Have you received your 4X4 vehicle insurance renewal yet? If you haven’t, you’re likely to be in for a shock as our resident not-so-grey nomad Marty Ledwich found out recently when his arrived. Unfortunately, the news isn’t good. Premiums are on the rise.
A couple of weeks ago, I was sitting in our new caravan, working on my laptop, looking for things to do during our visit to Canberra and thinking “how good is my life”. That was until my email pinged that I had received a notice for my car insurance renewal. Normally I would just flick this over to my wife who takes care of our finances and not give it a second thought but something inside me made me open it up and check it out. I had heard that premiums were on the rise. Crikey, that was an understatement.
The next words that came out of my mouth cannot be repeated here. Suffice to say I had a bit of a shock. The insurance premium on our 200 Series LandCruiser had risen by 30%. No, that isn’t a typo. A 30% increase or an additional $300 per annum! Given we had not had any claims or changes in circumstances in the last 12 months, I was keen to find out what had happened.
I called my insurer (who shall remain nameless) and asked to speak to a consultant about it. She confirmed it was no mistake and that our premium had indeed risen by the stated amount. When I asked her why all I got was the usual general reasons they probably give out to everyone. Your vehicle type may have been involved in more accidents this year. Claims and payouts may have risen in your area. Nothing really specific to my particular situation. And no amount of questioning was going to yield any better explanations. That’s the premium and you’re welcome to shop around for a better deal.
Thanks for nothing…
SO WHAT IS GOING ON?
Not content with what I had been told, I thought I would do a bit of asking around to find out if anyone else with a 200 Series LandCruiser had had a similar experience. I put a question on one of the LandCruiser Facebook groups and, as it turned out, I was not alone, and it wasn’t limited to my insurer. What was going on?
I contacted Kalen Ziflian, General Manager for Club 4X4 Insurance to see if he could offer any further explanation.
He said, “Insurance portfolios are constantly adjusting to changing conditions in the macro environment, but also specific to the portfolio itself. There has been a number of events that have happened over the last 12 months that have put pressure on insurance portfolios. Most notable was the 2021 flooding across Eastern Australia.”
There was more.
“When it comes to motor vehicles, we have also been hit hard by the effects of the pandemic that have plagued almost every market in the country.
The cost of parts has risen dramatically thanks to high demand and significant supply challenges not only for factory parts but the aftermarket industry, which also struggled with manufacturing and supplies both locally and abroad. Where the cost of managing claims goes up, so do many insurers’ premiums. These costs are exacerbated by the issues with labour caused by COVID lockdowns and illness”
All this was well and good but it didn’t quite explain why my particular premium had gone up so much. Here, things get a little closer to home and I can almost guarantee many other 4X4 owners will be in the same boat as I am.
As Kalen explained, “If you want to purchase a new vehicle, you’re in for a wait of 12 to 18 months. Most people can’t wait this long so they turn to the second-hand car market. Such is the demand, prices for second-hand cars have gone through the roof. This means the market value for certain vehicles has risen rather than fallen as we would normally see. In your case, as the owner of a 200 Series LandCruiser, you could almost sell your car for close to what you paid for it. This has an effect on total sums insured, payout figures have increased as a result and this is reflected in the renewal premiums.”
WHY SHOULD THESE AFFECT ME?
It all seemed a little unfair. My back pocket was taking a substantial hit due to forces beyond my control. But, as Kalen pointed out, I am not alone. Vehicle and property insurance premiums are rising across the board and customers will all see the effects at some point over the next 12 months. Everyone is going to have to pay for this in some way.
WHAT CAN I DO ABOUT IT?
While I wasn’t doubting anything Kalen was telling me, I was still a bit flummoxed how my premium had gone up so much. Fortunately, there is something I can do about it. In fact, we all can.
Now is probably as good a time as any to shop around and consider your options. It costs you nothing to see what other insurers are prepared to offer you as a new customer. But if you are reluctant to change insurers, and there are a number of reasons why you may not want to switch, you should have a discussion with your insurer to see if they can offer you a better deal.
You can ask them to reassess your situation. For instance, you may be able to store your car in a locked garage rather than leave it out in the street. You may be able to reduce the number of kilometres you use your vehicle every year. Or you may be able to choose a higher excess or remove options like windscreen cover. All these changes, and many more, can reduce your premium.
WHAT ARE THE CONSEQUENCES?
We should point out that some of these changes to your insurance policy don’t come without risk.
Having a car accident is a stressful and potentially expensive experience. Having a higher excess to pay at claim time is just another unwanted hit to the hip pocket right at a time when you probably don’t need it.
You also should be very concerned about making changes to your insurance circumstances that are not necessarily true. If your car is not garaged and you tell your insurer it is, you run the risk of having a claim denied and that is something no one wants to deal with.
WILL THIS BE THE SAME NEXT YEAR?
Having had all this explained to me and realising that we are all going to feel the pain of the last couple of years, got me thinking about the future and I don’t think the situation is likely to improve.
Considering that we are still in the midst of a global pandemic and with new variants of COVID-19 coming along almost every three months, who knows what the ongoing effects on the economy will be.
We are also waiting to see what effect the recent floods in Queensland and New South Wales will have on premiums moving forward.
Then we have the worsening situation in Eastern Europe. It has already had a profound effect on the cost of fuel in Australia and this has its own knock-on effect on other markets. Insurance companies will not be immune to this either.
I think we can expect insurance premiums to continue increasing well into the foreseeable future.
WHAT DID I END UP DOING?
Well, after talking to Kalen, I went back to my insurance company and had a good chat with them about my particular situation. While they were not able to find any opportunities to significantly lower my premium, they were keen to do whatever they could to keep me as a customer.
They offered me a further $100 discount off my premium. I guess that’s better than nothing.
Safe travels.
Club 4X4 is an Authorised Representative AR 1235616 of The Hollard Insurance Company Pty Ltd AFSL 241436, the product issuer.
