Uninsured drivers are the reason your car insurance premium is rising

Ben Tosi

03 Nov 2017

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Part of your comprehensive car insurance premium is being used by insurers to cover the costs of uninsured drivers, according to a report from the Brotherhood of St Laurence.

According to The Pranged: The Real Cost of Optional Vehicle Insurance in Australia, Aussies are paying an extra $45 a year on their premiums, as insurers attempt to compensate for the unrecoverable losses that at-fault uninsured drivers represent.

Drivers with a comprehensive policy can make a claim on their own insurance for accidents that aren’t their fault, if the at-fault driver is uninsured. The report suggests that to account for this, insurers are raising comprehensive policy premiums, costing insured drivers a nationwide $1.3 billion.

RELATED: Progressive Direct exits Aussie car insurance market

The author of the report, Tony Robinson, said that the current car insurance system employed here is “plainly unfair”, but simply switching to a mandatory scheme like the one used in the UK - where the minimum legal insurance covers drivers personal injury and property damage of others - wouldn’t work in the Aussie market.

“Mandatory schemes still record significant percentages of people who don’t pay for compulsory cover. What if they are dependent on cars for work? You can’t take cars off people,” said Robinson.

The current Aussie car insurance system involves a compulsory third party insurance policy, also known as a greenslip (CTP) which covers the cost of personal injury to others, but property damage cover is optional.

RELATED: Mozo’s Experts Choice Car Insurance awards reveal the best policies to help Aussies save

And it turns out that a substantial chunk of Aussies aren’t taking up that option with the research estimating that approximately 12% of Aussie vehicles are uninsured for third party property damage and that uninsured drivers were at fault in approximately 114,000 accidents per year.

Robinson said that when Aussies pay for their car registration and CTP insurance, many believe they’re covered for property damage without realising that they need to seek out either a third party or comprehensive car insurance policy to get that added security.

If you’re a little confused at how our current system works, check out Mozo’s dedicated car insurance hub for a whole range of informative guides.

Comprehensive car insurance policies - rates updated daily

  • Promoted

    Budget Direct

    Budget Direct

    Comprehensive Car Insurance

    No claim
    Online discount up to 15%

    2 to 3 minutes

    costs extra

  • Promoted

    Virgin Money

    Virgin Money

    Price Saver Comprehensive

    No claim
    Online discount up to 15%
    Restricted Drivers Discount available

    2 to 3 minutes

    costs extra

  • Promoted

    Bingle

    Bingle

    Comprehensive Car Insurance Policy

    2 to 3 minutes

    costs extra

  • Promoted

    Youi

    Youi

    Comprehensive Car Insurance

    20% discount on Contents Insurance if Youi Car Insurance also held

    costs extra

  • Promoted

    Woolworths

    Woolworths

    Comprehensive Car Insurance

    Online discount 5%
    5% discount if you exclude drivers under 25
    Drive Less Pay Less option to reduce premiums for limited kilometres.

    2 to 3 minutes

    costs extra

Mozo’s top tips to choosing car insurance

  • Choose between third party or comprehensive: The first big decision you need to make is whether you want insurance to cover just the damage you cause to another person’s property (third party) or whether you want your own car covered too (comprehensive). To help you decide, we’ve put together this helpful guide.

  • Set a budget: One of the most important parts of choosing your car insurance policy is to figure out how much you’re willing to spend on your precious set of wheels. Set a number that you won’t exceed and keep it simple by making that amount how much you’re willing to pay in the form of an annual rather than monthly premium.

  • Shop around: Lugging yourself around from one provider’s site to the next can be pretty tedious. Luckily for you, Mozo compare a range of car insurance policies to help you find one that is just right for you.

  • Make the most of discounts: When shopping around, you’ll see that there is a number of discounts that particular car insurance companies offer that will reduce your premium, so make sure to check your eligibility so that you can save!

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