Car insurance in 2018: the ultimate buyer's guide to what it costs, what to look for and how to save

Update: If you're after a current assessment of car insurance prices and trends in Australia, check out Mozo's 2020 Car Insurance Report.

Here at Mozo, we recently held our Experts Choice Car Insurance Awards, to reveal the Best Value and Best Quality car insurance policies out there on the market today. Our data crunchers sifted through tonnes of information, including 63 products from 54 insurers, 10,010 different insurance scenarios, and a national survey of 3,726 insurance customers.

“These awards and the research that came with them allowed our experts to take a good hard look at what affects the cost of car insurance and from there, how Aussies could go about finding the best deal for their needs,” said Mozo Director Kirsty Lamont.

Now, we’ve collected all that information into one handy guide. Check out what we learnt and how it can help you snag a better price on your comprehensive car insurance premium below.

Key points

• Aussies pay an average of $1,027 per year for car insurance
• Factors like age, gender and where you live heavily affect the cost of your car insurance
• The average difference between the most expensive and the cheapest insurance plan across Australia is $1,087 per year

First things first, just what are Aussies paying for their car insurance? Tasmanians pay the least for their policies, paying an average of $811 per year, while at the other end of the scale, drivers in Victoria fork over an average $1,345.

Overall Aussies pay a national average of $1,027 to insure their wheels.

Average annual car insurance quote by state

Splurging vs saving on your policy: finding the comprehensive sweet spot

Mozo crunched the numbers on the difference between the most expensive car insurance policy available in each state and the cheapest one, and found that the differences ranged from a $741 difference in Tasmania, to a whopping $1,875 in the Northern Territory.

“There’s a huge difference between the price of policies in most states, and what this means is that if you aren’t careful about which policy you pick, there’s a good chance you could be either paying too much, or not getting the quality of cover you really need,” says Lamont.

The most expensive vs the cheapest plan: what’s the difference?

Some drivers will be able to switch to a cheaper policy and save a tonne of cash, but while there’s some wiggle room when choosing a policy, where you fall on the spectrum between the highest and lowest price tag will depend on your personal circumstances and what you want to get out of your comprehensive car insurance.

When it comes to comprehensive cover, what works for one driver might not work for another. For example, you might not get the same quote or be able to save the same amount by switching as your neighbour because you drive different cars, or because you have a different driving history.

Plus, your neighbour might opt for a cheaper policy but forgo some element of cover you would rather keep.

Case study: Amanda chooses a comprehensive car insurance policy

Amanda needs a car insurance policy to cover her new wheels. She compares car insurance and finds the cheapest policy is $732 a year. This option really only ticks off the basics - cover for the windscreen and “reasonable costs” in an emergency are included, and nearly everything else is listed as an optional extra.

She then looks at a policy that covers more or less anything she can think of - from windscreen cover, right through to a hire car for after an accident and cover for baby seats. This policy has a price tag of $1,495.

Neither of them are quite right - the budget option doesn’t offer her the kind of cover she wants, and the top end policy is a bit outside her price range at the moment, and a bit of overkill (she doesn’t even have a baby!)

Instead, Amanda opts for a mid-range policy with a $1,230 price tag, which includes the key benefits she thinks she needs - windscreen cover, a generous allowance for emergency towing, accommodation and repairs, plus some cover for her personal property.

There are a heap of factors that go into determining how much you’ll pay for car insurance, including the kind of car you drive, your driving history, what area you live in, whether you park in a garage or on the street and even the colour of your car. The general rule of thumb - as with any kind of insurance - is that the riskier you are to insure, the more you’ll need to pay for cover.

We drilled down into some key factors that affect your premium, to get a closer look at who’s paying what and why.

How age affects your insurance quote

It’s no secret that generally speaking, the younger you are, the more expensive your comprehensive car insurance will wind up being.

“Young drivers don’t have as much experience behind the wheel as their older counterparts, and that shows in the price tag for protecting their vehicles,” says Lamont.

Cost of comprehensive car insurance by age

Although drivers aged 20 and under generally pay higher premiums to insure their ride, there’s also a $3,402 gap between the most and least expensive policies available. For older drivers, there’s less of a difference.

Difference between highest and lowest quotes: age differences

Not only do young drivers pay more on their comprehensive car insurance premiums, but some insurers also hit them with young driver excesses. Additional excesses for drivers under 25 range from $400 to $1,200 depending on the policy and insurer - a massive potential cost if you need to make a claim!

