Saving Money on Car Insurance

Saving Money on Car Insurance

Wait, wait, wait! Yes, I know the title is boring and mainstream but this blog post is actually quite interesting (for a change!). No, seriously. I guarantee it. Read on and be slightly enlightened.

So yesterday I accidentally painted the deck a pretty horrendous colour that my wife will kill me for when she returns in a few days. To take my mind off the consequences, I decided to take a look at our finances and areas in which we could save money.

Recently, we bought a new car. A very sensible Nissan Wingroad. After having owned some daft boy racer/unreliable cars, I threw in the towel and went for something that should cost us much less in the long run.
Car Insurance for my Nissan

On buying the car, we immediately rang up my regular insurer, AMI Insurance, to get the car fully covered.

A few days later, it occurred to me that I’m being unnecessarily loyal. I’ve been with AMI for almost 10 years now and they’ve been good to me (except for one staff member who, following a car accident, told me with a grunt “We’re not going to make any money out of this accident you know?”. Cheers mate) but I’m a sensible guy and being loyal to a company simply for the sake of being loyal doesn’t make any sense.

Having recently signed up as an AA member, I decided to check out their options to see if they could beat AMI’s rates. I was happy to find that AA have a really good website with an online car quote tool. This was quite a bold move as, although it adds heaps of usability, it allows people to make slight adjustments to their circumstances to see how much they could save. I’ve found that car insurance companies are actually quite cagey about revealing how they arrive at their quote figures.

AMI insurance have an online car insurance application but, from what I can tell, you fill in your contact details and they review your application and contact you with a quote, unlike AA that create the quote on the spot and provide you with the details and a quote reference instantly.

So I started to go through the process on the AA website with good intentions … and then I thought “Hmm, what if I kept the car in my garage instead of under the carport?” for example. This slight adjustment turned into many and it was quite revealing how different options affected the quote. Some were expected, others were quite unusual.

Standard Details

The first quote I completed was for my exact, honest, situation. These are basically:

28 year old male with a clean and full licence, living in Aranui. Car is kept under a carport.
Wife over 25 is a secondary driver but she’s on a restricted license
No modifications to the car. No factory fitted alarm.
The car is a 2001 Nissan Wingroad, 1.5Lt, that the AA set at an agreed value of $7,600 (although I don’t agree with that!)

With my standard details and a $400 excess, full comprehensive cover from the AA came to $55.45 per month.

Following this, I played around with the options to see how they affected my premium.

Your Suburb

I live in Aranui. Anyone in Christchurch knows that Aranui doesn’t have a particularly good reputation when it comes to crime. Fendalton, however, tends to be home to those in a much more respectable pay bracket than myself. These guys don’t try Nissan sation wagons, they all drive Audi Q7s.

So on changing my suburb from Aranui to Fendalton, I expected my premium to reduce. Surely Fendalton is a much safer area with less car crime?

Result:

On changing the suburb from Aranui to Fendalton, the insurance premium actually went up $55.90 per month. While this is only very slightly more than the original quote, it’s still more when I expected it to be less. Odd.

Possible Reasons:

I can only guess on why the price went up. Here are my un-educated guesses:

1. As a police officer once told me when discussing the difference in suburbs around Christchurch, “Burglars don’t shit in their own back yard”. This could mean that Fendalton actually experiences more car crime than Aranui. Let’s face it, if you’re going to steal from someone, you may as well steal from someone who has better stuff than you.

2. People in Fendalton have more money than people in Aranui so it’s safer to charge them extra (obviously I’m speculating with all of these!)

3. In my experience, burglars are scared of dogs. Walk along our street for 50 metres and you’ll pass approximately 3 German Shepherds, 4 Bull Mastiffs and a Rottweiler.  Do people in Fendalton only own poodles? Or cats? (Speculating again! Don’t get angry with me, Fendaltonians!)

Your Gender

This one’s actually quite obvious but it’s interesting to see it confirmed and exactly how much weight car insurance companies place on your gender.

Result:

I filled out the form again but this time said I was a woman. The quote dropped to $49.91 per month, $2.79 less than for a male.

