The 'system error' that could have cost me $179
We all know it, that dreaded, sinking feeling when you realise it's almost time to renew your car insurance again. Somehow, even though it typically rolls round at the same time each year, it always seems a surprise and always comes when it feels like you're already hemorrhaging money.
This was my exact experience at the end of March. Somewhere in between forking out a small fortune on getting married and buying a new mattress to appease my new and very tired husband, the renewal notice from my insurer for my Compulsory Third Party (CTP) protection landed in the mailbox.
As someone who has always been good at saving, even maintaining a separate savings account for car-related expenses, the bill shock wasn't any less shocking. Having bought a new car early last year, the CTP had been arranged by the dealership and I really didn't know quite what to expect in terms of cost.
CTP legislation differs from state to state, meaning the need to shop around for this specific cover type is greater for some than others.
For example, states like Victoria and the ACT include CTP cover in car registrations with the government being the provider. In contrast, in New South Wales - my home state - there are six private insurers that consider a range of risk factors in pricing CTP premiums, like age, driving record and how much driving you do. Having a clean driving record and typically travelling no further than the train station every other day, I assumed in the realm of a few hundred dollars was likely for my MG ZST.
So, imagine my surprise when I opened the renewal notice and saw $529 quoted - close to half the total cost of my annual comprehensive cover.
A couple of weeks later, after picking my jaw up off the floor, I jumped on to a comparison site and ended up settling on a $320 policy with an alternative insurer. I gave myself a pat on the back for the $210 saved and put the difference in cost down to the dealership having not provided my full details when the policy was initially taken out.
However, a few days later, another letter came. Apparently, due to an unspecified "system error", the amount quoted on my renewal notice was higher than it should have been. The accurate amount was only $350.
In fact, according to the letter, the error had impacted numerous people - people who would now receive refunds.
The fact that they're receiving refunds is great, however, if they had shopped around, they might have gotten an even better deal - like me, who still paid $30 less.
According to a 2021 survey by Compare the Market, when it comes to insurance renewal notices, most Australians don't shop around. Of 966 motorists surveyed, 65% of those who could remember receiving their latest renewal notice simply accepted and paid the quote without question.
The same survey found that 20% of car insurance customers don't know how much they pay for their cover, while 73% have been with the same insurer for three years or more.
Finder analysis of the NSW government Green Slip Price Checker website shows that CTP for an Audi S3 manufactured in 2017 cost $642 on average in April 2023. Switching to NRMA, the cheapest provider, would save you $157 annually.
Don't get caught out paying a loyalty tax, Finder insurance expert James Martin warns.
"Never auto-renew is the key message here... Always take note of your renewal date and pop a reminder in your calendar for a month before; just because a deal is good one year, that doesn't mean it will be the next," he says.
Look out for deals, too. Martin says often insurers will offer up to 15% off for switching.
As with any insurance, accuracy is important, as you don't want to run the risk of being underinsured. While you might be tempted to fudge how many demerit points you have, it could cost you when it comes to claim time, Martin warns.
Finally, and more generally, in times like these where money is tight, you might be less inclined to fork out for your car. However, in some cases, you may end up sorry if you don't.
"Roadside assistance is really important and, while it's an optional cover, it only typically costs about $7 per month. It's one of those insurances that can actually save you because, in the event you do have an accident or breakdown, a tow truck is going to cost more than $84," Martin says.
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