Your guide to picking a policy, and tips and tricks to help you find the best value car insurance*
Finding the best car insurance* is not always about finding the lowest price. It’s about finding the right cover for your circumstances with the benefits you need, a reliable insurer and the best value for money.
This guide looks at how you can get the right car insurance from the right provider at the right price, and helps answer the question, “What is the best car insurance in Australia*?”.
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What kind of car insurance do I need?
The first step to finding the optimal car insurance policy is to work out what type of cover you need.
- Compulsory third party (CTP) insurance: This insurance, which covers injury or death on the road, is mandatory in Australia. In NSW and QLD you are able to choose your own provider, so finding the best CTP car insurance is as simple as getting quotes from the six CTP insurers in Australia.
- Third party property damage (TPPD) insurance: Another type of third party car insurance, TPPD covers property damage. This is generally the cheapest and most basic form of car insurance, which only covers damage to other vehicles and property.
- Third party fire and theft insurance: This is slightly more expensive and covers both damage to other vehicles and property as well as your own car in the event of fire and theft.
- Comprehensive car insurance: The highest priced but most extensive type of car insurance is called comprehensive car insurance. This includes all the benefits of the third party insurance mentioned above, as well as protection for your own car against a wide range of hazards, including fire, theft, floods, storms, vandalism and much more.
How much cover do I need?
Every driver needs third party insurance to cover their liability for damaging other people’s property. To work out whether third party insurance alone is enough, or if you need a comprehensive car insurance policy, try asking yourself the following questions:
- How old is your car? If it’s an old car and only worth a couple of thousand dollars, it’s most likely not worth paying for comprehensive insurance.
- How often do you drive it? The more you drive, the greater your risk of having an accident, so the more important comprehensive insurance becomes.
- Where do you park it? If you live in a high-crime area and you park your car on the street, you may want third party fire and theft insurance, and you might want to install car security for lower premiums.
- Are you a younger driver? If you are under 25, you will pay more for your insurance, so you may want to consider insuring through your parents or someone else.
- Has your car been modified? If you own a vintage car or you like to drive a modified car, you may want to look for a specialty insurer to avoid paying much higher premiums.
- Do you use it for business or private use only? If you’re a taxi driver, you’re going to pay more because you are at greater risk due to being on the road so much. Business drivers may want to look for a specialty insurer.
- How much excess can you afford to pay? Increasing your excess will lower your premiums, but you need to be careful that you don’t increase it too much, as you’ll need to come up with the money if you make a claim.
Can I cut costs without compromising cover?
Price is important, but price isn't everything. The key is to find the cover that you want first, and then try to reduce your premiums. There are a lot of ways to do this.
- Does the size of my car affect the cost of my insurance? Yes. Smaller and cheaper cars cost less to insure.
- Does nominating a driver affect my premium? Yes. Nominating drivers can both raise and lower your premiums depending on their age, driving record and car insurance claims history. Nominating safer drivers over the age of 25 will lower premiums, while nominating more drivers of any kind tends to lead to higher premiums.
- I don't let my kids drive the car, does that mean I can pay less for cover? Just like restricting the number of people driving your car can result in a decreased premiums, so too can restricting the age of the drivers. If your kids are under 25 it will cost a lot more to include them in your policy.
- I seldom use my car during the week, does that make a difference? If you don’t drive much, you may want to select a “Pay As You Drive” option.
- Is your car self-braking? If it is, you're in luck. Self-braking cars can reduce your annual premiums by as much as 10-15%.
- How does the excess affect how much I pay? Increasing your excess reduces your premiums because you are agreeing to pay more in the event that you make a claim.
- I've got an alarm, does that help? Yes, adding security to your vehicle such as an alarm will reduce your premiums, as does keeping it in a locked garage overnight rather than on the street.
- If I have multiple policies with one provider, shouldn't I be entitled to a discount? Yes. Packaging your insurance with one provider may result in you getting a multi-policy discount.
- I have never had an accident, can that help? Looking for a provider with a No Claims Bonus discount can help you save more. Some insurers will even recognise no claims bonuses held with other insurers so you can take this discount with you when switching car insurance.
- Should I choose market or agreed value if I want to save money? Insuring your car for market instead of agreed value saves you money on your premiums. However, if something does happen the benefit you receive is generally lower than if you had taken out an agreed value policy.
