Pandemic Premiums: Mozo’s COVID Car Insurance Report 2021

Quick facts and figures:

• The average price difference for car insurance in 2021 is $303 a year for comparable cover.

• 1 in 3 drivers have always been with the same car insurance company.

• The costs of car insurance has been contentious during the COVID-19 pandemic.

• 12% of people reported that they can’t afford their comprehensive insurance payments.

• Around half of Australians are driving less than they did six months ago.

• Residents in parts of Melbourne and Sydney pay more for their car insurance on average than the rest of the country.

• A growing number of insurance providers are offering pay-as-you-drive car insurance.

Introduction: Driven car owners best placed to save

When it comes to the day-to-day habits that have been impacted by the pandemic, one of the major ones is driving. In fact, new Mozo research has revealed that nearly half of Australian motorists have been spending less time driving than they did six months ago - a figure that rises in regions which have been subject to lockdowns.

But as restrictions continue to lift, more Australians are starting to dust off the cobwebs on their side mirrors and checking their tyre pressure before getting behind the wheel again in order to commute to work, visit friends and hit the road on trips away. 

Many will also be checking in on their car insurance. As they should, because it turns out that whether out of a sense of loyalty or a lack of awareness of other options on the market,     some car owners are paying more than they need to for their comprehensive car insurance.

So how much are people paying? How can drivers reduce the cost of their insurance? And what are the options available to Australians who want to continue to drive less in the future?

Those are just some of the questions we’ll be addressing in the 2021 Pandemic Premiums: COVID Car Insurance Report 2021 which utilises nationally representative research* commissioned by Mozo as well as data from our recently announced 2021 Mozo Experts Choice Car Insurance Awards.

How much are Australian drivers paying for car insurance?

As most drivers know, there are different types of car insurance available in Australia, but in this report we’ll be focusing on comprehensive car insurance. After all, of those with insurance, 81% have a comprehensive insurance policy. If there’s one take away from our research, it’s that there’s a big difference between what drivers are forking out for their comprehensive insurance.

When asked how much they were paying, 26% of survey respondents who held comprehensive car insurance reported that their annual premium ranged from $500 - $750, which is on the lower side. At the other end of the spectrum, 11% of respondents revealed that they were paying over $1,750 a year.

A significant number of Australians are struggling with their respective insurance costs. According to our research, 34% of people said that meeting their car insurance payments put a strain on their finances, while 12% said that they simply couldn’t afford their comprehensive insurance payments right now.

The kicker? Many drivers are likely paying more than they need to.

As part of an assessment of quote data from 35 car insurance providers across 9,503 customer scenarios used as part of our 2021 Mozo Experts Choice Car Insurance Awards, it was found that there was an average premium difference of $303 a year between quotes for comparable cover.

The cost of loyalty and lethargy

So why would drivers pay $303 a year extra just to get the same cover?

The simple fact is that a large chunk of drivers won’t be aware that they’re paying more than they need to be because they don’t take the time to shop around and compare quotes from different car insurance providers.

While an encouraging 25% of respondents to our survey said they reviewed their comprehensive car insurance every year, one-in-three (34%) admitted that they have always been with the same insurance provider.

“If you’re struggling with the cost of your car insurance and you haven’t compared policies in the past 12 months, or spoken to your provider about a discount for driving less, you could be missing out on significant savings,” says Mozo Spokesperson, Tom Godfrey.

“Loyalty can also prove costly when it comes to car insurance, so a good option can be to get in the habit of comparing policies each year to help ensure you’re getting the best deal possible.”

Additionally, many seem to only be doing a surface level of research. Around a quarter (24%) of motorists choose their provider based on a recommendation from family or friends and 23% just rely on brand recognition.

Key factors that impact the cost of car insurance

There are a multitude of factors that go into determining the cost of a comprehensive car insurance policy, which go some way to explaining why the range of premiums people pay are quite broad. These factors can be important for drivers to appreciate, because while some of them are unavoidable, others are not. At the end of the day, it’s all about risk. 

“To help ensure your premium isn’t overheating during the pandemic, it pays to compare quotes and understand the various things that can impact the cost of cover such as where you live, how far you drive, your gender, age and car colour,” Godfrey says.

Let’s start with you, the driver. Did you know that your gender and age can influence the price you pay for comprehensive insurance? According to our research, women are more likely to receive a cheaper insurance quote than men, with women paying $973.02 on average compared to an average of $1,055.87 for men.

