How Much Is Car Insurance in Australia? A Financial Expert’s Guide to 2025–2026 Premiums

1. What Is the Average Cost of Car Insurance in Australia?

Let us start with the national picture. In 2025, the average annual premium for comprehensive car insurance across Australia is $2,226, up from $2,104 in 2024. While this 5.8% increase is significant, it is a substantial deceleration from the 30.5% spike recorded between 2023 and 2024. For context, the average premium has risen by 42% since 2019.

However, this national average masks enormous variation. Some drivers pay as little as $676 per year for comprehensive cover, while others face premiums exceeding $3,700. The policy with the cheapest average premium nationally is $795 in Tasmania, while the most expensive average premium is $3,065 in Victoria.

The table below summarises the national trends:

Metric	2024	2025	Increase
Average comprehensive premium	$2,104	$2,226	+$122 (+5.8%)

Source: Canstar 2025 Car Insurance Star Ratings, based on analysis of over 67,000 quotes

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2. State-by-State Comparison: Where You Live Matters

Your postcode is one of the most powerful determinants of your insurance premium. Insurers assess local accident rates, theft statistics, weather risks, and traffic density when pricing policies. The disparities between states are substantial.

2025 Average Comprehensive Premiums by State

State/Territory	2024	2025	Increase ($)	Increase (%)
New South Wales	$2,430	$2,570	+$140	+5.8%
Northern Territory	$2,189	$2,283	+$94	+4.3%
Queensland	$1,901	$2,010	+$109	+5.7%
South Australia	$1,881	$1,970	+$89	+4.7%
Tasmania	$1,710	$1,785	+$75	+4.4%
Victoria	$2,715	$2,940	+$225	+8.3%
Western Australia	$1,885	$2,032	+$147	+7.8%

Source: Canstar 2025

Key Observations

Victoria continues to be the most expensive state for car insurance, with average premiums of $2,940—a staggering $225 (8.3%) increase from 2024. Victorian drivers pay roughly 32% more than the national average. Young male drivers in Victoria face even steeper costs, with average premiums exceeding $4,100. The state’s dense urban traffic, higher accident rates, and elevated repair costs all contribute to this premium.

New South Wales ranks second at $2,570, followed by the Northern Territory at $2,283. NSW’s CTP scheme (green slips) adds another layer of cost, averaging around $458 annually for a standard vehicle.

Tasmania offers the lowest premiums at just $1,785 per year, despite a modest 4.4% increase. Lower population density, reduced traffic congestion, and fewer claims drive these savings.

Western Australia experienced a significant 7.8% jump to $2,032, while Queensland and South Australia saw more moderate increases of 5.7% and 4.7% respectively.

City-Level Variations

When we drill down to capital cities, the picture becomes even more granular. Based on June 2025 data:

City	Average Comprehensive Quote (June 2025)	Quarterly Change
Sydney	$2,426.97	-1.32%
Melbourne	$2,259.42	-2.35%
Brisbane	$1,569.81	-0.24%
Adelaide	$1,437.91	-0.80%
Perth	$1,504.24	-0.01%

Source: Compare the Market General Insurance Index, June 2025

Notably, the June 2025 quarter marked the first recorded reduction in quoted premiums since tracking began, with an average 1.10% drop across the five major capitals. However, experts caution that this may not signal a sustained trend, as reinsurance costs and new pricing data could push prices upward again.

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3. The True Cost of CTP Insurance (Green Slips)

Before diving deeper into comprehensive insurance, it is essential to understand Compulsory Third Party (CTP) insurance. Often called a “green slip” in NSW, CTP is mandatory for every registered vehicle in Australia. It covers personal injury compensation if you injure or kill someone in an accident—but it does not cover damage to your vehicle or other people’s property.

CTP costs vary by state because each jurisdiction administers its own scheme:

State	Typical CTP Cost (2025)	Notes
NSW	~$458 average	Called “green slip”; varies by vehicle type and insurer
Victoria	Included in registration	Transport Accident Charge (TAC) is built into rego fees
Queensland	$4–$19 increase for Class 1 vehicles in 2025	Three insurers offer CTP
South Australia	Calculated by CTP Regulator	Premium data available for 2024–2029 period

Importantly, CTP does not cover damage to your car or another person’s vehicle. For that protection, you need third-party property or comprehensive insurance.

