security in the rush for low cost car insurance.

Here are ways to cut the cost of your turbocharged package.

No claim bonus.

This is your ticket to cheaper car insurance: just one year of accident-free driving will knock about 20% off your premium, and each year after that is worth about 10% more, to a total of 60% at the top 'Rating 1' no claim bonus. Before making an auto insurance claim, consider whether the payout is worth more than the potential loss of your NCB.

Loyalty.

Everybody loves a multi-policy discount, especially insurers. You could save 10% or more across all your policies by using the same insurance company for products including:

• Comprehensive car insurance
• CTP greenslip
• roadside assistance
• home and contents insurance

Excess

The higher the excess you're prepared to pay, the lower the premium. If you're not worried about the cost of minor repairs (or back your driving abilities to avoid them), higher excess is a great route to cheap car insurance.

Nominated drivers

Unless your car is the town bicycle, restricting the number of drivers who use your vehicle is an easy way to save on your policy. Fewer drivers is better, and older drivers (particularly over 25 years) makes a significant saving.

Some policies will still cover car accidents caused by non-nominated drivers, but levy a higher excess in these cases.

Security

The more you have, the smaller your premium. Immobilisers and car alarms contribute, and a car tracking device is ideal if you're at the luxury end of the caryard.

Market value payout

If you write off the car, your insurer will either pay the current market value of your vehicle or a preset 'agreed' value. The latter might allow you to buy a new model but it will also increase your premium.

Safe driver discounts: the driving course

Young drivers in particular can have their premiums (and excess) reduced by completing a defensive driving course. (Lesson 1: the best defence is not a good offence.)

Salary packaging

If your car payments or lease is arranged through your job, employer or own business you can include car insurance in the package to pay it off pre-tax.