How is my car insurance premium calculated?

Find out how your RACQ car insurance premium is calculated. Learn the key factors that influence pricing and get informed on ways to lower your premium.
Man and woman in car smiling
Insurance costs are an ongoing part of car ownership. We want to make sure you understand the range of factors that affect how we calculate your premium.

Here are the main things to know about what goes into your car insurance pricing:

Part of your car insurance premiums is based on your unique driving story

When it comes to your car insurance application, you’ll notice we ask lots of questions. We’re trying to get the whole story – the who, what, why and how of your driving habits.

Who you are as a driver

Information like date of birth and gender paint a picture of what kind of driver you might be. These generalised demographics like the age of a driver can impact the premium. Depending on which categories apply to you, your risk may be higher or lower in the eyes of an insurer.

What kind of vehicle you drive

Your vehicle’s make, model and year of manufacture provide a wealth of information.

From these, we can determine the vehicle’s value and safety features. It will also give us a sense of what the likely repair costs might be at the time a claim is made. Older cars are usually considered less valuable. They may cost less to repair or replace than modern cars with new technology. Classic or collector models are often the exception to this rule. It’s widely known that the speed capabilities of sports cars can make them riskier to insure. Meanwhile, you might be surprised to learn that a vehicle’s popularity or scarcity can impact your car insurance price, too. Certain car makes cost more in general and require parts that are difficult to source. Other car features including manoeuvrability, safety features, blind spots, length and durability of the car body can affect the insurance price.

Why you are driving the car

Is your car going to be driven for private or business purposes? Different drivers have different needs. Drivers who use their cars for business may spend more time on the road. Whereas someone who uses their car occasionally and only for running nearby errands has different insurance needs.
How are you as a driver

Most of the information above is used to draw general conclusions about your driving habits. We know this doesn’t always tell the whole story. That’s why we also look at your driving history. Drivers who have a long-standing record of safe driving are less of a risk to cover. This is why drivers who have fewer accidents good drivers often enjoy discounts on their premiums.

Car Insurance costs are also influenced by external factors

The story told by your application is only one piece of the premium puzzle. External factors outside of your control (no matter how good a driver you are) will influence the premium you pay. If your circumstances have remained the same and you’ve noticed an increase in your premiums, these external factors are the likely culprits for your increased car insurance price:

  • Repair costs and supply chain issues. For example, with new technology the cost to repair windscreens has increased dramatically
  • An increase in reinsurance costs
  • Inflation

So, you can see the car insurance premium you pay is a blend of your personal risk factors and external risk factors. But as you know, your premium amount is not set in stone.

You have choices when it comes to car insurance policy inclusions

There are a few ways to lower your car insurance cost if you feel it is right for your situation. Two examples include choosing a higher excess or taking on fewer policy inclusions.

RACQ is always here to help with any questions you have about your cover and adjustments to your policy.

Get your car insurance quote
Request your personalised car insurance quote and choose your options today with RACQ.

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Things to note

The information in this article has been prepared for general information purposes only and is not intended as legal advice or specific advice to any particular person. Any advice contained in the document is general advice, not intended as legal advice or professional advice and does not take into account any person’s particular circumstances. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives and needs.

Insurance products (excluding Travel Insurance) are issued by RACQ Insurance Limited ABN 50 009 704 152 (RACQ). Conditions, limits and exclusions apply. This is general advice only and may not be right for you. This information does not take your personal objectives, circumstances or needs into account. Read the PDS and any applicable Supplementary PDS before making a purchase decision on this product. You can also access our Target Market Determinations on this website.