There are similar differences for age, with younger drivers generally considered riskier and more expensive to insure. For instance, drivers under 25 pay an average price of $1,448.83 for their insurance while those aged between 55 to 64 pay $791.31 on average.

Your location is also a big factor. As our interactive map above shows, people who live in particular parts of New South Wales and Victoria (notably the metro parts of Sydney and Melbourne), as well as the Northern Territory, are paying higher average premiums than those in Tasmania and Western Australia.

Finally, let’s talk about your car, because the model, make and even the colour of your vehicle can greatly impact the price of your comprehensive car insurance.

Our analysis found that in order to insure a Peugeot, for example, drivers would be looking at an average premium of $854.27 - one of the cheaper makes of car to insure. However, at the higher end of the spectrum, it costs $1,917.96 on average to insure a Tesla.

Colour can also make a small difference when it comes to cost. Interestingly, our research found that blue cars ($993.72) were the cheapest to insure on average, while black cars ($1,072.64) were the most expensive.

Driving drop: pandemic necessity or new normal?

As we said at the outset, Australia’s driving habits have changed over the course of the pandemic. It’s a phenomenon we explored in our 2020 Car Insurance Report, but as a result of recent lockdowns in the east coast states, it’s become more apparent once again.

According to our survey results around half (46%) of motorists in Australia are driving less than they did six months ago, while 39% are doing about the same amount and 15% are driving more. Unsurprisingly, motorists in the ACT (67%), NSW (62%) and Victoria (58%) have been even more likely to have reduced their time on the road. 

So with many people hitting the roads less, should car insurance premiums come down too? That’s the sentiment shared by the vast majority of our survey respondents - 81% of whom believe their premiums should be reduced for driving less. Despite that, almost two thirds (64%) of comprehensive insurance holders haven’t contacted their provider to ask for a discount.

“A quick call to your insurance provider to let them know you’ve reduced the distance you’re driving might be all it takes to cut the cost of your premium,” says Godfrey.

The rise of pay-as-you-drive insurance

What will be interesting to see is whether these new habits remain. Will some drivers keep up their pandemic driving habits in the future? And will we see interest in flexible insurance policies continue to rise if more drivers are spending less time on the road?

The attraction of flexible comprehensive insurance policies (often called pay-as-you-drive insurance) is simple. The less you drive, the less likely you are to be involved in an accident and, therefore, the less your insurance provider will charge in the way of premiums.

Typically these policies allow drivers to elect a set number of kilometers they’re likely to drive each year (or over the premium period) and there are a growing number of Australian car insurance providers offering them, including:

• AAMI

• Apia

• Australian Seniors

• Huddle

• Kogan Insurance

• Real Insurance

• Woolworths

If you're interested in learning more about it, including the pros and cons involved, check out our dedicated pay-as-you-drive car insurance guide for a more thorough run through. 

Tips to cut your car insurance costs 

Given the number of car owners who take out comprehensive car insurance, it’s clearly a type of cover that many people see value in. But that doesn’t mean drivers should be paying more than they need to. So with that in mind, here are some strategies you might be able to employ to cut down your costs: 

• Ask for a discount: If you’ve been driving less or you’re simply not happy with the premium you’re paying, ask your insurance provider for a discount. As Tom Godfrey says, it can be as simple as picking up the phone. If you’re not happy with what you’re offered though, don’t be afraid to start looking for a new provider.

• Opt for a pay-as-you-drive policy: Driving a lot less than you used to, or only using your car for short trips? You may be able to reduce the amount you’re paying by switching to a car insurance policy that offers a pay-as-you-drive feature.

• Make smart changes: As we outlined above there are a number of factors that affect your premium, some of which you can change yourself. For example, you may be able to reduce your premium by parking in a secure garage rather than on the street, or by restricting the number of drivers on your policy.

• Shop around: Last but not least, don’t forget to regularly shop around and compare quotes from multiple providers to see if you can find yourself a better or cheaper deal. The Mozo car insurance comparison tool is a great place to start, as are our 2021 Mozo Experts Choice Car Insurance Awards which highlight some of the best value and best quality car insurance providers in Australia.

*Mozo commissioned a nationally representative survey of 1,147 motorists which was conducted by Researchify in September 2021. For more information on the 2021 Mozo Experts Choice Car Insurance Awards, including a copy of the methodology report and the full list of winners, visit our awards landing page.