How much does car insurance cost?
Our research says that the average cost for a comprehensive car insurance policy in 2019 is $75 a month.
Car insurance is hyper personalised, which is why the cost of car insurance varies so much. Car insurance calculators factor in your age, gender, where you live, where you park your car and myriad other things when coming up with your premium. And it doesn't stop there as the price of your car insurance can vary from insurer to insurer.
What is the average cost of car insurance in Australia?
We took the average of six car insurance brands and found that a relatively new car (2016) can cost around:
- $33 per month for just Third Party Property Damage Insurance
- $75 for Comprehensive Insurance
Note: The cost of car insurance depends largely on which company you're looking at and what your driving profile looks e.g. cost for insuring the exact same person driving the exact same car can differ by $100s.
What affects the cost of car insurance?
Why does your car insurance policy cost more than your mum’s but less than what your best friend pays? The cost of car insurance is impacted by lots of factors, all of which are taken into account when calculating your premium. These include:
Aside from compulsory third party (CTP) insurance, which is mandatory for all Australian drivers, there are three levels of car insurance cover to choose from: comprehensive, third party fire and theft, and third party property damage. The policy you choose will influence the cost of cover due to:
- Your level of cover. Comprehensive car insurance provides protection against an extensive range of risks, so it therefore costs a lot more to purchase than a third party policy.
- Market value or agreed value cover. Does your policy cover your car for its agreed value, which is an amount you and your insurer agree upon when you take out cover, or its current market value, which is determined when you make a claim? Market value cover is the cheaper option but it does come with its own drawbacks.
- Your excess amount. Most insurers allow you to adjust the excess payable when you claim in order to vary your premium – the higher your excess the less you pay for cover, and vice versa.
- Whether you add optional extras. When you buy car insurance, you may be given the choice of adding extra-cost options to your policy, for example roadside assistance or excess-free windscreen cover. Adding these extras to your policy will drive up your premium.
As part of the underwriting process, the insurer will assess a number of factors about you and every other driver listed on the policy. Areas they’ll examine include:
- Your age. Due to the fact that young drivers are statistically more likely to be involved in accidents and engage in risky behaviour on the road, car insurance for under 25s is significantly more expensive than it is for older drivers.
- Your gender. Men, particularly young males, are also more likely to engage in risky behaviour and are therefore more likely to need to make a claim. However, your age (if you’re an older driver) and marital status (if you’re married rather than single) can help reduce the impact of your gender on car insurance prices.
- Your driving experience. The insurer will consider how much experience you have behind the wheel when calculating the risk of providing cover, which is why car insurance for P-platers and L-platers costs more.
- Your claims history. Have you previously been involved in an at-fault accident or lodged a car insurance claim? If so, this will force your premium up.
- Your driving record. If you’ve got a lengthy list of speeding tickets and traffic infringements on your record, you can expect increased premiums.
- The number of drivers listed. Adding just one extra driver to your policy, even if they’re the safest driver in the world, will increase your premiums. This is due to the fact that more drivers covered on a policy means a greater chance that you will need to make a claim.
In the eyes of car insurance providers, not all cars were created equal. Some vehicles are more expensive to insure than others for several reasons, and insurers will consider the following factors when calculating your premium:
- The value of your car. It doesn’t take a rocket scientist to work out that a new $80,000 luxury vehicle will cost more to cover than a 10-year-old hatchback worth less than $10,000.
- How much it costs to repair. Does your car manufacturer have an extensive dealership and service network across Australia? If so, it will typically be easier and cheaper to get spare parts, which means cheaper repair costs and in turn, lower premiums. Vintage vehicles can be extremely expensive to repair, which is why you may need to have a specialist vintage car insurance policy if you own this type of vehicle.
- How powerful it is. As a general rule, more cylinders and more horsepower mean higher premiums. If you drive a high-powered or performance vehicle – souped-up Mitsubishi Lancers and Subaru WRXs are two models that spring to mind – insurers associate it with risky driving behaviour. Unfortunately, this association will be reflected in your premiums.
- Your car’s security system. Does your car have a sophisticated anti-theft system including an engine immobiliser? If so, this is seen as a powerful deterrent to thieves and can lower your premium.