Not only do drivers in younger age brackets pay these extra charges, but drivers in the 25-29 range might also find themselves being charged higher excess if they have less than 2 years experience on the road.

Gender and the cost of car insurance

The battle of the sexes is alive and well when it comes to getting behind the wheel, it seems. Our research showed that on average, men pay $107 more than women on their car insurance.

On the surface, this might suggest that insurers are factoring an extra degree of risk into their quote when insuring a male driver, but this discrepancy is not as cut and dried as it may seem. You need to remember that there are other factors coming into play here, like the type of car or driving history.

“In reality, this might just reflect the fact that men are more likely to drive certain types of cars, or that more women park in a garage,” she says.

Car insurance and your car loan

Here’s something you may not have considered before: does how you pay for your car affect the price tag on insuring it?

According to our research, it does. Insurance is cheapest when you don’t have a car loan, at an average cost of $881. On the other hand, if you buy your car using a secured car loan, you’ll pay an average of $270 more while an unsecured loan bumps the average insurance premium up by $276.

Because of this extra cost on your insurance, it's important to make sure you find the cheapest car loan around to keep costs down as much as possible.

For example, according to our car loan repayment calculator, picking a $30,000 car loan with a low rate of 6.82%, instead of the average big bank secured rate of 8.11%, you could save $1,103 over a five year loan - making up for the extra cost of insuring a financed car.

Whether your car is just a way to get from A to B, or it's your pride and joy, there’s an insurance policy to suit your needs.

But how do you find the right fit? When our experts were comparing car insurance policies for our Experts Choice Awards, they found that there were two very distinct sorts of drivers out there: those who wanted to be sure they were fully covered, and those that just wanted the lowest price tag available.

Below is a quick breakdown of some of the main things to look for in a policy designed to give more bang for your buck, and in one that has quality of cover as the main priority.

Budget friendly essentials vs top notch cover

Want a more detailed description of what to look for? Here you go:

Budget friendly essentials car insurance

Sometimes, all you need is the basics. If you’ve bought an inexpensive second-hand car, don’t drive that often or don’t rely mainly on your car for things like getting to work or taking the kids to school, chances are you just need to be covered for the basics, and aren’t interested in paying for all the bells and whistles.

If this sounds like you, look out for:

Money-saving features

A low premium is obviously the first step to getting the cheapest car insurance around. But there are a couple of other important features of a car insurance policy that might save you some dollars. One thing to consider is your excess. A policy that gives you a range of excess options can help to lower your upfront premium. The option to pay monthly premiums at no extra cost won’t necessarily save you money, but it will help you to spread the cost out so you can better fit it into your budget.

Another is some hefty discounts that apply to your situation. Look out for regular discounts like no claims discounts, seniors discounts and loyalty discounts for starters, but remember you can also reduce your premium by restricting the number or age of drivers insured under your policy, or putting a cap on the amount of kms driven you’ll be insured for.

Key cover areas

Even if you’re only interested in the most affordable policy available, it’s still important that it includes some key benefits - or else what’s the point of paying for it at all? It’s worth taking the time to sit down and decide which benefits are important to you - that way, you can find a policy that covers those things, but doesn't charge you for cover you don’t need. Also, remember to look at the optional extras available with cheaper policies, as it may be better for you to add-on cover for what you really need, rather than opt for a higher priced policy.

You might like to start by looking for policies that offer a 24/7 claims phone line so you can get your claim sorted out as soon as possible and good windscreen cover, since the windscreen is your first defence when cruising in your car - and perhaps the most likely thing to be damaged.

Top notch car insurance cover

On the other hand, for some people, a car is serious business. If you’re cruising around in a Jag, or generally spent a hefty amount on your wheels, then it might be worth looking into getting a higher level of cover, even if it means paying a bit more.

Another reason you might opt for quality over frugality when it comes to car insurance is if you rely on your vehicle for work. In this case, you want a policy that will replace your car as soon as possible, so life can go on as normal.

Comprehensive benefits

Our experts identified a number of features that drivers looking for top quality cover might like to search for, including roadside assistance and cover for a hire car after an accident, so you don’t have to worry about how you’ll get to work, your kids’ school or the grocery store while your car is being fixed. When it comes to windscreen cover, a top dollar policy should give you the option to remove the excess on windscreen claims for an extra premium.

