Car Insurance Report 2020: How does pricing stack up in your state and are you paying too much?

Woman standing next to car, comparing car insurance on her phone.

Car insurance report quick facts:

  • Half of Australian motorists have reduced their driving due to COVID-19. 
  • Three out of five motorists believe their premium should be lower: despite this the majority of drivers are not asking for a discount. 
  • There are huge price variances in what insurance companies offer, with an average difference of $902 a year for comparable cover.
  • 44% of Victorian drivers are feeling a degree of financial strain paying for car insurance. 
  • 25% of Australians choose their provider based on brand, while 34% go by word of mouth.

Summary: Aussies want to hit the breaks on car costs

Given that Aussies have been driving less since Covid-19 started, most drivers believe car insurance should be cheaper. You’ve likely heard this opinion shared at the family dinner table and guess what, you’re not alone. 

New research by Mozo has found that the overwhelming majority of people (67%) think car insurance companies should be reducing premiums to reflect emptier roads. However, most drivers haven’t actually asked their provider for a discount, which may be due to a lack of research on prices. 

Indeed, our report shows that nearly half (47%) of car owners surveyed thought car insurance policies were comparable and failed to access any savings that might potentially be on offer. Additionally, one-in-three car owners failed to shop around for a better deal despite many believing their insurance was too expensive. 

Most notably, this report shows that drivers should be more discerning – that regardless of where they live, their age or gender, comparing quotes can help them avoid overpaying on car insurance premiums.

How to get the best value car insurance in 2020

Mozo’s data shows the key to getting a better deal on car insurance inevitably comes down to researching and comparing options. Once a driver is armed with this knowledge, they can use it as leverage to negotiate with their current insurance company or switch to a provider offering better value for money.

Many Australian’s – around 47% according to Mozo’s research – don’t feel car insurance policies differ from provider to provider, despite prices and policy offerings varying significantly across the market.

Graphic: 3 out of 5 motorists believe their premium should be lower.

Mozo’s analysis shows there are considerable savings to be had. By assessing more than 10,000 car insurance quote scenarios, Mozo has found the average annual premium difference between comparable policies is $902. 

The report also reveals the majority of Australians feel car insurance prices are too high right now and should be reduced to reflect the fewer hours drivers are spending on the road. Mozo director Kirsty Lamont is encouraging drivers to make the most out of the current circumstances and seek a discount.

“Motorists may have found themselves out of the driver’s seat, but this doesn’t mean they can’t take charge when it comes to their car insurance,” Lamont says. “While you may not have qualified for premium reductions in the past, it’s best to make your insurance provider aware of your situation to push down your premium.”

A great way to start researching car insurance options is with the Mozo Experts Choice Car Insurance Awards. Each year Mozo conducts a thorough investigation of policies to assess some of the best value and highest quality options available on the market. As a customer, you can make a more informed choice about comprehensive car insurance with the data our expert judges collect and analyse.

You’re never too old to save on car insurance 

Many car insurance providers will automatically charge a fee on top of your premium and excess if you’re under a certain age (commonly 21 or 25), or if you’ve only been driving for a limited number of years. This is because younger and more inexperienced drivers are seen as greater risks on the road. 

The golden car insurance pricing rule is the riskier you are as a driver - based on your demographic profile - the more you could potentially cost at claim time. Providers compensate for this by increasing your premium.

Graphic: Cost of comprehensive car insurance by age

In 2020, Mozo saw younger drivers aged under 21 hit with the largest premium – $1,608 per year compared to the national average of $952. Scroll through the age brackets below to see what drivers are paying across the age spectrum.

Female versus male pricing

We hate to generalise, but the data shows women are more likely to get a cheaper offer on their car insurance. This comes down to men being statistically riskier drivers – getting involved in more car accidents which are more costly and incurring more traffic infringement penalties. This means they could cost insurance companies more at claim time.

Mozo found on average men are quoted $89 more than women for their annual premiums.

Graphic showing average car insurance quotes for women vs men

Car colour

Like to stand out from the crowd? Well it turns out that if you would rather scoot around in a bright green car, as opposed to a sleek black one, then you could save on insurance costs.

According to Mozo's research a green car costs, on average, around $177.64 less to insure than a black car. That's an average of $892.76 compared to $1,070.40. There could be a number of reasons for this, including the fact that black cars are more likely to be stolen, that's according to a 2017 report from Car Safe.

Graphic showing the average quote based on car colour.

Location, location, location

Along with other considerations, where you live can impact how high or low your car insurance premium is. For example, a so-called high crime location will increase your premium.

To see how likely it is that your car could be stolen, insurance providers will take everything into account - from the crime rate in your area, to whether you tuck your car away in a garage at night.

