Cheap car insurance

A digital illustration of a car being protected by a giant umbrella.

Australia is a country of drivers. We drive to work, we drive to the shops, we go on weekend road trips, and to go see our friends. Our cars are important to us, and plenty of people drive every single day. So, when something goes wrong with our cars (like getting in an accident) it can be a real pain in the bumper – not to mention expensive to fix. Hence why it’s useful, if not financially responsible, to have car insurance

Although, when you factor in the rego cost, licensing, servicing, as well as maintenance and cleaning (not to mention the price of fuel), adding on a car insurance policy is enough to make your wallet hitch the first ride out of here, far away from you and your spend-happy habits. 

So, naturally many of us look to getting cheap car insurance to cover our daily drives. While  cheap insurance may be easier on your wallet in the immediate term, you still want to ensure that you’re getting the coverage that best suits your needs as a driver. After all, cheaper policies don’t necessarily mean value for money car insurance. 

The first step in understanding the ins and outs of what makes some car insurance more affordable is taking a look at how car insurance costs are calculated in the first place.

How car insurance costs are calculated

Car insurance premiums (the fee you pay for coverage) are calculated by providers based on a risk profile. When getting a car insurance quote, you’ll be asked all sorts of questions which are used to build a general picture of who you are as a driver. We’ll cover the sorts of information car insurance providers are looking at in the next section. Ultimately, what the car insurance provider wants to determine is how likely you are to make a claim.

What makes car insurance cheap?

When it comes to trying to lower car insurance costs, there will be some factors that are flexible and some that aren’t really in your control. For example, you probably won’t be able to easily change where you live, but you might be able to choose how high or low your policy excess is.

Some of the factors that influence how cheap your car insurance is include:

  • Your driving history. When you apply for a car insurance policy, insurance providers will want to check your driving history. Someone with a clean driving record may benefit from a lower overall premium, while a driver with multiple infringements may be charged more, as an insurance provider will see them as more likely to make a claim.
  • Where you park your car at night. Another thing you probably won’t be able to change easily (unless you move home) is where you park your car at night. A car parked in a garage will usually be at lower theft risk, while a car parked on the street may be more likely to be stolen or damaged by another vehicle. 
  • Where you live. Again, unless you move to another neighbourhood, this probably isn’t something you can change easily. That said, your usual address is something an insurance provider will take into account when working out your premium. If you live in an area with a low crime rate, your overall insurance premium may be lower and vice versa.
  • Your car’s safety rating. Short of buying a new car, your car’s safety rating is something you won’t be able to change. If you have an older car the safety rating may be lower and the insurance company may take this into account.
  • Your age. Generally younger drivers with less experience will be seen as a higher risk on the roads, meaning they may be hit with a more expensive car insurance premium.

A few factors affecting your premium you might be able to change include:

  • The excess. Some insurance providers may allow you to choose how high or low your excess is. A higher excess will usually mean lower premiums. Although just beware that when it comes to claim time, a higher excess may also mean that you have to pay more out of your own pocket.
  • Who drives your car. One way to keep your insurance premium down is to restrict who drives your car. This could be restricting your car use to over 25s or even a select few people.
  • How safe you are on the road. While you can’t change your driving history, you can keep the road straight going forward. Safe driving is best for you, other drivers, and perhaps your car insurance premium.
  • How often you drive. If you are more of a weekend driver, you might be interested in opting for a ‘pay-as-you-drive’ insurance policy. A number of insurance providers now offer pay-as-you-drive car insurance for Australians who drive less than a certain number of kilometres per year.

How to find the cheapest car insurance quotes in Australia

Narrow down your search for cheap car insurance by checking out the winners of the 2021 Mozo Experts Choice Awards for Car Insurance. For the 2021 awards, our research team compared comprehensive car insurance policies for value by reviewing more than 10,000 quotes from 57 insurance providers. Our awards included Exceptional Value Car Insurance, Exceptional Value Young Driver Insurance and Exceptional Value Senior Driver Insurance.

