Have you ever wondered why others pay less for their Motor Vehicle Insurance than you do, even though you both drive similar cars? Or why your neighbour’s Home Insurance seems like a bargain compared to yours? 

As an insurance broker, our team at Tank Insurance often gets these questions. 

You may have thought that Insurance premiums are a bit of a mystery, but there’s actually a clear logic behind why they differ from person to person. 

Let’s break it down together!

What are Insurance Premiums, Anyway?

Simply put, your premium is the amount you pay for your insurance policy, usually monthly or yearly. 

It’s the price of having coverage for things such as your car, home or business. 

But why does this price vary so much? 

It all comes down to how insurers assess risk and as brokers, we’re here to help you look at those differences to find a policy that suits your needs and budget.

Key Factors that Influence Insurance Premiums

Insurers use a range of factors to calculate your premium, tailoring it to your unique situation. 

Here are some of the main reasons why premiums vary between people:

1. Your Personal Profile:
   
   Your age, gender and even marital status can play a role.
   
   For example:
   
   
   • Younger drivers often face higher Motor Vehicle insurance premiums because stats show they’re more likely to have accidents.
     
     Say, in South Australia alone, drivers aged 16 to 24 years old are involved in serious road crashes despite making up only 12% of the population, with 27% leading to fatalities and 30% experiencing serious injuries.
     
     
   • Similarly, older homeowners might pay less for Home Insurance if they’re seen as less likely to make claims.
     
     
2. Where You Live
   
   Your postcode matters…a lot.
   
   If you live in a Sydney suburb prone to storms or theft (e.g., some parts of Western Sydney), your insurance premiums might be higher.
   
   The Insurance Council of Australia (ICA) notes that areas with higher risks of natural disasters (think floods or bushfires) often see elevated premiums to cover potential claims, estimating that the losses suffered by Australian homeowners due to natural disasters reach about $4 billion every year.
   
   
3. What You’re Insuring
   
   The type and value of what you’re insuring can make a big difference.
   
   For instance:
   
   
   • A brand-new Tesla will cost more to insure than a second-hand Corolla because it’s pricier to repair or replace.
     
     
   • A house with premium fixtures or located in a high-value suburb will likely have a higher premium than a modest unit.
     
     
4. Your History and Habits
   
   Insurers love data and your past can shape your premium.
   
   
   • A clean driving record? There’s a higher chance you’ll pay less for Motor Vehicle Insurance.
     
     However, if you’ve had a few speeding tickets, expect a bump in costs.
     
     
   • For Home or Business Insurance, a history of frequent claims might signal higher risk, pushing your premium up.
     
     
5. Your Coverage Choices
   
   The level of coverage you choose directly affects your premium.
   
   Take a look at these:
   
   
   • Opting for a comprehensive insurance policy will cost more than third-party only.
     
     
   • Adding extras, including a flood cover for your home or a business interruption cover for your company, can increase premiums but provide more peace of mind.
     
     
6. Lifestyle and Occupation
   
   Your job and hobbies can sway your premium.
   
   A tradie who uses their ute for work might pay more to insure their vehicle than an office worker.
   
   Likewise, if you run a café in a central business district (CBD), your Business Insurance premium will reflect the higher risks of a busy, public-facing operation compared to a home-based consultancy.

Why Does This Matter to You?

Understanding these factors can help you make smarter decisions about your insurance. 

For example, parking your car in a garage rather than on the street can lower your Motor Vehicle Insurance premium by reducing the risk of theft. Or if you’re a business owner, bundling your Public Liability and Commercial Property Insurance might score you a better deal.

A Few Tips to Keep Your Premiums in Check

Want to keep your insurance costs down? 

Here are some practical steps you can take:

1. Shop Around with a Broker: Insurance brokers can access deals you might not find on your own.
   
   
2. Review Your Coverage Regularly: This has been said a lot of times, but it bears reiterating.
   
   After all, life changes, one way or another. You could be moving house or changing jobs. These things can affect your premiums.
   
   
3. Consider Higher Excesses: Agreeing to pay a bit more out-of-pocket can lower your premium.
   
   
4. Bundle Policies: Combining your policies with one insurer can often lead to discounts.

How We Can Help at Tank Insurance

As an insurance broker, we’re here to find the right insurance policy on your behalf, comparing options from multiple insurers to find coverage that fits your life or business. 

We take the time to understand your situation, whether you’re a young driver, a homeowner in a flood-prone area or a small business owner. 

Our goal is to help you balance cost and coverage, so you’re not paying for more than you need.

Here’s what we do to make the process easier:

• Explain the Fine Print: Our expert team at Tank can break down policy details in plain English, so you know exactly what you’re getting.
  
  
• Hunt for Value: As a broker, we can also compare policies to find competitive premiums without skimping on coverage.
  
  
• Tailor to You: Be it Motor Vehicle, Home or Business Insurance, we can match policies to your specific risks and needs.

Understand the Factors Affecting Your Premium

Insurance premiums vary because everyone’s situation is different.

Your location, lifestyle and what you’re insuring all shape the price you pay. 

By understanding these factors, you can make informed choices and potentially save. 

Here at Tank Insurance, we can assist you in choosing policies that match your needs without breaking the bank.

Reach out now to explore your options and don’t forget to check out our blog and Health Check eBook.

Let’s find a policy that works for you!