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4. Comprehensive vs. Third-Party: What Do You Actually Get?

Understanding the different coverage levels is critical to choosing the right policy. Here is a clear breakdown:

Compulsory Third Party (CTP)

• What it covers: Personal injury or death caused to others in an accident you cause

• What it does NOT cover: Damage to your car, damage to other vehicles, theft, fire, weather events

• Is it mandatory? Yes, for all registered vehicles

• Typical cost: $450–$800 depending on state

Third-Party Property Damage

• What it covers: Damage you cause to other people’s cars and property (e.g., fences, buildings)

• What it does NOT cover: Damage to your own car, theft, fire, weather damage

• Typical cost: Generally less than half the price of comprehensive cover

• Who it suits: Drivers with older, lower-value vehicles

Third-Party Fire and Theft

• What it covers: Third-party property damage plus cover for your car if it is stolen or damaged by fire

• What it does NOT cover: Accidental damage to your own car (e.g., collision with a tree)

• Who it suits: Drivers with moderate-value vehicles who want protection against theft and fire

Comprehensive Insurance

• What it covers: Damage to your car (even if you are at fault), damage to other people’s property, theft, fire, vandalism, weather events (hail, storm, flood), plus optional extras like hire car after an accident

• Who it suits: Most drivers with vehicles valued over $5,000–$10,000; drivers who cannot afford to replace their car out-of-pocket

Premiums can range from several hundred dollars annually for basic third-party property damage to well over a thousand dollars for comprehensive cover on newer or high-value vehicles.

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5. Key Factors That Determine Your Premium

Insurers price policies based on risk. The higher the perceived risk that you will make a claim, the higher your premium. Here are the most influential factors:

Age and Gender

Age is the single most powerful demographic factor. Younger drivers pay dramatically more because they are statistically more likely to be involved in accidents.

Driver Profile	Average Annual Comprehensive Premium (2025)
Under 25 male	$3,020
Under 25 female	$2,706
25 to 29	$2,176
30 to 49	$1,607
50+	$1,260

Source: Canstar 2025

Notice the gender gap: male drivers pay an average of $1,484 for comprehensive cover compared to $1,393 for female drivers. This difference reflects claims data showing that men are more likely to be caught speeding and to be involved in serious accidents.

For Victorian drivers, the costs are even more pronounced. Under-25 males in Victoria face average premiums of $4,109, while under-25 females pay $3,665. Drivers aged 30–49 in Victoria pay approximately $2,094 annually, while those over 50 pay $1,603.

Driving History and Claims Record

A clean driving record is your most valuable asset when negotiating insurance premiums. Traffic violations, at-fault accidents, and prior claims all signal higher risk to insurers. Even minor speeding fines can affect your premium for several years.

Vehicle Make, Model, and Age

The car you drive directly influences your premium. Insurers consider:

• Market value: Expensive cars cost more to replace

• Repair costs: European luxury brands often require specialist parts and labour

• Theft risk: Popular models like Commodores and Hiluxes attract higher premiums due to theft rates

• Safety features: Vehicles with autonomous emergency braking, lane-keeping assist, and anti-theft systems may qualify for discounts

Electric and Hybrid Vehicles

EVs and hybrids are increasingly popular, but they come with higher insurance costs. In March 2026, the average quoted comprehensive premium for a battery electric vehicle (BEV) was approximately $2,300, up from $2,071 a year earlier—a 10.2% increase. Hybrids and plug-in hybrids averaged roughly $1,700, up 6.6%.

Specific EV models show wide variation:

• Tesla Model Y RWD: $3,203 in March 2026, up 5% year-on-year

• Xpeng G6 Standard Range: up 24%

• Zeekr X RWD: up 19%

• BMW iX1 eDrive20: up 11%

• MG 4 Excite 51: down 4%

Higher EV premiums reflect specialised repair requirements, limited repair networks, and expensive battery replacement costs.

Location (Postcode)

Your suburb matters enormously. Insurers analyse local theft rates, accident frequency, traffic density, and weather risks. Urban areas with high population density attract higher premiums, while regional areas may be cheaper—though risks like wildlife collisions can increase costs in certain rural locations.