- My partner and I share a car; whose name should be on the insurance? There are a number of factors to consider, the biggest being driving history. If only one of you has a clean record, that person will probably pay less for cover than the other. If both of you have a clean driving history, insure it under a female name if possible, as females are statistically safer drivers and typically get lower premiums. According to the NSW Centre for Road Safety, women are consistently involved in fewer car accidents than men. In fact, men account for almost 80% of fatal crashes.
- I am thinking about getting a policy online, is that a good idea? Yes. Many insurers offer a discount if you buy your insurance online.
- My car is eco-friendly, does that impact my premiums? Some insurers will offer discounts for driving eco-friendly vehicles, which can be worth looking out for.
What features should I look for in a policy?
Most third party car insurance policies come with little in the way of expensive extras, making them easy to compare by price. However, if you decide on comprehensive cover there are a lot of additional options to consider. The best policy* for you should have all the extras you want, and nothing you don’t.
- Damage to your vehicle. Some comprehensive insurance policies let you choose which hazards you want to be protected against. Select the hazards that are more likely to happen, and try to exclude the ones that definitely won’t.
- Damage to other people’s property. This is the core of non-compulsory third party car insurance and typically offers up to $20 million worth of cover. It also comes with comprehensive insurance and you may be able to choose different limits for different prices.
- Roadside assistance. A lot of people are happy to pay more for this extra, but some people prefer not to. You must decide if the convenience is worth the cost.
- Choice of repairer. If you have a modified, classic, luxury or otherwise unique vehicle then this could be vital for you. More typically, however, it’s more a matter of convenience.
- Lifetime repair guarantee. Many people prefer to have repairs done by the insurance company and be guaranteed for life.
- Hire car after theft or damage. This is a common add-on recommended for people who are absolutely dependent on being able to drive and can’t rely on public transport as they wait for their car to be repaired or replaced.
- Cover for personal property. Some comprehensive policies offer limited cover for possessions store in the car, usually up to several thousands of dollars. If you normally park on the street with trade tools, electronics, jewellery or other valuables in your car then this can be a valuable. Always check personal property cover for exclusions and limits.
- Cover for baby capsules and child seats. If you don’t have children you should probably opt out of this extra.
- Change of vehicle cover. If you plan on changing cars in the near future, this is worth looking for as a way to reduce or eliminate extra fees down the line.
- Damage to your trailer or caravan. If you have a trailer or a caravan, this is recommended. As always, check the limits and exclusions to make sure you’re adequately covered.
- New-for-old replacement vehicle. If your car is written off before a certain number of years, your insurance company will replace it with a new one. If this appeals to you, look for the insurer who offers it for the most number of years (usually between one and three), but first work out whether it’s worth the cost.
- Towing and storage. If you use towing equipment and vehicle storage frequently it’s worth finding a policy to cover it.
- Recoding of remotes and locks after theft. Late model vehicles are tempting targets for thieves and they often have remote control electronic locks. Car manufacturers take advantage of this by charging substantial prices for the recoding of remotes and locks after theft, so you could save by getting a plan that covers it.
What are the best and worst cars to insure?
Some cars are cheaper to insure than others.
- Do you drive a sports car or a high performance vehicle? This is a red flag for insurers, as they (accurately) assume it will typically be driven faster than a standard car.
- How big is the engine? The more powerful the engine (ie, the higher the kilowatts) the more you'll pay for your car insurance.
- Do you drive a safe car? Find out by having a look at the ANCAP safety rating of your vehicle. Safer is cheaper.
- Are the parts for your car hard to come by? The more it costs to repair your car after an accident, the more risk it represents to an insurer.
- What kind of car is it? Some makes and models are statistically involved in more accidents than others. So even if you haven't been involved in an accident, the fact that you're driving that type of car means you're more of a risk and will get higher premiums.
- Do you know if your car is more likely to be stolen? Some types of cars are targeted more often by thieves because they’re easier to steal or strip for parts. These cars cost more to insure.
- Like to cruise around with the top down? It'll cost you. Soft tops are easier to break into and tend to need repairs at some point, so they represent a substantial risk to the insurer.
- Does your car take petrol or diesel? Diesels cost more to repair, so insurance is more expensive.
