Cheapest car insurance

Person smiling in older car, with cheap car insurance

Trying to save money? Driving down your daily dollar spend is no easy task, and it doesn’t help that car insurance can be an exxy, albeit necessary, expense.

To help you navigate the financial road ahead, we’ve scoured through the many car insurance companies in Australia to get a fair dinkum overview of the what's on offer. So, follow our tips to secure a top deal that'll suit your needs as a driver. 

How can I get cheaper car insurance?

This question 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.

That aside, there are some ways to keep car insurance costs down. One option is to choose a more basic level of cover. CTP (compulsory third party) insurance is the least amount of insurance you must have to legally drive in Australia. After that there is third party car insurance and third party, fire and theft cover. 

Of course the downside to third party cover is that it will not usually provide insurance for your own set of wheels. So if your car is ever in need of repair, the cost in the long run could potentially outweigh the savings made on the premium. An alternative is to try and find cheaper comprehensive car insurance. To do this you may need to shop around a bit, gather insurance premium quotes and compare policies.

Which car insurance type is the cheapest?

After CTP insurance, which is a must but does not offer any cover for your actual car, third party car insurance is possibly the more affordable option in the short run. In the long run, however, this type of car insurance is generally more limited as to what it actually covers. For example, usually repairs for your own vehicle will not be covered.

Here’s a breakdown of car insurance options to consider:

Third party car insurance is cheaper when it comes to optional car insurance. However, it may not necessarily give you the cover you need to get from A to B and back again without a worry.

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 (usually between $5,000 and $10,000 unless you elect a greater amount). But it won’t cover damage to your car as a result of an accident.

If you want this as part of this package, you should consider comprehensive car insurance. 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.

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 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.

What car insurance essentials do I need to get me started?

After you’ve done your research and found a car insurance quote to suit your needs, have the following info handy before giving your chosen provider a buzz or applying online.

  • Your driver’s licence number - This shows what kind of licence you hold, which will in turn influence the price you pay for your car insurance. It will also show the insurance company your driving history including offences and any demerit points lost which may also affect the amount you pay.
  • Your age - Under 25? Expect to pay a higher premium for your comprehensive car insurance. But remember, it's still likely better than footing the bill for major repairs to your own and other cars. 
  • The Vehicle Identification Number (VIN) of your car - This will tell the provider who owns the car and whether or not it’s been stolen. The number is usually displayed on a metal plate under the bonnet of your car or more conveniently on your rego papers. If you’ve purchased a second hand car, hopefully you’ve already done the checks on your vehicle before handing over the money. 
  • Your address - The are a huge range of factors that influence car insurance costs, and your postcode is one of them. Why? If where you live has a high crime rate or poor record of road accidents, then you may be more likely to claim on your insurance, and so providers raise premiums to mitigate that risk.
  • The type of car you're insuring - The price you pay for your car is one thing, but the actual street value is another. Value, age and any fancy modifications to your vehicle can impact how much you pay, as these can influence the cost of repairs or replacement. The model of car you drive might also have some bearing. For example, insuring a Mazda might be different to insuring a Mercedes-Benz.

How to avoid costly car insurance traps

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 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.
  • Late fees. Did you know you can be charged a ridiculous amount for not paying you 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 usually offered 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.

What makes car insurance cheaper?

A clean driving history, living in an area with a low crime rate and opting for a higher excess are just some things that might make a car insurance premium cheaper. 

When it comes to trying to lower car insurance costs, there will be some factors that are flexible and some that are not. 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 things you probably won’t be able to change are:

  • 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 things that can affect your car insurance premium, that you might be able to change are:

  • 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, what you can do to try and save money on car insurance is to just drive safely. 
  • 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 kilometers per year. 

These are just a few ways to try and keep your car insurance premium down. Check out the full list of FAQs below for more tips on how to reduce your car insurance premium.

Or if you’re keen to start gathering quotes, check out the comprehensive car insurance policies on offer below.

More FAQs on cheaper car insurance

How can I reduce the cost of my car insurance?

While there are a lot of things such as your age, where you live and what kind of car you drive that you won’t be able to change, there are a few things you can do to try and reduce the premium you pay. Here are a few ideas:

  • Choose a higher excess. Some car insurance policies may give you the option to have a higher excess. Just keep in mind that while a higher excess may equate to lower premiums, it may also mean that you wind up paying more come claim time.
  • Drive safely. As well as being the best thing to do while on the road, driving safely can also help keep your insurance premium down. A lot of providers offer a variation of the ‘no claims bonus’. This a discount customers can generally access if they go for a certain amount of time without making an at-fault accident claim.
  • Be picky about who drives your car. Another way to keep your insurance premium down is to only allow a few people to drive your car. Specifically only allowing drivers over 25 with a clean driving record to use your car, could help lower the price of your insurance premium.
  • Install security devices. Installing security devices such as a car alarm, vehicle immobilisers and wheel locking devices can help reduce the risk of your car being stolen and the likelihood of you having to make a claim. Although it might be a good idea to check first with your insurance provider on these items.
  • Bundle your cover. Need insurance for your home and contents too? A lot of insurance providers offer multi-policy discounts when you purchase your car, home and contents insurance from them.
  • Drive less. If driving less is an option, doing so might just help lower your premium. Nowadays a lot of car insurance providers even offer pay-as-you-drive policies. Generally, these types of policies are for people who drive less than around 15,000 km per year. 
  • Shop around. Lastly, we recommend shopping around a bit, before signing up to a policy. This means comparing cover and gathering quotes from multiple insurance providers. Head to Mozo’s compare comprehensive car insurance page to get started.
Is comprehensive car insurance expensive?

Whether comprehensive car insurance is expensive or not is tricky to answer. Yes, insurance premiums for comprehensive car insurance will usually be higher than insurance premiums for third party car insurance. However, comprehensive car insurance is designed to provide more cover than third party insurance, so it might actually save you money.

Generally third party car insurance offers liability cover for damage you might do to someone else’s vehicle - it does not usually provide cover for any repairs your own car might need. Comprehensive car insurance offers a higher level of cover in that it provides cover for your own wheels.

How much should I pay for car insurance?

While car insurance premiums will vary for each individual driver, it is still possible to get an idea of whether a policy is overpriced by gathering quotes from multiple insurance providers and checking averages. In 2020, Mozo research showed that the national average annual premium for comprehensive car insurance was $952 at the time. Averages across states and territories differed quite a bit. For example, the average annual comprehensive car insurance premium for drivers in Victoria was $1,181- that’s $229 above the national average!

Insurance premium prices will also vary depending on things like whether you live in the city or in a small town, where your car is parked at night, your driving history and so forth. Read the full 2020 Mozo Car Insurance report for more information.

How can I compare cheap car insurance in Australia?

One way to compare cheap car insurance in Australia is to check out the winners of the 2021 Mozo Experts Choice Awards for Car Insurance. For the 2021 awards, our research team reviewed 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 have 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.

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    * Terms, conditions, exclusions, limits and sub-limits may apply to any of the insurance products shown on the Mozo website. These terms, conditions, exclusions, limits and sub-limits could affect the level of benefits and cover available under any of the insurance products shown on the Mozo website. Please refer to the relevant Product Disclosure Statement and the Target Market Determination on the provider's website for further information before making any decisions about an insurance product.

    ^See information about the Mozo Experts Choice Car Insurance Awards