How to lower car insurance premiums

How to lower your car insurance premium without losing cover

It’s no secret that car insurance costs have gone up, and fast. According to the Insurance Council of Australia, premiums have jumped 42% since 2019, driven by rising repair costs, expensive parts, and increasingly complex vehicles.

Still, that doesn’t mean you’re stuck overpaying. Whether you’re buying a new policy or reviewing a renewal notice that made you raise an eyebrow, there are practical ways to lower your car insurance premium, especially if you live in a high-cost area like Melbourne. At Sheen, we’ve helped countless drivers by liaising with their insurers after an accident. That first-hand experience has given us valuable insights into how car insurance works, and the small changes that can help bring your premiums down.

This guide will show you what insurers look at when setting your premium, how to adjust your policy without losing important protections, and what steps you can take today to pay less, without cutting corners.

9 ways to get cheaper car insurance in Melbourne

When it comes to reducing your car insurance premium, there's no single trick. It’s all about stacking the small wins. From tweaking your policy to changing how and where you use your car, each of the tips below can help you pay less without giving up the cover you actually need. Some of them are surprisingly simple, others just require a quick phone call or a few minutes online.

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1. Shop around and compare policies

Don’t assume your current insurer is offering you the best deal. Insurance companies regularly adjust pricing models, and loyalty doesn’t always pay. Get quotes from at least three different providers, including direct insurers and aggregators. Even if the differences seem small, they can add up to hundreds of dollars over the course of a year. Comparing car insurance options is one of the easiest ways to find your best policy.

Feeling stuck with your provider? Learn when to switch car insurance policies.

2. Review your current cover

Insurance policies aren’t “set and forget.” Take the time to re-read what’s included in your current policy, especially the extras. Are you paying for a hire car you wouldn’t use? Is your windscreen cover costing more than it’s saving? Trim any optional extras you no longer need or use. Even a few small removals can lead to a noticeably lower premium. It’s important to consider whether your cover still reflects your day-to-day needs.

Tip: Make sure your changes don’t leave you underinsured. Dropping extras should be based on risk, not just price.

3. Increase your excess

Raising your excess (the amount you’ll pay out of pocket in the event of a claim) can lower your overall premium. This is known as a trade-off: you pay less each year, but more if something goes wrong. Just make sure the higher excess is manageable if you need to make a claim unexpectedly. Saving $150 a year won’t help if you can’t afford repairs later. Choosing a higher excess can be a smart way to reduce your premiums without changing your level of cover.

Want to understand the trade-offs? Read our guide on how car insurance excess works.

4. Pay annually (if you can)

Many insurers charge additional fees for monthly instalments. If you’re able to pay for your policy in one go, you’ll often avoid admin costs and qualify for a better rate. It’s not always easy, but it can be one of the simplest ways to save, especially if you’re looking for cheaper coverage long-term. Your base premium will typically be lower if you pay up front.

5. Buy online

Most insurers offer an online discount for digital purchases, often between 5% and 10%. It’s their way of rewarding you for saving them admin time. Some providers even offer cashback deals or sign-up bonuses. Just double-check the policy before clicking 'buy' — cheaper doesn't always mean better. Buying insurance online is fast and convenient, and you may also get a discount you wouldn’t see elsewhere.

Keep an eye out for discount codes, bundles, or rewards programs.

6. Remove unlisted or occasional drivers

Drivers under 25 or with a history of claims or traffic offences can significantly increase your premium. If you have someone listed on your policy who no longer drives the car (like a grown child who’s bought their own car, a former partner, or a one-time borrower), it’s time to update your policy. Removing inactive or occasional drivers can reduce your risk profile and save you money.

7. Check your declared car use

Your insurer wants to know how often and how far you drive. If you’ve transitioned to working from home or stopped long commutes, let them know. Drivers who use their cars less frequently (often under 10,000km a year) are seen as lower risk, and that can lead to a lower premium. Reducing the number of kilometres you drive annually could lower your premium substantially.

Less time on the road = lower risk = lower premiums

8. Update your parking location

Your postcode and where your car is parked overnight play a big role in how your premium is calculated. If you've moved from a high-risk zone to a quieter suburb, or if you’ve gone from street parking to a locked garage, your policy needs to reflect that. These updates could lower your risk profile, and your higher premium along with it.

Also, make sure your policy reflects accurate use type: private, business, or both.

9. Keep your car secure

Insurers reward vehicles that are harder to steal or damage. Factory-installed immobilisers, alarms, and GPS tracking systems all work in your favour. Even simple things, like keeping your car garaged or parking in well-lit areas, show insurers you’re a lower risk, which can translate to lower costs when it’s time to insure or renew. Good driving habits and added security features may save you money across a range of general insurance products, including home insurance.

3 common myths about car insurance premiums

Let’s clear up a few persistent misconceptions that could be costing you more than you realise:

1. “Loyalty means better pricing.”

Not necessarily. While some insurers reward loyalty, many apply what's known as a ‘loyalty tax’, in which they increase your premium over time while offering discounts to new customers. You may be eligible for loyalty discounts, but they’re rarely as good as a new sign-up offer.

2. “You can’t change your policy mid-term.”

You absolutely can. You can update your drivers, usage, excess, or address at any time. Just give your insurance provider a call, and don’t wait until renewal if something changes.

3. “Comprehensive means everything is covered.”

Not quite. Comprehensive car insurance policies offer broad protection, but there are still exclusions. Always check your product disclosure statement to make sure you’re covered for what matters, especially if you need to make a claim after an at-fault incident.

Curious about what’s not included? Let’s talk about car insurance exclusions you might not know about.

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What’s worth keeping, and what can go

Here’s a quick framework to help you decide:

Consider keeping:

• Agreed value (for newer cars)
• Choice of repairer
• No-claim discount protection

Consider dropping:

• Hire car cover if you have a spare vehicle
• Windscreen cover if your windscreen is already replaced or rarely damaged
• Roadside assistance if it’s already bundled elsewhere (like your credit card)

Proceed with caution:

• Third party only: it’s cheaper, but won’t help if your own car is damaged. Third-party insurance is a basic level of cover, and another option could be third party fire and theft, if you’re insuring an older car.

Need help understanding what to keep? See our guide on what your car insurance covers.

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Feeling overwhelmed? Sheen can help!

We get it — insurance is complicated. From choosing a comprehensive cover or third-party option to understanding how optional extras and your excess amount affect your premium, it can feel like a lot. But we're here to help.

Whether you’re shopping around or reviewing your existing cover, our in-house insurance team can:

• Help you understand your policy and excess amount
• Talk you through what’s worth keeping
• Assist with car insurance claims, towing, and panel repairs

We work with many car insurance providers and see hundreds of policies every year. If you're not sure whether you're paying too much for car insurance in Melbourne, we’ll help you take a closer look.

Want peace of mind and a cheaper premium? Upload your smash, get a quote, and let’s get started.