‘Risky’: Motorists warned about pitfalls of cutting car insurance as premiums surge

Australians are ditching their car insurance to cut costs, new figures suggest.

Australians are ditching their car insurance to cut costs, new figures suggest. Photo: Getty

Australians are being warned about the dangers of ditching comprehensive car insurance as new figures show people are making “risky” sacrifices to avoid soaring premiums in 2024.

Comparison site Finder said on Wednesday that the number of uninsured vehicles driving on Australian roads is rising following a 10.6 per cent rise in average premiums in the past year.

Insurance expert Tim Bennett said drivers are either paring back their cover or dropping non-compulsory insurance altogether, something that could end up costing them dearly.

That’s because it could leave you financially liable for damages to another person’s vehicle.

“It’s possibly the worst decision you could ever make,” Bennett explained.

“If you run into a Maserati you don’t want to be stuck with a quarter of a million-dollar bill.”

A Finder survey of 961 motorists found 16 per cent of drivers have cancelled or pared back their car insurance in the past year, 5 per cent of which have ditched their policy.

About 9 per cent already weren’t covered beyond compulsory third-party insurance, which typically only covers medical liabilities and not vehicle damage, Bennett explained.

“The cost of living is biting and insurance is one of those costs you don’t see every single day,” he said.

“It’s a little bit invisible until it knocks on the door and starts begging to be paid.”

The latest uptick in insurance costs has been caused by a series of natural disasters in recent years, and particularly widespread flooding across eastern Australia that caused billions in damages to homes and vehicles that insurance funds are now attempting to recover.

Unfortunately, with the climate crisis worsening and scientists predicting more frequent and severe extreme weather events, it’s predicted that insurance costs will continue to increase.

That goes not just for vehicle insurance, but also home and contents insurance, which has also spiked over the past year for many of the same reasons car cover has risen.

“Climate change increases the overall cost base for insurers, but also reinsurers and the underwriters,” Bennett said.

“When you increase the cost base, that increases the cost of every type of insurance.”

Thankfully there are some ways to ease the squeeze, particularly if you’re willing to make some changes to your cover and shop around to see which insurer best fits your situation.

Bennett said there are two main ways to reduce car insurance costs; making yourself less risky to the insurance company and reducing the level of cover you have.

“If your situation has changed or you can make some adjustments, maybe you can be covered for less,” he explained.

“There are little adjustments you can make.”

Options include limiting your cover to a certain age group, which Bennett explained could reduce your premium, though it means anyone over the age limit can’t drive while insured.

Also keep an eye out for extras in your policy you might not need, such as roadside assistance or replacement keys – services that can come in handy but are also pricey.

Measures to make yourself less risky, such as committing to store your car in a garage rather than on the street and investing in anti-theft technology for your vehicle lowers costs too.

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