Usage and Annual Kilometres

How you use your car affects your premium. Higher annual kilometres increase your exposure to accidents. Using your vehicle for business, rideshare (Uber, Didi), or delivery services typically increases premiums because you spend more time on the road. Parking on the street rather than in a secure garage also increases risk.

Excess (Deductible)

Your excess is the amount you pay out-of-pocket when you make a claim. Choosing a higher voluntary excess will lower your annual premium. For example, increasing your excess from $500 to $1,000 could reduce your premium by 10–20%. However, you must be able to afford that higher excess if you need to claim.

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6. Which Insurers Offer the Best Value?

The Australian car insurance market is competitive, with dozens of providers. Based on independent analysis from Mozo, Canstar, and CHOICE, here are the standout performers for 2025:

Best Value Insurers (National)

Insurer	Recognition
Budget Direct	Mozo Experts Choice Award – Australia’s Best Value Insurer 2025
ROLLiN’	Canstar Highly Commended; consistently cheapest across multiple locations and age groups
Bingle	Exceptional Value Award – Comprehensive Car Insurance
Everyday Insurance from Woolworths	Exceptional Value Award – Drive Less Pay Less option
AAMI	Exceptional Value Award – Comprehensive Car Insurance

Best Quality Insurer

NRMA Insurance was awarded Australia’s Best Quality Insurer in the Mozo Experts Choice Awards for 2025, reflecting superior coverage features and customer satisfaction.

Cheapest Insurers by State (CHOICE Analysis, 2025)

CHOICE analysed thousands of quotes to identify the most affordable comprehensive policies in each state:

State	Cheapest Average Premium Range
ACT	$676 – $2,462
NSW	$1,195 – $3,304
NT	$1,411 – $3,706
QLD	$999 – $2,129
SA	$819 – $2,293
TAS	$821 – $1,971
VIC	$1,077 – $3,689
WA	$814 – $2,852

Source: CHOICE, based on 221,677 quotes collected in January 2026

The key takeaway is that the spread between the cheapest and most expensive policies is enormous—often more than double. In NSW, the difference exceeds $2,100 annually. This highlights why shopping around is not optional; it is essential.

Top-Rated Policies by State (Canstar 5-Star Rated)

Switching to a 5-star rated policy could save you hundreds of dollars:

State	Average Premium (All)	Average 5-Star Rated	Potential Saving
NSW	$2,538	$1,683	-$855 (-33.7%)
NT	$2,283	$1,645	-$638 (-27.9%)
QLD	$2,010	$1,429	-$581 (-28.9%)
SA	$1,970	$1,316	-$654 (-33.2%)

Source: Canstar 2025

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7. Seven Proven Strategies to Reduce Your Car Insurance Premium

As a financial expert, I recommend these practical strategies to lower your premiums without sacrificing necessary coverage.

1. Shop Around at Every Renewal (Never Auto-Renew)

Loyalty does not pay in car insurance. Insurers routinely offer lower premiums to new customers while increasing renewal prices for existing policyholders. This “loyalty penalty” costs Australian drivers hundreds of dollars annually.

The average driver who switches to a top-rated provider could save approximately $692 per year. In Victoria, potential savings reach $967, while young male drivers under 25 could save up to $1,000.

Action step: When your renewal notice arrives, treat it as a reminder to compare quotes from at least three different insurers.

2. Increase Your Voluntary Excess

Your excess is the amount you pay when you make a claim. By increasing your voluntary excess from $500 to $1,000 or even $1,500, you can reduce your annual premium by 10–25%. However, ensure you have the higher excess amount readily available in your emergency fund.

3. Pay Annually Instead of Monthly

Many insurers charge interest or administration fees for monthly payment plans. Paying your premium annually in one lump sum can save you 5–10% compared to monthly instalments.

4. Bundle Policies with the Same Insurer

If you have home and contents insurance or other policies, ask about multi-policy discounts. Many insurers offer 5–15% savings when you bundle car insurance with home, landlord, or life insurance.

5. Improve Your Vehicle Security

Parking your car in a secure garage overnight rather than on the street can reduce your premium. Installing approved immobilisers, tracking devices, or alarm systems may also qualify for discounts.