How to save money on car insurance
If something isn’t clearly spelled out in a policy, or you’re unsure about any of the details, you should call the insurance company and ask them about it. Ask them some of the following questions to see if you can get lower premiums.
- Will installing a car alarm or immobiliser reduce my premiums?
- Will you insure me if I have had a recent licence suspension or if my driving record is less than perfect?
- Will you insure me if I am under 25 with a poor driving record?
- What modifications can I make to my vehicle and how will they affect my premiums?
- Will you honour my existing No Claim Bonus if I switch to you?
- How long does it take you to pay out in the event of a claim?
- Where are your vehicle assessment centres located?
- Will you cover taxi fares or rental cars if my vehicle is unusable?
- Do I have to organise my own quotes?
What is the best car insurance* for those who don’t drive much?
If you’re a pensioner who doesn’t drive much anymore, or anyone else who only uses their car occasionally, Pay As You Drive is an option offered by some car insurers that rewards drivers with lower premiums if they travel less than the average 15,000 kilometres a year.
If you think you qualify for this cover, it could be a good way to reduce your premiums. If you aren’t sure or you think you might be on the cusp, then there are some ways to cut down on your driving time:
- Carpool several times a week
- Catch the train or bus to work
- Plan your errands for one trip per day instead of taking lots of little trips
- Take the most direct route, by distance, to your destination
What is the best car insurance* for younger drivers under 25?
If you’re a young driver (under 25), or a P-plater, it can be hard to find the best value car insurance. Due to inexperience, these groups are at higher risk of having accidents.
If you’re in this demographic you will be hit with higher costs, but there are still some things you can do to reduce your premiums. These include:
- Choosing a car that’s cheaper to insure. Remember that a more expensive car not only costs more straight off the bat, but will also cost more for as long as you use it. If you’re a young driver, it’s worth buying cheap.
- Taking a defensive driving course, such as the free one offered by AAMI
- Having a consistently safe driving record, which will gradually decrease your premiums over time
- Being a nominated driver on your parents’ insurance (although this will likely increase their premium)
- Increasing your excess to an amount that’s high but affordable
What is the best car insurance* after an accident?
If you’ve had an accident and made a claim, your premiums have likely increased. To keep this from getting out of hand in the future, here are some things to consider.
- Do you really have to make a claim? You might want to get quotes from mechanics before calling the insurance company. If it can be fixed for less than the excess you should not make a claim. Even if making a claim saves you money in the short term, it might be worth holding off to avoid raising premiums later on.
- You might have to adjust your coverage. If you’ve had an accident and your new premiums are breaking the bank, there are a few quick ways to potentially bump the price down. Raising your excess, reducing your limits or dropping extras can lower the price while letting you keep essential cover.
- Maximise discounts. Your safe driver no claims bonus is gone, but there are still plenty of other options. Look for Pay As You Drive options if you aren’t on the road much, multi-policy discounts from your other insurers, membership discounts or defensive driving and road safety training courses, which are recognised by insurance companies.
How does your insurer handle claims?
One important factor to look at is how well your insurer processes claims. Try to find out:
- How quickly they handle claims
- Whether their call centre is in Australia or overseas
- Whether they appoint a case manager or make you do all the legwork
- Their level of customer satisfaction
- Whether they guarantee their repairs
- Their overall friendliness and willingness to help.
While there’s no substitute for personal experience, talking to friends and family who have dealt with an insurer is also useful. Visiting online chat forums and the insurer’s own Facebook page can also provide an insight into how they interact with their customers and what people are saying about them in general.
Is your insurer reliable?
What makes a car insurance company reliable? The best indicator is if it’s there for you when you need it. A reliable insurer:
- Pays claims promptly rather than immediately looking for loopholes to avoid paying
- States all their terms and conditions clearly in their PDS (Product Disclosure Statement), without attempting to hide them in the fine print or couch them in legal jargon
- Is accessible 24/7, is located in Australia and has a branch and claims assessment centre near to you
- Does not penalise its customers for claims where they were found not at fault
Finding an insurer with all these qualities can mean paying a little more for cover, but paying more is sometimes the right choice.
Whether you want the best* value bare bones third party car insurance in Australia, or a reliable insurer that will provide a comprehensive package with great extras, it’s worth looking for discounts, considering all the options and comparing car insurance quotes from a range of different providers.
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.