The Mozo Experts Choice Awards have been going strong since 2014, so our research team has plenty of experience when it comes to analysing PDS documents and crunching numbers. Head to the 2021 Mozo Experts Choice Car Insurance Awards page for a full list of the winners and a link to the methodology report.

What type of car insurance is the cheapest in Australia?

After compulsory third party (CTP) insurance, third party car insurance may make for a more affordable option in the short term. Long term, however, you may find this type of car insurance to be limited with what it covers. More on that below…

What isn’t covered with cheap car insurance?

Third party car insurance is limited to covering damage you might cause to another vehicle or property, and is often capped at a set dollar limit. This means it won’t cover damage to your car as a result of an accident, or if your car gets stolen. If that’s something you’re looking for, consider a comprehensive car insurance policy instead. 

Depending on which policy you choose, this can cover damage to your own car and others, and could even cover the full cost of replacing your vehicle and others if they’re written off (depending on the age and mileage of your car). Just make sure you check the fine print in the product disclosure statement (PDS) before signing up so you know exactly what you’re paying for first.

And before considering either of these insurance routes, make sure you've at least organised your compulsory third party insurance (CTP). While costs and some details differ across state borders, this is the kind of car insurance you need to legally drive on Australian roads, and you'll have to take it out when you register your ride. It's there to cover the costs of injuries you might cause or experience while driving and, in the worst case scenario, death.

Is cheap car insurance the best for me?

Whether a cheap car insurance policy is the best for you will come down to your needs. Are you content with CTP insurance, or do you believe a cheap comprehensive car insurance policy may be more suitable? 

You’ll have to put a bit of thought into it, as with any financial decision, and work out whether a cheap insurance policy not only provides the level of cover you’re looking for, but if it’s suitable for your needs. For example:

  • If you live in a flood-prone area, does the policy include flood protection? 
  • Are you happy paying a higher excess when it comes time to claim if it means your premiums might be cheaper? 
  • Would you consider bundling a cheap car insurance policy with another insurance policy (e.g. home and contents insurance, or a multi-car insurance policy) to lower the cost of both policies?

In short, you want to find a balance between price and inclusions that you feel comfortable with.

How to lower the cost of my car insurance

This is a tough nut to crack, mainly because what you pay will depend on who you are and how you use your car. As so many factors affect insurance premium prices, no one car insurance policy will be the cheapest for everyone - or offer the best coverage. 

Securing affordable car insurance isn't necessarily about going for the bargain basement option. It's more about being aware of various car insurance traps. Knowing these sneaky car insurance facts will make you a more savvy shopper when it comes to researching and buying car insurance.

  • On street vs private parking. If you’re lucky enough to have access to one, then you'll want to start using your garage or off-street parking spot to protect your car and save big bucks. This is because insurance companies consider your car at a lower risk of theft or vandalism if it's parked securely on private property rather than on the street.
  • Late fees. Did you know you can be charged a ridiculous amount for not paying your premium on time? Worse still, your insurance could be cancelled altogether while you're still driving. To avoid unnecessary late fees or the cancellation of your policy, set up a direct debit to pay for your car insurance.
  • Excess vs premium. By agreeing to pay more on your excess you could save hundreds of dollars in the long run on your premium. Just keep in mind a higher excess generally means you'll have to fork out more cash at claim time before your coverage kicks in. Make sure you've done the calculations and have funds to call on should you need to in the event of an accident.
  • Shop around. This is probably the most obvious way to save dollars on your car insurance. You’ll be surprised how many car insurance customers purchase the first product they read about. Check out Mozo's car insurance comparison page to kick-start your research journey.
  • Insurance loyalty. If you are happy with your current car insurance provider, you could save cash simply by sticking with them. Many insurance companies offer loyalty discounts that rise alongside the years you hold an insurance policy with them.
  • Apply online. An average savings of 10% or more on your first year's premium is offered by some providers as an incentive to purchase car insurance online. It’s to reduce insurance company overhead costs while simplifying the application process. 
  • Drive safely. If you can prove you're a reliable driver who doesn't get into accidents or disobey road rules, many providers will offer a discount on your policy. A 'no-claims bonus' or 'safe driver discount' often increases with time if you maintain a clean claims history, and can be transferable between different insurance companies.
  • Multi-car insurance policies. Have more than one car within your household? The more policies connected to yours, the better your overall premium will be if your provider offers a multi-policy discount. Bear in mind, the family members’ vehicles under your car policy forfeit their opportunity to build their own personal credit rating and future no-claim bonus discounts.