Another thing you’ll want to keep an eye on is the level of cover in an emergency. Will your insurance pay for emergency accommodation or towing? What about emergency repairs? And finally, if you put a lot of effort into the upkeep and maintenance of your wheels, you may want a policy that ensures you can have your choice of repairers and ensures you’ll get genuine manufacturer parts, so you can visit your preferred mechanic and get the repairs you need.

Customer experience

If you’re paying a higher premium for your car insurance, then you want to be sure that if you have to make a claim, it will be handled responsibly and quickly, and that there won’t be any nasty surprises waiting for you. And what better way to find out whether an insurance policy is good quality than getting it straight from the horse’s mouth!

Our experts looked at customer experience survey responses and Financial Ombudsman Service data, in order to determine how satisfied Aussies were with their insurance coverage and how their claims were handled. These were factored into our Award winners, and you can also check out car insurance reviews on the Mozo website to help you decide whether an insurer is a good bet.

While these are some of the features you may want to keep an eye on when searching for a comprehensive car insurance policy, it’s not an exhaustive list, and it’s important to think about your personal situation and what’s important to you when you choose your cover option.

Whether you opt for value or quality, there’s no reason to pay more than you have to for your comprehensive car insurance. Here are some of our top tips to bring the price down on your policy.

• Buy an old car. Although it’s not a hard and fast rule, Mozo’s research has shown that generally speaking, quotes from most insurers are lower on older cars. So buying a second hand car can not only save you money on the ticket price, but also on your insurance bill.
• Shop online for your policy. An easy way to score a discount on many insurance policies is to buy it online. You can save between 5% and 15% on your policy by snagging an online discount.
• Bundle your insurance policies. You can also knock dollars off your insurance premium with a multi-policy, or bundling discount. By bundling other policies, like your home and contents insurance, you might save 5% to 15% on your car insurance again.
• Drive safely. Safe drivers are rewarded when it comes to insurance, thanks to the no claims discount. Most car insurance policies offer this discount, and though how much you’ll get off depends on which state you’re in, you could knock as much as 70% off the price of your insurance.
• Bulk up your security. Adding extra security such as alarms or immobilisers to your vehicle can help bring down the cost of your car insurance, by reducing the risk of vandalism or theft. There aren’t usually set discounts for measures like this, but they will be taken into account when your insurer works out a quote for your policy.
• Manage your excess. Being able to choose your excess gives you greater control over how much money you’ll pay up front, and how much you need to come up with in an emergency. Choose a higher excess and your premium will go down - just remember that if you do have to make a claim, you’ll have to cover more of the costs before your insurance kicks in.

If you’re in the market for a car insurance policy, why not make it an award winner? Our experts have already done the hard yards trawling through all of the data to find some of the best policies on the market today.

You can check out the full list of winners here, or take a look at our editor’s picks from each award category below.

Exceptional Value

Budget Direct Comprehensive Car Insurance

Why is it a winner? Balancing a good level of cover with a affordable price tag, this policy ticks the important boxes when it comes to benefits, from windscreen cover to emergency repairs, without breaking the bank. Available across all of Australia, Budget Direct is worth a look when you get a new set of wheels, or renewal time rolls around.

Sound like just the ticket? Read our full review of Budget Direct comprehensive car insurance. Or head over to Budget Direct to find out more.

Low cost

Bingle Comprehensive Car Insurance

Why is it winner? This no-frills policy came out on top as an option for frugal drivers. As an online company, Bingle doesn’t have the overhead costs of traditional insurers and can pass those savings to customers. It offers cover for reasonable costs in an emergency, and you can tailor your policy by adding benefits like a rental car after an accident as an optional extra.

Is this the right fit for your wheels? Find out what we think of Bingle car insurance in our full review, or head over to Bingle to read more.

Exceptional Quality

Apia Comprehensive Car Insurance

Why is it a winner? This one’s designed for drivers who love their car, and want top notch cover. It includes a tonne of benefits as standard, and a couple of extras that can be added-on if you want them, like roadside assistance. But don’t worry - there are also a couple of great discounts up for grabs to help keep the cost of cover within budget.

If Apia comprehensive cover is what your car deserves, head over to our full review to find out more.

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