The big drivers of car insurance costs

You might feel like your premiums are just a random number, but there’s a lot that goes into calculating them. Here’s why your car insurance might be getting more expensive:

• Repair cost increases: Newer cars are packed with tech, making repairs more costly. This added expense means insurers adjust premiums to cover these higher repair bills. For ideas on managing rising insurance costs, check out our guide on Smart Ways to Slash Your Car Insurance.

• Extreme weather events: Floods, storms, and other natural disasters are occurring more frequently, with events like Cyclone Gabrielle highlighting this trend. These incidents drive up weather-related claims, impacting premiums. Rising risks from climate events are also prompting insurers to increase prices.

• Rising vehicle values: New and used car prices have surged due to inflation and supply chain disruptions. As the value of your car rises, so does the cost to insure it.

• High claim rates: When accidents increase, insurers face higher payouts. For example, in high-density areas with higher accident rates, like Auckland, premiums are more likely to rise. To understand premium differences across locations and car models, check out our blog Comparing Insurance Costs for Top Cars in NZ.

• Inflation pressures: Inflation is driving up repair costs and labour rates, which, in turn, push up premiums. These economic pressures also increase operating costs for insurers, who then pass them on to consumers.

• Location:Your location significantly impacts your premium. For example, Auckland residents pay among the highest premiums due to greater traffic densities, accident risks, and frequent extreme weather events.

• Electric vehicles (EVs): If you’ve switched to an EV, you may find insurance costs are higher. Due to advanced parts, EVs can be more expensive to repair, which affects premiums.

• Profitability needs: Insurers need to cover their costs and remain profitable to continue providing services. With rising claims, particularly from weather events and inflation-driven costs, insurers have adjusted premiums across the board to maintain profitability.

Pro Tip: Keeping your insurance in check

If you've stayed with the same insurance provider for a while, it might be time to review your policy. Many drivers find they can save by switching providers or adjusting their cover to better suit their current needs. Our guide on Ten Insurance Mistakes That Cost You Money shares tips to avoid common pitfalls that could be adding to your costs.

How are your car insurance premiums calculated?

Ever wondered what goes into calculating your car insurance premium? Insurance companies look at a few key things, so here’s a quick rundown on what really affects what you pay:

• Your car: The type and value of your vehicle make a big difference. High-value or newer models tend to cost more to insure, especially with all the advanced tech packed into today’s cars. If you’re eyeing a new model, it’s smart to compare insurance costs across popular models, like the Toyota Corolla or Ford Ranger, to see how your premium could vary​. Our blog on Comparing Insurance Costs for Top Cars explains how specific models affect premiums.

• Your driving history: Got a clean record? Nice one! Drivers with past accidents or claims are considered higher risk, so keeping a clear history can help you save on premiums. Just keep in mind that even if an accident wasn’t your fault, it might still bump up your rate​.

• Your age: Younger drivers, especially those under 25, generally pay more because they’re statistically more likely to have accidents. For example, drivers aged 18-24 typically pay higher rates for comprehensive cover. Some insurers even apply a higher excess for this age group​.

• How much you drive: The more you’re on the road, the more you’re likely to pay. That’s because high mileage means higher chances of an accident. But if you’re a lower-mileage driver, you could save some money here

• Extras: Add-ons like rental car cover or roadside assistance give you extra peace of mind but do come with an extra cost. Take a look at how often you’ll use these extras to decide if they’re worth keeping in your policy.

How can Quashed help you save on car insurance?

Car insurance can feel a bit like a puzzle, but with Quashed, there’s no need to guess what’s covered or how much it’ll cost. Instead of scrolling through countless insurer websites, just hop onto Quashed! You’ll be able to compare prices and features side by side, making it easy to find a policy that’s right for you without the hassle.

Quashed also lets you adjust key factors that affect your premium and shows the impact right away. Take charge of your costs easily with Quashed:

• Sum insured: This is the amount you choose to cover your car for, and it directly affects your premium. Lowering it can help you save, but keeping enough cover for peace of mind is always a good call.

• Excess: Want to reduce your monthly premium? Raising your excess (the amount you’d pay if you make a claim) is one of the easiest ways to lower costs. And with Quashed, you can adjust this setting and instantly see the savings!

• Type of cover: Whether you’re looking for comprehensive cover, third-party only, or third-party, fire, and theft, Quashed shows you what each option includes and how it impacts your premium. This way, you can pick the cover that feels right for you.

With Quashed, comparing policies is straightforward, so you can strike the right balance between cover and cost. Whether you’re after lower payments or extra protection for the long run, it’s your call.

Example: tweaking your excess with Quashed to save money

To illustrate how small adjustments impact your premium, here’s a specific example using a Toyota Aqua:

Source: Quashed, assumes a sum insured of $15,000, Auckland location.

In this example, raising your excess from $100 to $1,500 saves you $621 per year—giving you a clear idea of the savings just from a small adjustment. With Quashed, you’re in the driver’s seat to find a plan that fits you best.

Be the boss of your car insurance

Car insurance premiums might be rising, but you’re not without options. By staying informed, comparing your choices, and making small adjustments to your cover, you can better manage these costs.

Quashed simplifies this process, providing you with the tools to find cover that suits you best without breaking the bank. Explore your options with Quashed and take control of your premiums today.