Disclaimer: to keep the test fair I left all of the other information the same. So … I was actually a female with a female partner. However, I’ve thought about this and I don’t think car insurance companies change their policies depending on whether you’re a lesbian or not.

Possible Reasons:

Let’s face it lads, females drive more sensible than males and so have less accidents. Or as I like to say it, women have MORE accidents but at much lower speeds – parking, cornering, etc. – and so when they have an accident they don’t bother claiming. When men have an accident, they do it properly! Cue torrent of abuse in the comment section!

Car Crime

Factory Fitted Alarm

Here’s another one that’s basically a given. Car insurance companies will always ask you if you have a factory fitted alarm. AA also stipulate that the alarm system must have a minimum of a 4 star rating. They also say on their website:

Make your car more secure

Save on your insurance by making it more difficult for thieves to break into or steal your car. Install a car alarm or immobiliser and we’ll give you a discount.

Results:

With a 4 star factory fitted alarm, the quote came to $52.84 per month. This is  $3.06 per month cheaper than without.

Is it worth installing an alarm?

$3.06 per month works out at a saving of $36.72 per year. Let’s say that you own your car for 6 years before you sell it and get something else. In 6 years, you would have saved $220 on your car insurance.

A 4 star car alarm will cost you in the region of $550 installed. While this means you’ve still lost out on around $300, there is of course the added peace of mind that your car is fitted with an alarm. Plus it’s practically worth it for the ‘Whoop Whoop’ chirp of the alarm when you hit the button on your keyfob.

So if you have the money, a car alarm could be a worth investment – but it will only help your insurance if you get it professionally installed.

Changing “spouse” to “child”

Ok this is an odd one but it was a good test of the online process compared to dealing with a human. I left all the details exactly the same, including my wife’s age, but instead of listing her as a spouse, I selected ‘daughter’.

Result:

No change. Fair enough. I was wondering if the premium would rocket purely based on the ‘child’ relationship status but clearly the system took into account that person’s age.

Hot Girl Doesn't fit into Car Properly

Making my Wife the Main Driver

Here’s an interesting one. I previously had myself (28 year old male with full licence) as the main driver and my wife (25 on a restricted licence) the secondary driver. But what if I swapped them around?

Result:

This was the single biggest change to the premium price. It went from $55.45 per month for me to a whopping $84.63 per month with my wife as the main driver! Over a year, that’s a difference of $350.16 per year.

Possible Reasons:

Although I’ve had a full driver’s licence for over 5 years while my wife, despite having been on the road for a number of years, is still on her restricted, this didn’t seem to be the deciding factor. I repeated the quote application with myself as the main driver and my wife as the secondary but this time saying we both had full licences (instead of my wife being on a restricted) and the quote was exactly the same $55.45.

This one came down to both age and the fact that most importance is placed on the main driver’s circumstances.

Previously Stolen Car

Has your car been stolen previously? We have actually had a car stolen in Christchurch before. The Christchurch police (safer communities together) did nothing to try and find it so we headed out and tracked it down ourselves. It wouldn’t seem fair for this to affect your insurance premium. Your car may not have been stolen from your carefully locked garage so that shouldn’t affect your premium.

I carried out the test again and said that my car had been stolen a few years ago.

Results:

Thankfully, AA recognised that this was neither myself nor my car’s fault and the premium remained the same.

Insuring a Modified Car

Modified your car? Oh dear. you could be in trouble. In this test, I decided that my car was modified. Only slightly, but a modification none-the-less. I selected “Upgraded Air Filter” and “Upgraded Exhaust” and carried out the test again. I was quite keen to see how this affected the premium price but wasn’t even offered that much!

Results:

“Unfortunately we’re unable to offer you this cover. We would like to discuss with you: Modifications or accessories that have been added to your vehicle.”

Oh dear! They want me to call them. This one isn’t promising so I left it at that.

Need to Insure an Aston Martin DB9?

Need to insure an Aston Martin DB9?

Ok I was kind of dreaming when I did this test. Each time I did the test I had to scroll through long drop down lists over and over again. Finally I was sick of it so selected a car near the top of the list instead – a 2010 Aston Martin DB9 which AA valued at $340,000. The result?