- How safe your car is. The safer a car is for its drivers and passengers, the cheaper it is to insure. You can find the safest cars on the market by comparing official ANCAP safety ratings.
- How popular your car is with thieves. Some makes and models are much more likely to be stolen than others, simply because they’re in style or are easier to resell. A highly desirable car will often attract higher premiums.
There are still plenty of other variables that can have a bearing on how much car insurance costs, including:
- Your state or territory. Insurers will consider the car theft rates in your state or territory when determining the likelihood of you making a claim. The proportion of the population that drives will also be taken into account – the more drivers on the road, the greater the risk of an accident.
- Your suburb. Does your postcode have a high rate of car theft? Is your suburb prone to severe storms or flooding? If you live in a high-risk area, expect to pay more for cover.
- Where you keep your car. A car kept locked in a secure garage when not in use is much less likely to be stolen or damaged than one that is left parked on the street.
- Your driving habits. Do you clock up several-hundred kilometres in busy traffic every week, or is your car only driven for short trips to the shops outside peak periods? The more you drive, especially in busy traffic, the more car insurance will cost.
- Business use. If you use your car for business purposes, expect to pay more for cover than if your car is for private use only.
- Any discounts that apply. Insurers offer discounts for everything from buying cover online to being a long-term customer, so keep an eye out for any discounts that may help you save on cover.
How to reduce your car insurance premium
Looking to save money on the cost of car insurance? These three steps take you through the process from start to finish, from buying a car to renewing your subscription.
Stage 1: The Car
- Buy a popular model. The more popular your car is in Australia, the lower the prices you can expect. Cheap and popular cars make for cheaper car insurance.
- Avoid modifications. Australian insurers don't take kindly to car modifications – in fact, mods can increase the cost of cover or potentially reduce the level of cover the insurer is willing to offer. Check in advance how modifying your vehicle will affect your cover before you get the tools out and get to work.
- Try aftermarket security. Even if your car was missing important security features when you bought it, you can still install aftermarket systems. VIN etching, for example, is relatively cheap but can make a big difference. Remember that not all insurers will recognise all security systems, so check in advance.
Stage 2: Getting Insurance
- Shop online & compare. Put in the time and effort and you're sure to save money in the long run. Comparing online is usually cheaper and allows you to compare the features and cost of car insurance policies side-by-side.
- Choose the right level of cover. Know what cover you need. If you've got a banged-up old runabout, you probably only need basic cover such as a third party property policy.
- Match policy to use. Try finding a policy that suits your typical car use. For example, if you only drive six months a year, a pay as you drive policy may be the best option for you.
- Choose a higher excess. By adjusting your excess to a higher level, you can access cheaper car insurance premiums. Just make sure your excess is still affordable should you need to make a claim.
- Don't add options you don't need. Before adding any extra-cost options to your policy, have a long, hard think about whether or not you actually need them.
- Restrict drivers. Adding a young driver to your car insurance policy will substantially increase your premiums. However, if you can declare that no-one under the age of 25 will drive your car, many insurers will offer significant discounts.
Step 3: On the Road
- Don't make cheap claims. It might be cheaper to pay out of your own pocket for smaller expenses rather than claiming them on insurance. Maintaining a no-claims history, or a reputation as a safe driver, can make a substantial difference to your premium.
- Avoid infringements. It's easier said than done, but try to avoid running up a long record of traffic violations that will follow you around and keep bumping up your car insurance costs.
- Watch for extra charges. Some (but not all) insurers will charge more for cover if you pay your premiums by the month rather than as an annual lump sum.
- Review cover regularly. The final tip to remember is to regularly review your car insurance policy to check that it still matches your needs. Compare similar policies from a range of insurers and don't be afraid to switch car insurance providers if you find a better deal.
- Take advantage of discounts. Check with your insurer to see if there are any discounts available, such as:
- Online discounts if you buy a policy online
- Multi-vehicle discounts if you insure more than one car
- Multi-policy discounts if you also hold a different type of insurance policy with the same provider
- Seniors discounts for drivers over the age of 55
- Loyalty discounts for long-term customers
- Low-kilometre discounts for drivers who only use their vehicle occasionally
How much does car insurance cost for seniors?