While suburban locations will vary on price, one thing that doesn’t usually matter is which state or territory you live in. Of course, every state and territory in Australia has both urban and rural areas, so crime rates vary. We can work with averages however, and according to Mozo’s research, car insurance premiums in Victoria are the highest in the country.

Mozo’s findings show that Victorian drivers pay $229 more than the national average: that’s a hefty $1,181 compared to a national average of $952. This is the case despite three out of four Victorian residents driving less than they were this time last year.

70% haven’t asked for a discount

Despite growing dissatisfaction on premium price, Mozo also finds that 70% of drivers in Victoria have not reached out to their insurance provider for a discount.

Lamont therefore encourages Victorians who are driving less during the pandemic to ask for a lower premium.

“Victorian motorists should be in the driver’s seat at the moment when it comes to negotiating reduced premiums,” Lamont says. “While you may not have qualified for premium reductions in the past, now is the time to make your provider aware of your situation.”

44% of Victorians struggle to pay their premium

Mozo’s research reveals that 44% of Victorian drivers find their car insurance bill a financial strain, while one in 10 cannot afford their premium.

Graphic: 1 in 10 Victorian motorists unable to afford their car insurance

What’s the alternative? Well, despite these figures, hopping on a tram may also not be an option for many Victorians. Mozo finds that compared to the rest of Australia, Victorians are the most averse to taking public transport right now. In fact, over 30% of residents said they did not want to get on a train or bus for fear of catching Coronavirus.

Lamont says, “With so much pressure on household budgets, it’s unsurprising many Victorian motorists are looking to park their comprehensive car insurance. However, for those who want to maintain coverage, the good news is that the less time you spend on the road, the better the savings you could be banking.”

If you're looking to compare car insurance policies in a specific state or learn more about the car insurance requirements in your area, Mozo has the on car insurance details for:

Can car owners afford to stay loyal to their provider?

While a quarter of car owners told Mozo they thought their car insurance was too expensive, one in three failed to shop around for a better deal. 

So why aren’t Australians looking to switch? It’s largely based on how familiar people are with a brand, or what their family and friends recommend to them. Over a third of policy holders chose their insurance provider based on reviews from loved ones, while 25% simply stuck to a brand they recognised.

Issues around insurance affordability and driving less in response to Covid-19 are also a key concern right now, according to Lamont. 

“Many Australians are under a lot of financial strain right now, so a car collecting dust and a sky-high car insurance bill doesn’t make a lot of sense. Mozo’s report shows that 32% of motorists find their car insurance bill to be a financial strain, while a further 8% say they can no longer afford payments,” Lamont says.

One in five drivers are considering canceling their car insurance and another 25% have already cut their comprehensive cover.

Lamont suggests car insurance customers keep a keen eye on the market, even if they're currently getting some discounts.

“Insurance companies try to make car owners stay with them through loyalty and rewards programs. But if you want to drive home a better deal on your insurance you would be much better off comparing a range of policies and premiums, then switching to the best deal you can find.”

Tips for saving money

For anyone who is feeling the financial pinch right now, see Lamont’s surefire ways to reduce car insurance costs below.

Graphic: Tips to cut car insurance costs

“Whatever your situation there are options if you would ideally like to stay driving, but are finding it financially taxing,” Lamont says. “Pay-as-you-go car insurance could bring about major savings if you drive less than 7,000 kilometres per year.”

What is pay-as-you-drive car insurance?

Different providers will have slightly different versions of this, but the general idea is that the price is based on how often you actually drive. If you drive less, then it only follows that you are less likely to have an incident or accident.

To put it simply, pay-as-you-drive car insurance is usually a comprehensive car insurance plan with restrictions on how much you can drive in one year, or one insurance premium period. Companies that currently offer pay-as-you-drive or pay-per-kilometre plans include:

  • Huddle
  • Real Insurance
  • Woolworths
  • AAMI
  • Apia
  • Kogan Insurance
  • Australian Seniors

Speaking of how often you drive, you may have noticed that some car insurance providers are currently offering Covid-19 related discounts. Typically, these are for customers who are using their car less as a result of the pandemic. However, if yours hasn’t yet offered you money off, then you might want to consider asking for a discount.

Negotiating a decent discount 

When it comes to negotiating, knowledge is power. So get the facts first! 

Before contacting your provider you’ll want to have a look around and see if there are more competitive car insurance deals out there. 

When you’re ready, Lamont says to “List any factors that could bring down your premium and then call your insurance company to let them know you won’t be sticking around, if they can’t beat out the competition.

Finally, if they refuses to budge on price, then you might want to seriously think about switching. 

When researching for the Mozo Experts Choice Awards for Car Insurance, Mozo’s research team discovered that Budget Direct and NRMA were two car insurance companies that often had better value for money when it comes to policies.

Head to Mozo’s compare car insurance page for more options and to see what discounts are on offer right now.