Unfortunately we’re unable to offer you this cover. We would like to discuss with you: The type of vehicle you wish to insure.

I can see the discussion now. “You’re 28 and live in Aranui. You don’t really have this car do you?”. “No. I’m sorry.”

Summary of Insurance Savings

After my basic tests, the summary of the savings are as follows. Note that these savings apply to my own unique circumstances only and were also only achieved by using the online process. I’d assume that if you were dealing with a representative face to face, you’d be able to negotiate for different rates to that which you might be given online.

Change Quote Difference Savings Per Yr
Original 55.45
Suburb 55.90 0.45 5.40
Female 49.91 5.54 66.48
Alarm 53.84 1.61 19.32
Less Experience 84.63 -29.18 -350.16
Modified Not Given
Aston Martin Not Given

New Zealand Vs. United Kingdom Car Insurance

A test that I would love to have done would be to get a quote with the same details except from a UK company.

Car insurance in New Zealand is stupendously cheaper than car insurance in the UK. Probably for that reason, I couldn’t actually find an online quote process on a UK website.

In the UK, you pretty much flat out can’t get car insurance if you’re a 17 year old male with a realistic bank balance. The only way to get insured is by adding yourself as a named driver on your mum’s insurance.

Why is car insurance so much cheaper in New Zealand compared to the UK?

I believe that this one is easy. Car insurance in the UK is required by law. Car insurance in New Zealand is simply recommended as a sensible option.

The difference on premiums is incredible and, to some extent, to be expected. Imagine if it was required by law that you bought a cheeseburger every day. The price of cheeseburgers would be through the roof.

Should you lie on your car insurance?

A great question, thanks for asking. To be honest, no, you definitely shouldn’t. Car insurance companies can and will send an investigator to check things out in the event of a claim. And if they see a way to void your car insurance and not pay you, they will jump on it.

Let’s say you fit an after-market air filter to your car but don’t tell your car insurance company. Understandable as your car insurance premium might go through the roof.

However, this is totally stupid. If you do this and not tell your car insurance company, you may as well cancel your car insurance as you’re paying for nothing.

Imagine you’re in a car crash, not your fault, and your car is heavily damaged. The first thing a car insurance company will do is take it to their inspection centre. At which point, they will discover your modification, realise you didn’t mention it and will write off your insurance altogether.

In other areas, the risk is a wee bit less. Read above and you’ll see how much difference it made saying that my wife was the main driver of the vehicle rather than me. In the event of an accident, exactly how would the insurance company be able to tell that I was listed as the main driver on a car that my wife was driving? She’s still allowed to drive it.

This one is totally at your own risk. If you feel like living on the edge, saving a decent amount of money but risking a lot of questions in an investigation then you go for it. If you think it’s worth be straight up about everything and so there being no question in the event of an accident then good for you.

What about you?

All of the examples above are for someone in my exact circumstances and will vary massively for other people. What are your experiences with car insurance? Have you ever had problems making a claim on a car that you thought was perfectly insured?

What about accidents that you’d have in New Zealand? I’ve personally been significantly crashed into 3 times in New Zealand and not one of the other people even had third party insurance and so faced massive bills while I walked away and left the paperwork to my insurance company. Do you have  car insurance? If not, why not?

Flickr image credits: Bekathwia, Hans Vink, FotoSleuth

  • CarInsuranceNovice

    I was lucky to have found this great article. I was recently in a situation similar to yours – I have been with AMI for many years without questioning myself why I should be loyal to them. You totally enlightened me! After reading this, I shopped around for a better insurance for my new car, and I found one that suits me better in many ways. Many thanks!

  • Thank you for your comment and I’m glad you found a. etter deal! Insurance companies don’t seem to be too vocal about how you can save money so it’s definitly worth asking some probing questions.

  • A.A covered

    Hi Mark,

    Thanks for your article! I’ve been with A.A for about a year or so now and had been relatively happy but now my choice might worth questioning a bit more, well maybe how we are covered to be precise!
    Cheers!

  • No worries! Yeah 30 minutes spent checking out your options can save you a fair bit in the long run.