This year’s main budget stress? The intolerable cost of living. Rising prices have squeezed household budgets in everything from groceries to interest rates to petrol. Not to mention the impact of climate change on insurance premiums.
With all this upward pressure on prices, it’s not surprising that many Aussies have cheap car insurance on their minds. But an inexpensive policy isn’t worth the money, no matter how cheap, if the coverage isn’t adequate.
So with more budget-conscious drivers hitting the road, it’s high time to review what actually goes into your car insurance premium – and how to spot good value.
New research from Mozo turns the headlights on which factors affect our premiums the most. On average, Australians spend $1,302 on car insurance every year, but this changes wildly depending on a variety of circumstances.
Analysing over 260,000 quotes from 66 different policies and 55 providers, Mozo found some drivers may be paying more than they have to while others travel in the fast (and cost-effective) lane.
So, what are the key ingredients for a good value policy?
Insurance companies look at the driver – not just the vehicle – when pricing premiums. They try to gauge how likely you are to get into an accident and how expensive your claims might be if you do. The risky driver will therefore cop higher premiums.
Mozo’s research found the most significant factors influencing the cost of car insurance are age and gender.
Ah, the classic boomer vs. zoomer rivalry. Mozo’s research found drivers under 20 tend to cop the heftiest car insurance premiums, averaging $2,365 per year, while drivers over 70 cruise by on a cool $818.
This is more about driving history than age, though. Older drivers usually have a proven track record of road safety and no claims – young ones don’t. This can make golden oldies appear like a safer bet for insurance.
Gender is a social construct, but its impact on car insurance is quite real. According to Mozo’s research, female drivers, on average, pay $1,081 per year on car insurance, while male drivers fork out over $1,220.
Statistically, men tend to take more risks on the road than women, which leads to a higher rate of damages, accidents, traffic violations, and claims. Providers compensate for the risk by giving male drivers higher premiums.
Where you live and keep your car can also influence the cost of car insurance. Providers will look at which state you live in, whether you reside in a metro or regional area, and where you park.
Victoria, followed by NSW, had the most expensive annual premiums on average, with Tasmania paying the least for car insurance by a margin of about $100.
Risk factors like a state’s accident rates, annual road death rates, car theft rates, and even history of severe weather events are all details car insurance companies consider.
| State | Average annual premium |
| VIC | $1,463 |
| NSW | $1,400 |
| NT | $1,284 |
| ACT | $1,244 |
| SA | $1,040 |
| QLD | $989 |
| WA | $978 |
| TAS | $872 |
Those in metro areas pay more for their car insurance on average – roughly $230 more per year than their regional counterparts.
More drivers on the road in metro areas means more opportunities to prang your car, whereas regional areas tend to be less densely populated.
It turns out that where you park (or leave your car unattended) can significantly affect the cost of your car insurance – even more so when it’s parked overnight.
Mozo’s research suggests that those who usually park their car on the street are likely to pay more on average for their car insurance (around $1,260).
Those who usually park their car in a carport generally saw the lowest average annual car insurance premium, falling between $1,109 and $1,125.
| Parking location | Day parking | Night parking |
| Carport | $1,109 | $1,125 |
| Garage | $1,152 | $1,155 |
| Driveway | $1,162 | $1,177 |
| Street | $1,261 | $1,263 |
Cars parked in a more secure location are less likely to be tampered with, hence the slightly lower premiums.
Your car’s age, brand, size, style, and even colour, all have some bearing on your premium.
Black cars came in as the most expensive car colour to insure on average ($1,218), whereas green cars slipped under the radar at an average cost of $1,097. Perhaps there’s something to be said for enhanced visibility on the road!
| Vehicle Colour | Average annual premium |
| Black | $1,218 |
| Blue | $1,170 |
| Silver | $1,159 |
| White | $1,138 |
| Yellow | $1,136 |
| Red | $1,128 |
| Brown | $1,105 |
| Green | $1,097 |
Of course, it’s important to consider that if you have an accident, your car’s paint job can be more expensive to touch up, depending on the colour and finish you require.
If your car is between 2 - 5 years old, then you may be paying more on average ($1,300+) for your car insurance than others with newer or older vehicles than yours.
Mozo's research found the average annual cost of car insurance rises steadily for the first five years of a car’s life, then gradually drops from the sixth year onwards. By the time your car hits its mid-to-late teens (14 - 19), the average annual premium gets significantly cheaper.
Your car brand may also play a part in determining your car insurance premium. From Mozo’s research, one of the most expensive car brands to insure is Chevrolet, at an average annual cost of $5,102.
This also ties into where your car was actually manufactured, which too can change in how much your premium might cost.
Mozo's research reveals cars made in England top the charts as the most expensive (on average) to insure. The average annual car insurance cost of a car manufactured in England sits at about $2,028, which is a strong lead over the second most expensive country of origin, Argentina, at $1,614.
Cars manufactured in the United States follow close behind the leaders ($1,566), trailed by Germany ($1,491), Turkey ($1,459), Taiwan ($1,352), and the United Kingdom ($1,237). Some of the cheapest cars to insure were manufactured in places like Canada ($963), Korea ($995), and Australia ($1,025).
Despite green finance topping the priority list for many Australians, Mozo’s research found hybrid vehicles are much more expensive to insure, clocking in at $1,358 per year on average compared to $1,105 for petrol vehicles.
Why? In short: the market hasn’t caught up. Nearly all electric vehicles need to be imported into Australia, meaning replacement parts also need to be ordered from overseas. Insurance companies can’t be certain how long repairs will take, which means EV drivers could potentially file bigger damage or rental car claims.
However, with petrol prices skyrocketing, there are still potential savings in buying an electric vehicle. The average EV only costs about $4 per 100 km to run – nearly 75% cheaper than the average petrol car. A higher insurance bill might be worth it to avoid getting gouged at the pump.
Drivers can use a few strategies to keep insurance affordable. Safe drivers with a clear claims history can opt for a higher excess to reduce premiums. Bundling insurance policies with one provider, comparing quotes, and even adopting a Pay as You Go approach can all help keep costs within budget.
Using the averages from Mozo’s research, let’s look at two extreme examples of potential car insurance premiums. While these cases aren’t necessarily absolute, they’re a good way of illustrating how your unique circumstances may significantly affect the cost of your car insurance.
Joe Normale, a 19-year-old man from metropolitan Victoria, parks his 4-year-old black Chevrolet Bolt (manufactured in England) on the street outside his house at night. His driving history is…well, less than ideal, which will probably jack up his premiums.
Joe’s Mozo average: $1,793
Sheila Pennypincher, a 75-year-old woman from rural Tasmania, parks her green 20-year-old Holden SUV compact (made in Great Britain) in her lockup garage and rarely drives it. Somehow, she’s never had a hooning ticket, and her provider loves her for it.
Sheila’s Mozo average: $940
Unfortunately, you can’t change many of the factors providers use to determine your car insurance premium – not without moving state or trading in your wheels for an older (and probably less safe) model. But you can compare car insurance policies to see if you can save by switching, or find ways to mitigate your overall risk.
“Our analysis demonstrates that not all car insurance policies are created equal, and there can be a massive price difference between comparable policies,” explains Mozo insurance expert Claire Frawley.
“Finding cheaper car insurance doesn’t mean drivers should compromise on the quality cover they receive. This is where it pays to read the fine print and look for features like roadside assistance, sufficient accident cover, and choice of repairer.”
Once you do the legwork, you're ready to drive.
Keen to get the best price on your car insurance? Check out our car insurance comparison hub to see if you could switch & save.