We all know that purchasing car insurance is a necessity especially if you use your car every day. But when you are currently budget-strapped, you might want to pay a lower premium on your car insurance renewal every year. (And please don't ever consider not purchasing one just because your car is old - it's dangerous and costly)! In this post we will give you tips on how to save money when purchasing or renewing your car insurance, so that you can put those extra funds toward something that counts, like paying off debt.

Before we move on to our top tips to save, please bear in mind the following before signing any insurance policy. It's important that you thoroughly read your policy documents, the insurance contract, and the product disclosure statement. If you don’t do your due diligence in reading the fine print, you might be in for a nasty surprise if the time ever comes to lodge a claim. Did you know that one in five car owners risk not getting the insurance they need, because they simply don't read the policy? Don’t get caught out - take time to read and understand what you are purchasing. Ask the insurer any questions you have about the policy. Just like when purchasing life insurance, you also need to ask questions about things you don't understand. Arming yourself with a good knowledge of the policy will put you in a better position to ask the right questions and get clarity on the grey areas of what the insurer does and does not cover. 

Tips on how to save money when purchasing or renewing a car insurance:

1. Limit Car Modifications

Modifications are any changes made to your car that were not made by the manufacturer. A lot of car owners want to modify their cars or customize it to their liking – for example, paint jobs are a common customisation. However, bear in mind that certain mods can increase your car insurance premium or reduce your coverage. If you absolutely must modify your vehicle, is best minimise changes to those things you need the most, like alarm systems and safety features. To be on the safe side, ask your insurer first before making any changes. To help you decide whether the mods you want are worth it, here are some examples that are penalised by insurers: 

• Custom paint work; 
• Roll bars or roll cages; 
• Racing harnesses; 
• Nitro or hydrogen fuel equipped engines; and
• Turbo or supercharged engines.

The good news is that there are many modifications which are generally allowed: 

• Alloy wheels; 
• Bicycle racks;
• Bull bars; 
• CD stackers; 
• Chrome exhaust systems; 
• Driving lights; 
• Leather seats; 
• Radio and stereo systems; 
• Reversing cameras; 
• Roof racks; 
• Tow bars; and
• Sunroofs.

To be on the safe side, ask your insurer first before making any changes.

2. Compare Prices

This is perhaps the number one thing consumers can do to save money on car insurance! Take time to check online by using a product comparison site such as Mozo.com.au <HYPERLINK> or call the insurers directly and them for quotes (4-5 quotes are good). Ask them about the features on offer as different insurers might have special features that can be useful, such as free roadside assistance or car hire. After getting the quotes, put them in a spreadsheet and compare them side by side so you can analyse them better. Shopping around for a deal on insurance should be done not only when you first purchase it, but also every year that your insurance is due renewal. Shockingly, half of the insurers admit that renewal premiums can actually be higher than first time policy coverage! Note: There are insurers who may give you a discount when you get quotes and purchase them online. The discounts may be good, but this doesn't mean it’s the best deal out there. Also be sure to research insurer reviews and ratings as well – this way you will be able to learn from other consumers about their experience after purchasing the product, and whether the product and service being offered actually meets expectations. 

3. Young Driver Declaration

Having someone under 25 years old on your policy can increase your insurance premium. You can get a good decrease in rates if you will declare that you don't have a young person to be covered. However <a href="https://www.canstar.com.au/car-insurance/car-insurance-under-25s/"> according to CANSTAR, if you need to declare a young person, you can get a better rate if you include them in your coverage, rather than taking out a separate insurance policy (which can be quite hefty). The reason why young drivers have higher insurance premiums is because according to the statistics, they are bound to be more accident-prone - especially males. The good news is, as they become older, premiums typically go down too.

4. Park Your Car in the Garage

There are insurance companies that charge less if you can show that your car is kept in a garage and not on the road. This will assure them that your car is not that likely to get stolen or damaged due to vandalism, flood or storm.

5. Reduce Your Mileage 

Mileage can affect your insurance costs. If you don't drive your car very often, you can get a lower premium because driving less minimizes the chance that you will be in a collision and need to make a claim. If you have other means of transportation (such as taking a bike, bus or train), take this option instead of driving every day to reduce your insurance costs, as well as your fuel bill!

6. Don’t Make Your Vehicle Too Attractive

Related to number one (above), making your car attractive invites thieves – which can make you pay more for insurance, too. If you can, buy a car that isn’t too fancy and don’t purchase attractive accessories like fashionable mags, mirrors or headlights. 

7. Take Advantage of Discounts

There are insurers who give rewards if you have a good driving record and haven’t been involved in any accident. There are also those who give discounts if you take advanced driving lessons. Ask your prospective insurer if they offer this kind of loyalty program and take advantage of it! 

That’s all for our top tips on how to save on car insurance! If you’re struggling financially to afford the basics, it could signal that you may be in financial trouble! If this is the case call Credit Counsellors on 1300 003 328 and book in for an obligation-free budget assessment to figure out what you can really afford, and find out some options for how to overcome unbearable debt.