Car insurance in Australia has become a serious financial question. The average annual comprehensive premium hit $2,226 in 2025, up $122 from the year before. For a family on a typical budget, that’s a bill that demands a second look. Here’s what you actually need to know.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Comprehensive cover protects your own vehicle against accidental damage, theft, storms, hail, and floods. It also covers third-party property damage. But the cost has climbed 25% between 2022 and 2024 alone, according to Canstar’s pricing analysis. That’s faster than general inflation over the same period. The question isn’t whether you need insurance — it’s whether the policy you’re paying for is actually worth what it costs.
Here’s what you actually need to know.
What This Article Reveals About Your Car Insurance
One term you’ll hear a lot is loyalty tax. It’s the extra amount existing customers pay compared to new customers for the same cover. The Australian Securities and Investments Commission (ASIC) found that figure sits at $312 per year. That’s not a discount for staying — it’s a penalty.
What Comprehensive Cover Actually Costs — By State and Driver Profile
The national average of $2,226 hides big differences depending on where you live and who you are. Victorian drivers pay the most at $2,940 — that’s $714 above the national average. Young male drivers under 25 face an average premium of $3,020. Families with a typical profile pay $2,747.
Here’s how the numbers break down across different driver profiles and what they mean for your wallet.
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| Driver Profile | Average Annual Premium | Potential Savings by Switching |
|---|---|---|
| National average | $2,226 | $692 |
| Victorian driver | $2,940 | $967 |
| Young male (under 25) | $3,020 | Up to $1,000 |
| Family profile | $2,747 | $1,000 |
What this means in practice: a young male driver in Victoria paying $3,020 could switch to a top-rated 5-star policy and pay around $2,020 — saving a full $1,000. That’s not a small discount. That’s a month’s rent for many people. The gap between what you’re paying and what you could be paying is wider than most drivers realise.
Comprehensive cover increased 25% between 2022 and 2024. New car prices rose up to 39% over the same period, and used car prices climbed around 32%. When cars cost more to repair or replace, insurers pass that cost on. Total losses — where a car is written off — account for roughly 25% of all claims costs, according to industry data.
Three Mistakes That Cost Australian Drivers Hundreds
Sticking with the same insurer year after year
This is the most expensive habit. The ASIC review found loyal customers pay $312 more per year than new customers. Over five years, that’s $1,560 lost to inertia. What I tend to notice is that people assume their insurer will reward them for staying. The data shows the opposite. The fix is straightforward: get quotes from at least three providers at renewal time. You don’t even need to switch every year — just getting a competing quote often triggers a retention offer from your current insurer. The process takes about 20 minutes online.
Buying comprehensive cover for a car worth less than $5,000
If your car is worth $5,000 and you’re paying $2,226 a year for comprehensive cover, you’re insuring a car that could be replaced for just over two years of premiums. Third-party property cover costs significantly less — often under $500 — and still covers damage you cause to other people’s vehicles. The trade-off is that your own car isn’t covered if you’re at fault. But for an older car, that’s often a risk worth taking. A good rule of thumb: if the annual premium is more than 30% of the car’s market value, comprehensive cover is hard to justify.
Ignoring the excess level when choosing a policy
A lower excess means a higher premium, and vice versa. Many drivers pick the lowest excess without realising they’re paying hundreds extra each year for a benefit they may never use. If you have savings to cover a $1,000 excess, choosing a higher excess can cut your premium by 15–25%. Just make sure you actually have that cash set aside. The unspoken truth about car insurance excess is that most people don’t check their excess until they need to claim — by then it’s too late to change it.
How to Decide What Cover You Actually Need — and How to Get It
Assess your car’s value first
Look up your car’s current market value on a site like RedBook or Carsales. If it’s under $10,000, third-party property cover is worth serious consideration. If it’s under $5,000, comprehensive cover is almost certainly overkill. The premium you save can go toward your next car instead.
Compare at least three policies at renewal
Use a comparison site like Canstar or Mozo. Look at the 5-star rated policies — they average $1,534 per year, which is $692 below the national average. Check what’s included: roadside assist, hire car after a not-at-fault accident, and towing costs are common inclusions on better policies. Don’t just compare the premium — check the excess, the sum insured, and any exclusions for things like driving under 25 or modifications.
Watch for the loyalty tax at renewal
When your renewal letter arrives, don’t just pay it. The premium quoted is almost certainly higher than what a new customer would pay. Call your insurer and ask for a better deal. If they won’t budge, switch. The process is simple: your new insurer handles the cancellation of your old policy. Just make sure there’s no gap in cover — set the start date of the new policy for the day after the old one ends.
What’s coming next: telematics and digital pricing
Insurers are moving toward telematics-based pricing — where a device or app tracks your driving behaviour. Suncorp invested $560 million in a digital upgrade in late 2024. This means safer drivers could see lower premiums, but it also means more data collection. If you’re a low-mileage, careful driver, a telematics policy could save you money. If you’re not, it could cost more. This is still emerging, but it’s worth watching when you next shop around.
For drivers with modified vehicles, the stakes are higher. Modifications can void your cover if not declared. The risks of undeclared car modifications are real — a single undeclared change can leave you with no cover after an accident.
Frequently Asked Questions
Does comprehensive cover include theft if I leave my keys in the car? ▾
Can I switch insurers mid-year? ▾
Does my no-claim bonus transfer to a new insurer? ▾
What happens if I have an accident and my policy doesn’t cover the full repair cost? ▾
Is third-party fire and theft worth it? ▾
Do I need comprehensive cover if my car is financed? ▾
The Real Cost of Not Checking Your Policy
The average driver who switches to a top-rated policy saves $692. The average driver who stays loyal pays $312 more than a new customer. Those two numbers alone suggest that most Australians with comprehensive cover are overpaying. The insurance industry is competitive — 43 providers were analysed in the Canstar study alone — but that competition only benefits you if you actually shop around. The loyalty tax isn’t a fee. It’s a choice to not check.
Remember: this article is general information only. For advice on your specific situation, speak to a qualified professional.
If this was useful, you might also want to read The Great Car Insurance Debate: Are Third Party Policies a Risky Gamble in Australia?
Sources and Further Reading
Tips for Choosing the Right Car Insurance for Luxury Vehicles in Australia — If you drive a higher-value car, the decision between comprehensive and third-party cover changes. This guide covers the specific factors for luxury vehicles.
Electric Cars Insurance: The Shocking Truth for Australian Owners — EV insurance costs and coverage differ from petrol cars. This article explains what electric vehicle owners need to know.
Canstar (2025). Car Insurance Prices Continue to Accelerate. 🔗
Youi (2025). Is Comprehensive Car Insurance Worth It. 🔗
IBISWorld (2025). Car Insurance Industry in Australia. 🔗