6. Review Your Annual Kilometres

If you drive less than 10,000–15,000 km per year, consider usage-based or “pay-as-you-drive” policies. Providers like Real Insurance, Woolworths Everyday Insurance, and ROLLiN’ offer discounted premiums for low-kilometre drivers.

7. Maintain a Clean Driving Record

Your driving history is the most direct way to control your premium over time. Avoid speeding fines, traffic violations, and at-fault accidents. Many insurers reward claims-free years with no-claim bonuses that reduce premiums incrementally.

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8. Recent Trends and Market Outlook for 2026

Understanding where the market is heading helps you make informed decisions.

Premium Growth Is Slowing but Persists

The 5.8% increase in 2025 is a marked improvement from 2024’s 30.5% surge, but premiums continue to rise. Insurers point to persistent cost pressures, including higher vehicle repair costs, parts inflation, and increased labour rates.

EV Insurance Premiums Are Rising Faster

As more Australians transition to electric vehicles, EV insurance premiums are increasing at a faster rate than petrol vehicles. BEV premiums rose 10.2% in the 12 months to March 2026, compared to 6.6% for hybrids.

Loyalty Penalties Under Regulatory Scrutiny

The Australian Securities and Investments Commission (ASIC) has cracked down on complex pricing practices where promised loyalty discounts were applied to inflated base premiums. This regulatory pressure may lead to fairer pricing for long-term customers.

The “Loyalty Penalty” Remains Significant

Despite regulatory attention, the loyalty penalty persists. Compare the Market’s David Koch notes: “The biggest discounts are usually reserved for new customers. Most motorists will see their premium increase when renewal time rolls around. The message is always to shop around and make sure you are getting good value because loyal customers may miss out”.

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9. Common Questions About Car Insurance in Australia

Do I need car insurance to drive legally in Australia?

Yes, you need Compulsory Third Party (CTP) insurance to register your vehicle. CTP is mandatory in every state and territory. However, CTP only covers personal injury to others. Comprehensive or third-party property insurance is optional but strongly recommended.

Can I insure a car in Australia with an international driver’s licence?

Yes. Most Australian insurers accept valid international driver’s licences, though you may face higher premiums due to limited local driving history.

What happens if I drive without insurance?

Driving without CTP insurance is illegal. Penalties include fines, licence suspension, and vehicle impoundment. Driving without comprehensive or third-party property insurance is not illegal but leaves you personally liable for any damage you cause—potentially amounting to tens of thousands of dollars.

How can I lower my premium as a young driver?

Young drivers face the highest premiums, but you can reduce costs by:

• Choosing a safe, lower-value vehicle (avoid sports cars and high-performance models)

• Adding an experienced driver as a named driver

• Increasing your voluntary excess

• Completing an approved driver training course

• Maintaining a clean driving record

Is comprehensive car insurance worth it?

For most drivers, yes. Comprehensive insurance covers damage to your own vehicle—even if you are at fault—plus theft, fire, vandalism, and weather events. If your car is worth more than $5,000–$10,000, comprehensive cover is usually worthwhile. If your car is older and worth under $5,000, third-party fire and theft may be sufficient.

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10. Final Thoughts from a Financial Expert

Car insurance is not a commodity to be purchased once and forgotten. Your premium depends on dozens of personal factors—your age, your postcode, your driving record, and the car you drive. The national average of $2,226 is merely a starting point; your actual premium could be significantly lower or higher.

The most important lesson I can offer is this: never accept your renewal notice without shopping around. The loyalty penalty is real, and it is expensive. The average driver can save $692 simply by switching to a top-rated policy. For young drivers, the savings can exceed $1,000.

Set a calendar reminder for 30 days before your policy expires. Gather quotes from at least three insurers. Compare not only price but also coverage features—choice of repairer, hire car after an accident, windscreen cover, and roadside assistance. Then choose the policy that offers the best balance of protection and value for your specific situation.

Car insurance is ultimately about financial protection. The right policy shields you from catastrophic out-of-pocket expenses if the worst happens. By understanding the factors that drive your premium and actively managing your policy each year, you can secure that protection at a fair price.

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Disclaimer: This article provides general information only and does not constitute financial advice. Premiums, coverage features, and insurer offerings change over time. Always read the Product Disclosure Statement (PDS) before purchasing any insurance policy and consider consulting a qualified financial adviser for personalised guidance.