Switch insurers and avoid the ‘lazy tax’

Roughly three-quarters of general insurance policies (e.g. car and home) in Australia are renewed with the same company – without the policyholder approaching any other companies.1

Many of these annual policies renew automatically – the policyholder doesn’t have to do a thing.

However, according to consumer advocate Choice, insurance customers who renew their policies without shopping around are likely to be paying a ‘lazy tax’.2

“Most insurers offer better deals to new customers than existing ones,” Choice says. “In other words, insurance companies don’t reward loyalty.”

When to switch insurance companies

If you suspect your insurer has been taking your loyalty for granted and that your car and/or home insurance premiums are no longer competitive, it may pay to shop around.

When is the best time to consider switching insurers? You can switch at any time, however there are some obvious triggers.

One is a change in circumstances (e.g. you move house or add a driver to your policy) that requires you to modify your cover: Why not go further and see if you can find a better deal elsewhere?

Another potential trigger is your insurer’s annual renewal offer, which shows your new premium.

Tip:  If you decline the renewal offer and cancel your policy before it renews, you’ll avoid incurring any cancellation fee that would apply.

How to switch insurance companies

Switching to Budget Direct car and/or home and contents insurance from your current insurer is quick and easy:

1. Research

Compare different insurers’ products. To make it a fair comparison, compare products with the same or similar levels of protection.

As well as the included benefits, you may wish to consider the products’ optional extras, cover limits, and exclusions.

Insurance premiums are dependent on your personal circumstances, so you’ll need to answer a series of questions to get an accurate quote. 

You can get a quote online or over the phone directly from an insurer or by visiting a comparison website.

2. Buy

If you get a quote and buy a Budget Direct car, home, or contents insurance policy online, you’ll save 15%; if you buy a combined home and contents policy, you’ll save 30%.

You’ll also have the confidence of knowing you’re purchasing award-winning insurance that is highly rated by our car customers and home customers.

If you switch your comprehensive car insurance to Budget Direct, you can transfer your no-claim bonus or driver rating from your current insurer to us.

3. Contact

Once you’re covered by us (we’ll notify you in writing), contact your previous insurer to decline their renewal offer or cancel your other policy mid-term.

If you cancel mid-term, your previous insurer may refund the unused portion of your annual premium.

For example, if you cancelled your policy after nine months, you may be refunded the remaining three months’ worth of premium (unless you claimed on the policy, in which case you probably would not receive a pro rata refund).

However, your previous insurer may charge you an early cancellation fee.

Comparison websites

By simplifying complex insurance information and enabling you to compare like-for-like products in one place, comparison websites can help you make more informed purchasing decisions more easily.

You can find these websites – also known as ‘comparators’ or ‘aggregators’ – by typing ‘compare insurance australia’ into your internet browser.

Note that these websites compare only the products of those insurers they have commercial relationships with.

Few, if any, of these sites allow you to compare all insurance products; it’s therefore advisable to visit at least a couple of sites to compare products.

Transferring your no-claim bonus or driver rating

If you switch to Budget Direct car insurance, you can transfer your no-claim bonus (or no-claim discount, as we call it) or driver rating from your previous insurer to us.

All you need to do is provide proof, for example a renewal notice from your previous insurer that shows your no-claim bonus or rating.

We’ll then factor in the rating when we calculate your premium.

Staying vs switching

Here are some common reasons why people stay with their insurer – and our counter-claims.

‘My insurer gives me a big loyalty discount based on how many policies I have and how long I’ve been with them.’

‘Loyalty and multi-policy discounts of 50% or more can be seductive, but they can also distract you from the only figure that really matters: your annual premium.’

‘My insurer consistently accepts my claims and I feel like I owe them a debt of gratitude.’

‘If your claim is valid, your insurer must accept it – that’s why you pay them premiums! General insurers in Australia accept around 96 out of every 100 claims made.’3

‘I’m busy and can’t afford the time and hassle of comparing different insurers’ products.’

‘An hour or so spent comparing insurance products and switching could save you hundreds of dollars – not a bad return on your investment.’

‘I don’t want to switch insurers as my current one will charge me a cancellation fee.’

‘The amount you save on your premium by switching to another insurer can far outweigh your insurer’s cancellation fee.’

‘I’ve been with my insurer for years and have never had to claim.’

‘You should review your insurance regularly to ensure your benefits, sum insured, and excesses still suit your circumstances. You might find another insurer can offer you more tailored cover for less.’ 

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