Looking for more ways to save on car insurance? Read our detailed car insurance discounts guide.

Who has the cheapest car insurance?

Unfortunately, no one provider will have the cheapest car insurance policy for everybody. But low-risk customers will generally have access to lower prices, as the insurance providers reward safer driving. A provider will ask a series of questions about you and how you use your car during the quote process, which will give you an idea of how much your premium could be. But keep in mind, quotes aren’t always an indication of the final price of an insurance policy.

How can I get a cheap car insurance quote?

Getting a cheap car insurance quote is a matter of being low-risk and insurable. The lower the risk in the eyes of an insurance provider, the cheaper your quote may be.

Do car insurance costs differ by state?

The state you’re in can affect car-related costs, especially if you’re buying a car interstate

The reason the cost changes is because the states and territories have their own road rules and regulations. As such, the minimum amount of car insurance, CTP, is also slightly different in each part of Australia. This means that cheap car insurance in NSW could be a different price to cheap car insurance in WA.

What is the cheapest way to insure a car?

Some ways to save on your car insurance include:

  • Buying it online (if the provider offers an online discount)
  • Increasing your car insurance excess to make your premiums cheaper
  • Paying annually rather than monthly (signing up for a longer period of time can save you money)
  • Increasing the security of your car (where you park it, install security features) 
  • Driving responsibly  
  • Bundling your car insurance with another insurance policy from the same provider.
Why is some car insurance cheaper than others?

Some car insurance will be cheaper than others depending on a few factors. These can include what cover level is on offer, which insurance benefits are included or optional, how large an insurance provider is (economy of scale), and can also change in price depending on their risk-profile criteria.

Is cheap car insurance still good?

‘Cheap’ certainly carries its fair share of connotations, but so long as you think a car insurance policy provides you with enough coverage for your needs, at a price you’re comfortable paying, then a low cost insurance policy can be considered good. It’s all subjective, so you should look for value for money when comparing car insurance.

What if I can’t afford car insurance?

Compulsory third party insurance (CTP) is mandatory in all states and territories, so you will legally need to have purchased a CTP policy at the very least in order to drive. 

If you have a comprehensive car insurance policy, and you can’t afford to pay the excess for a claim, you may be able to organise a payment plan where you pay off the excess in instalments.

Will demerit points make my car insurance more expensive?

If you have a lot of demerit points to your name, your insurance premium may end up being more costly. This is because you’re viewed as higher-risk to an insurance provider, and therefore more likely to make a claim. The bread and butter of the insurance biz is NOT paying out claims, so they reward safer drivers because of that.

Does my age affect the cost of car insurance?

Your age does play a part in the cost of your car insurance premiums, so finding cheap car insurance for young drivers may be a little more difficult compared to what an older person may pay. 

So, if you’re looking for low cost insurance for young drivers under 25, then you’re unfortunately lumped-in with your cohort, who are generally considered riskier drivers and therefore more likely to file an insurance claim.

Will an accident increase my car insurance costs?

Some providers offer a no-claims discount if you’ve held a policy for a certain amount of time. The time frames, terms, and conditions will differ from provider to provider, but by being a safer driver, you can be rewarded with a cheaper insurance policy in some cases. 

So, if you do have an accident, then your provider may choose to increase the premium you pay. A one-off accident might not translate to an increase in your premium, but building up a history of accidents won’t look good on paper.

For more information, check out our car insurance guides, or start comparing car insurance quotes below.

Car insurance comparisons on Mozo - rates updated daily

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