Car insurance in Australia costs the average driver around $101.70 per month, or just over $1,220 a year, based on comprehensive cover. That figure comes from a recent survey of more than 1,500 drivers, and it tells only part of the story. What you actually pay depends heavily on your age, where you live, what you drive, and how you choose to pay.
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This article is general information only and does not constitute professional advice. For your specific situation, consult a qualified professional.
Monthly payments can help spread the cost, but not every insurer offers them at the same price. Some charge extra for splitting the premium into instalments, while others don’t. Understanding how these numbers break down — and what drives them — is the difference between overpaying and getting a fair deal. Here’s what you actually need to know.
If you’re new to driving in Australia, you might want to read our guide on choosing the right car insurance as a new driver before diving into monthly costs.
Before diving into the details, it helps to understand the central concept. Comprehensive car insurance covers damage to your own vehicle plus damage you cause to others. It’s the most common type of cover for monthly payments, and the one most of the data refers to.
What I tend to notice is that many drivers focus on the monthly figure without checking whether they’re paying a premium for the privilege of instalments. That’s worth weighing against the annual cost before you commit.
What happens when you misunderstand monthly car insurance costs
The difference between paying monthly and annually can be significant. If your insurer charges extra for monthly payments, you could be paying 10–20% more over the year without realising it. That’s on top of the 6% average annual increase in premiums that’s already baked into the market.
Consider a 22-year-old driver in Sydney paying $142.70 per month. Over a year, that’s $1,712.40. If the same policy costs $1,540 annually as a lump sum, the monthly option adds $172.40 — roughly the cost of a full tank of fuel. For a 35-year-old in Brisbane paying $105.20 monthly, the difference might be smaller, but it still adds up.
Location plays a bigger role than many people expect. New South Wales drivers pay an average of $120 per month, while Western Australian drivers pay $88.60. That’s a gap of over $375 a year for the same type of cover. Postcode-level data on accident rates, theft rates, and weather events drives these differences, not just state borders.
Gender also plays a role, though less than age. Men pay an average of $103.80 per month compared to $99.80 for women. The gap is wider for younger drivers, where young men are three times more likely to be involved in fatal road accidents. That risk shows up in the premium.
If you’re trying to budget, a budget planner notebook can help track monthly outgoings alongside your premium — especially if you’re comparing annual versus monthly costs.
Common mistakes people make with monthly car insurance payments
Assuming monthly is always more expensive
It’s a reasonable assumption, but it’s not always true. Around half of the insurers on Canstar’s database allow monthly comprehensive payments at no extra cost. The other half do charge more. The mistake is not checking which category your insurer falls into. If you’re with a provider that doesn’t add a surcharge, monthly payments are simply a cashflow convenience. If you’re with one that does, you’re paying for something you might not need.
Ignoring the excess trade-off
A higher excess — the amount you pay out of pocket when you make a claim — lowers your monthly premium. But it also means you’ll pay more if something goes wrong. The mistake is choosing the lowest monthly payment without considering whether you could afford the excess in an emergency. A $2,000 excess might save you $20 a month, but if you can’t cover that $2,000 after an accident, the saving is false economy.
Not shopping around at renewal
Loyalty doesn’t pay in car insurance. Premiums rise by an average of 6% each year, but switching providers can often keep your costs flat or even reduce them. The mistake is letting your policy auto-renew without comparing quotes. The data shows that premiums vary significantly between insurers for the same driver, same car, same cover. A 35-year-old driving a Toyota Corolla in Melbourne might pay anywhere from $781 to $990 annually depending on the insurer.
Overlooking the no-claim bonus protection trap
Some insurers offer claim-free protection that preserves your no-claim bonus after one at-fault claim — for an additional cost. The mistake is paying for this without understanding that it only protects your bonus, not your premium. Your premium can still rise after a claim even if your bonus is protected. The protection is on the discount, not the rate.
If you’ve ever had a claim denied, our article on what to do when car insurance claims are denied in Australia covers the steps you can take.
How to work out the best payment approach for your situation
Compare the annual cost, not just the monthly figure
When you get a quote, ask for both the annual premium and the monthly payment amount. Multiply the monthly figure by 12 and compare it to the annual figure. If the difference is more than a few dollars, the insurer is charging a surcharge for monthly payments. If it’s the same, monthly is effectively free. This simple check takes two minutes and can save you $50–$200 a year.
For example, if your annual premium is $1,200 and the monthly payment is $100, you’re paying the same either way. If the monthly payment is $105, you’re paying $1,260 annually — an extra $60 for the convenience of spreading payments.
Adjust your excess to find the sweet spot
Most insurers let you choose an excess between $400 and $2,000. A higher excess lowers your premium, but the relationship isn’t linear. The biggest savings often come from moving from a $400 excess to a $600 or $800 excess. Beyond $1,000, the savings tend to shrink. The sweet spot for most drivers is an excess you could comfortably pay out of savings — typically $500 to $1,000.
If you’re unsure about the legal side of your policy, services like JustAnswer Business Law can help clarify contract terms before you commit.
Check whether your insurer offers a multi-policy discount
Many insurers offer discounts if you hold multiple policies with them — home and car, for example. NRMA offers a Multi-Product Discount for two or more eligible policies. If you already have home or contents insurance, bundling your car insurance with the same provider could reduce your monthly premium. The discount varies, but it’s worth asking about before you buy.
Consider the future of car insurance pricing
New cars are becoming more complex. Advanced Driver Assistance Systems (ADAS), adaptive cruise control, and specialised sensors make repairs more expensive. Insurers are factoring this into premiums, and the trend is upward. If you drive a newer car with these systems, expect your premium to rise faster than the average 6% per year. Monthly payments will rise accordingly. This is one area where locking in a longer-term policy or a higher excess might make sense if you plan to keep the car for several years.
For a deeper look at saving strategies, our guide on how to save money on car insurance in Australia covers discounts and timing tactics.
Frequently asked questions about monthly car insurance payments in Australia
Can I pay CTP insurance monthly? ▾
Does paying monthly affect my no-claim bonus? ▾
What happens if I miss a monthly payment? ▾
Is it cheaper to pay annually for car insurance in Australia? ▾
Can I switch from monthly to annual payments mid-policy? ▾
Do all insurers offer monthly payment plans? ▾
Monthly payments are a tool, not a trap — if you check the numbers
The key insight from the data is simple: monthly car insurance payments in Australia are neither inherently good nor bad. They’re a cashflow tool that works well when your insurer doesn’t charge extra for them, and costs you money when they do. The average premium is rising by 6% each year, and newer cars with complex safety systems will push that figure higher. The best approach is to compare the annual cost of monthly payments against the lump sum, adjust your excess to a level you can afford, and shop around at renewal. That combination will save you more than any single discount.
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 Is third party property insurance enough? An Australian driver’s guide.
Sources and Further Reading
Did you know? Car insurance myths busted — Common misconceptions about car insurance in Australia, including how premiums are calculated and what affects your rate.
Driver courses that lower your car insurance premiums in Australia — Which accredited courses can reduce your premium and by how much.
Compare the Market (2024). Car Insurance Cost in Australia. 🔗
Canstar (2024). Pay-by-the-Month Car Insurance. 🔗
Your Finance Guide (2024). Car Insurance Guide. 🔗
NRMA (2024). Car Insurance Costs Explained. 🔗
