Car insurance is coverage provided by an insurer for damage to a motor vehicle and is required when the vehicle is financed with secured credit. Most car owners will have a comprehensive motor vehicle insurance policy. While required by lenders, policies also provide owners with ‘peace of mind’ that should their vehicle be involved in an accident or damaged, they won’t be up for massive repair bills. If the vehicle is written off, the insurance should cover the amount due of finance.
While avoiding those repair bills can be reassuring, avoiding ever increasing premiums may not be so easy. Many car owners may note that their annual premiums are significantly higher. If so, you are correct. ASIC recently released a report on motor vehicle insurance policies with findings that premiums increased 8% in 2024/25, and in the period 2019-2024 they rose 42%.
Policy holders may have found little if any information on why they face a sharp increase and how the premium is calculated. This was a key focus of ASIC’s review of the sector, and the Commission is taking insurers to task on providing details to customers.
We cover a number of topics around car insurance to assist car owners when their renewal notice arrives or when taking out a new policy.
ASIC Car Insurance Review
ASIC has released its report of a review of transparency of motor vehicle insurance policies, summarising the findings around how insurers disclose the details of the policy when a new policy is taken out and when an existing policy is due for renewal. While the review focused primarily on transparency, it also revealed figures on how policies have increased in recent years.
Premiums were the most complained about topic for complaints received by ASIC in the motor vehicle insurance area.
Key findings of the report included: insurers not including an explanation of the factors involved in calculating premiums or why the premium had changed from the year before; for policies available to be paid in instalments, it was not clearly shown that savings could be made by paying annually; and comparisons with the previous year with insured value and excess were not provided by five insurers.
The consumer survey revealed only 30% of policy holders made contact with the insurer to discuss the increase in their policy. Of those, 31% did receive a reduction in their premium. 67% of those surveyed decided to stay with the current insurer and 40% don’t proactively look for better deals.
These findings may motivate policy holders to take a closer look at the details when their renewal notice arrives and spend the time to seek answers and a better deal. The full reports may be read at the ASIC website (PDF).
Loans that Require Car Insurance
When a vehicle is financed with a secured loan, it must be fully insured. This is required by lenders that accept vehicles as collateral for the loan. Loans that require the vehicle to be insured are Secured Car Loans for private buyers and Lease, Chattel Mortgage and Commercial Hire Purchase for business buyers.
If financing an older vehicle with an unsecured loan, insurance is not required by lenders. It is up to the owner to decide if they want the vehicle covered. Compulsory Third Party insurance is required on all registered vehicles.
Car Insurance Policy Types
Motor vehicle insurance may be taken out with an Agreed Value policy or a Market Value policy. The key difference being the amount that the vehicle is insured for. This amount would be relevant should the vehicle be written off or stolen. Some loans and lenders only allow for one type of policy. Your Jade broker can provide you with details of the type of policy required by the lender when handling your car loan.
Specifics of what is included in cover can vary with insurers and with individual policies. As revealed by ASIC, all the details may not be abundantly clear. Vehicle owners should look at the detail as to what incidents and events, type of damage, driver profiles, locations and other matters affect the cover.
Some terminology can be confusing and at times controversial. For example, the difference between storm, flood and other natural disasters. The insurer’s definition may vary from your interpretation. With the increasing unpredictability of severe weather events in Australia, especially flash flooding from sudden storms, it may be worth checking the specifics of your policy to make sure the cover suits your location.
Hints for Securing Better Car Insurance
As the ASIC Review findings reveal, only 30% of policy holders contacted their insurer to discuss premium increases and 67% are not actively looking for a better policy. We know, it takes time and can be annoying, especially if you are ‘on hold’ for an extended period. But 31% of people who asked questions did get a better deal.
The motor vehicle insurance market is extensive and highly competitive. Instead of just auto-renewing, it may be worth scheduling some time to shop around and see if a better deal is available to you.
If you’re paying in monthly instalments, check if you save by paying annually. With costs of living pressures currently affecting many households, any savings may be worth considering a change in how you pay your car insurance.
Engaging an insurance broker to assist in finding the most suitable, affordable and the policy offering the best value, can be a benefit. Insurance brokers work in a similar way to finance brokers. While as finance brokers we find you the most suitable car loan, insurance brokers find you the most suitable policy. Saving you time and providing professional advice on policy details. For contacts on insurers and brokers, speak with your Jade Finance broker.
Financing Car Insurance Premiums
If your annual renewal notice has arrived and the premium payment is simply not affordable as a lump sum at the moment, we may have financing options. An Unsecured Personal Loan over a 1-year term may suit private car owners and Insurance Premium Funding is available for business fleet owners.
Connect with Jade Finance to discuss the car insurance requirements for your motor vehicle loan.
DISCLAIMER: NO LIABILITY IS ACCEPTED IF ERRORS OR MISREPRESENTATIONS ARE FOUND IN THIS ARTICLE. THE ARTICLE IS PREPARED AND PRESENTED FOR GENERAL INFORMATIVE PURPOSES AND IS NOT INTENDED TO BE THE SOLE SOURCE OF INFORMATION FOR MAKING FINANCIAL DECISIONS. THOSE REQUIRING GUIDANCE AND ADVICE SHOULD CONSULT A FINANCIAL ADVISOR.
