Have you ever heard of the lazy tax? Well it turns out, unless you’re shopping around before renewing your car insurance policy, you’re probably paying it. Despite evidence that premiums go up every year, a new study shows that Australians are overwhelming loyal to their insurers. But is it loyalty or simply laziness costing us hundreds of dollars more each year?
Last month, comparethemarket.com.au published a survey that examined the purchasing habits of 1000 Australian adults who have comprehensive car insurance. It found that a massive 89 per cent of people renewed with the same insurer as the previous year. Additionally, 69 per cent have stuck with the same insurer for more than two years. This includes a huge 30 per cent who have been loyal for two-to-five years, 15 per cent for five-to-10 years, and 24 per cent who haven’t changed insurers for more than 10 years. The most loyal age group were over 55s, with 41 per cent of respondents staying with their car insurers for over 10 years.
Are they getting the best deal? According to the study, 81 per cent of people were aware that their car insurance premium goes up every year. Even if you get the best possible deal when you sign up, you may be paying more when you renew. Spokeswoman Abigail Koch from Comparethemarket.com.au notes, “If you’ve been with an insurer for two years plus, there is typically a better deal out there.”
So, what would it take for Australian motorists to switch policies? 42 per cent of those surveyed said it would take a jump of 10 per cent on their premiums. For 32 per cent of people, that figure is over 15 per cent. It seems like it would take a lot more than the average five per cent hike of last year for most people to make a change.
Given the high rate of depreciation on most cars, it’s worth seriously considering just how much you’re paying for insurance. As Ms Koch states, “You’ve got to question why you’re paying more each year when your car is worth less.”
Words by Isabelle Laker