Car insurance for older drivers is typically much more affordable than it is for drivers under the age of 25. In fact, perhaps the simplest way to lower your car insurance premiums is to grow older. Not only will premiums drop as you gain more experience on the road, but you can build up a reputation with insurers as a safe driver and take advantage of any no-claim bonuses available.
There are several ways that older Australians can reduce the cost of car insurance:
- Seniors discounts. Many insurers recognise your years of experience and good driving habits with discounted cover.
- Low-kilometre policies. If you’re driving less than you used to, for example if you’re no longer working full-time and commuting to work, you may be able to save money by choosing a low-mileage policy.
- Restrict drivers. No young drivers getting behind the wheel of your car? You can restrict cover to drivers over 25 or 30 years only, which can significantly reduce your premiums.
- No-claims discount. If you haven’t made any car insurance claims in recent years, you may qualify for your insurer’s maximum no-claims discount.
However, once you reach 70 years of age, you may find that your car insurance premiums start to increase again. This is due to the fact that people in your age group are more likely to suffer from issues and health problems that may affect their driving, including:
- Sudden medical issues
- Impaired vision or hearing
- Arthritis and other conditions limiting physical movement
- Poorer cognitive functioning
- Greater use of prescription medicines
With this in mind, it’s important to compare a range of policies and shop around for affordable cover. You can also check out our guide to seniors car insurance for more information.
How much is comprehensive car insurance?
As all the information above shows, the cost of your car insurance premium is at the mercy of an extensive range of factors. From your age and gender to the car you drive, how you drive it and even where you live, the list of factors insurers consider when calculating your premium is a long one.
What this means is that there’s no such thing as an "average" cost for comprehensive car insurance. This is why you may end up paying more (or less) for cover than your friends and family members, and it’s also why you should always shop around for the best value for money. By comparing quotes from a range of insurers
, you’ll get a much clearer idea of the cost of comprehensive insurance and how much you can expect to pay for the cover you need.
How much car insurance do I need?
By law, the only car insurance you need in Australia is CTP insurance. However, the benefits offered by other optional types of car insurance make it well worth considering.
To work out how much cover you need, ask yourself a few simple questions:
- Will I be able to afford the repair bills if I crash into an expensive luxury car?
- Is there a high risk of my car being stolen?
- How will I be able to go to work and get around if my car is stolen or destroyed?
For many Australians, having at least some level of third party property damage cover in place is a good idea, as it offers essential financial protection if you’re involved in an accident with another car. However, you may decide that fire and theft cover is important for your vehicle, or that the best way for you to stay safe on and off the road is to invest in the high-level protection of comprehensive cover.
Whichever option you choose, make sure to compare a wide range of car insurance policies to find the cover you need at an affordable price.
What's the right type of car insurance for you?
Comparison of the monthly cost of car insurance
|Third Party Property Damage||Comprehensive|
|$24.70||$83.75||Get Your Quote|
|$28.75||$76.30||Get Your Quote|
|$30.25||$91.25||Get Your Quote|
To determine this estimated cost, we sourced quotes using this profile:
- We averaged together the cost of a male and a female policy, both born on 1/1/1983
- 2016 Ford Falcon
- Comprehensive car insurance
- Lived in Sydney, NSW
- Drives 10,000 - 15,000 kilometres per year
- Adjusted excess to $600-$700 where possible
- Safe driver with no claims made in the past 3 years
- Quotes sourced on 20 November 2018
Your cost will differ depending on your circumstances. Some things that can affect the cost of your quote include your gender, the type of car you drive, the colour of the car, how long you have been driving, the amount of cover you need, plus more. Be sure to read the PDS to find cover that suits you.
If you're still wondering how much car insurance you need, ask yourself a few simple questions:
- How much will I be using the car?
- How valuable is my car?
- Will I be able to afford the repair bills if I crash into another car or property?
- Is there a high risk of my car being stolen?
- How much do I depend on my car?
Depending on your answers to these questions will determine which cover suits you best. Whichever option you choose, make sure to compare a wide range of car insurance policies to find the cover you need at an affordable price.
Ask an Expert