2025 Australia Car Insurance Prices Are Rising: Cheapest Providers & Ways to Cut Your Premium Fast
TL;DR Summary
- Car insurance prices in Australia 2025 are rising due to inflation, higher repair costs, and more extreme weather claims.
- Many drivers are seeing premium increases of around 8–20% at renewal, even with no at-fault accidents.
- Cheaper car insurance options are often found with online-based insurers and no-frills comprehensive policies.
- You can usually cut your premium quickly by increasing your excess, removing add-ons, and comparing quotes every year.
- Simple changes like parking off-street, driving fewer kilometres, and keeping a clean record can reduce your cost over time.
Why Car Insurance Prices Are Rising in Australia (2025)
In Australia 2025, many drivers are shocked when their car insurance renewal arrives. Even with no recent claims, the cost often jumps. This is not just your insurer — it is a wider trend across the market.
Key reasons premiums are going up include:
- Inflation and labour costs: Mechanics, panel beaters, and parts are more expensive than a few years ago.
- Modern car technology: Sensors, cameras, and electronics make repairs more complex and costly.
- Extreme weather and floods: Storms, hail, and flooding events increase the total claims bill for insurers.
- Higher write-off rates: Sometimes it is cheaper for insurers to write off a car than repair it, increasing claim costs.
Insurers then pass these higher costs back to customers through higher premiums. The good news is you can still compare, adjust your cover, and reduce what you pay — if you are proactive.
Cheaper vs Premium Car Insurance – Real-World Comparison
Below is a simplified comparison between a typical “cheaper” online insurer and a more “premium” traditional insurer in Australia. This is a general guide, not a quote.
| Feature | Cheaper Online Insurer (No-frills Comprehensive) |
Premium Traditional Insurer (Full-feature Comprehensive) |
|---|---|---|
| Average Cost | Lower annual premium | Higher annual premium |
| How You Buy | Mainly online, self-service | Online, phone, sometimes in-branch support |
| Excess Options | Often higher minimum excess | More flexible, can choose lower excess (higher price) |
| Extras (hire car, windscreen, etc.) | Limited or optional at extra cost | More included as standard or as bundles |
| Claims Support | Online forms, call centre | Call centre, sometimes dedicated claims managers |
| Strengths | Good for lower premiums, simple cover | Strong service, more add-ons and flexibility |
| Limitations | Fewer bells and whistles, more self-management | You pay more for the same insured value |
| Best For | Budget-focused drivers wanting basic comprehensive cover | Drivers who value service, extras, and a smoother claims experience |
Which Type of Car Insurance Is Best for You?
Cheaper Online / Budget Insurers
Usually best for drivers who:
- Want the lowest possible premium and are comfortable managing everything online.
- Drive an older or lower-value car where full extras are not necessary.
- Are okay with a higher excess if it keeps the price down.
Mid-Range Comprehensive Policies
Usually best for drivers who:
- Want a balance of price and features.
- Have a car that would be expensive to replace out of pocket.
- Want some extras like windscreen cover or hire car, but not everything.
Premium Comprehensive Policies
Usually best for drivers who:
- Own newer or higher-value cars.
- Prefer stronger claims support and more included extras.
- Are willing to pay more for convenience and peace of mind.
Step-by-Step: How to Cut Your Car Insurance Premium Fast in Australia 2025
1. Check Your Current Policy Details
- Find your renewal notice or log in to your insurer’s portal.
- Note your current premium, excess, cover type (comprehensive, third party), and any optional extras.
2. Decide What Cover You Actually Need
- If your car is older and low-value, consider whether full comprehensive is still worth the cost.
- For newer or financed cars, comprehensive is usually safer.
3. Increase Your Excess (If You Can Afford It)
- Most insurers let you raise your basic excess in exchange for a lower premium.
- Only do this if you could realistically pay that higher excess in a claim.
4. Remove Add-ons You Do Not Use
- Review extras like hire car, roadside assist, windscreen cover, and “premium” options.
- Remove anything you do not truly need or already have elsewhere (e.g. separate roadside membership).
5. Compare at Least 3–5 Quotes
- Use comparison sites and check some insurers directly.
- Use the same details (kilometres, parking, excess) so you can compare fairly.
6. Ask Your Current Insurer to Match or Improve
- Call or chat with your insurer and mention cheaper quotes you found.
- Sometimes they can reduce the premium or adjust cover to keep you.
7. Keep Your Risk Profile Low
- Park in a locked garage or off-street if possible.
- Limit unnecessary kilometres and avoid high-risk driving behaviour.
- Maintain your no-claim history where you can.
Cost, Fees, and Tax Considerations
- Premiums: Vary by state, age, car type, address, and driving record — always compare for your exact details.
- Excess: A higher excess usually lowers your premium, but increases what you pay if you claim.
- Monthly vs annual payments: Paying monthly can include extra fees compared to annual payment.
- GST and stamp duty: Car insurance premiums generally include GST and state-based duties.
- Tax deduction: If you use your car for work (not just commuting), a portion of your premium may be tax-deductible — check ATO rules or an accountant.
FAQ – Car Insurance Price Rises in Australia 2025
Why is my car insurance going up every year in Australia?
Premiums are rising due to higher repair costs, more expensive car technology, inflation, and bigger claim payouts from storms, floods, and other major events. Even if you have not claimed, your insurer’s overall costs may have increased.
Who has the cheapest car insurance in Australia 2025?
There is no single cheapest provider for everyone. Prices depend on your age, car, location, and driving history. Online and budget-style insurers often offer lower prices, but you need to compare quotes based on your situation.
How can I quickly reduce my car insurance premium in Australia?
Increase your excess, remove unnecessary add-ons, compare multiple quotes, and consider switching to a cheaper comprehensive or third party policy if your car is older.
Is it worth switching car insurance every year in Australia?
It can be. Many drivers save money by comparing at renewal and changing insurers when another company offers similar cover for a lower cost. Just check the PDS and make sure the cover level suits your needs.
Does driving less reduce my car insurance premium?
Yes, in many cases. If you accurately declare a lower annual kilometre estimate, some insurers offer cheaper premiums. Always be honest about your usage — incorrect information can cause issues at claim time.
Is comprehensive car insurance worth it for an older car in Australia?
It depends on the market value of your car and your financial situation. If the premium plus excess is close to the value of the car, some people switch to third party property damage cover instead. Compare both options before deciding.
Can I claim car insurance as a tax deduction in Australia?
If you use your car for work-related purposes (not normal commuting), part of your car expenses, including insurance, may be deductible. Check the latest Australian Taxation Office (ATO) guidance or speak to a tax agent.
Sources / Official References
- Australian Taxation Office (ATO) – car and work-related expense guidance
- State and territory insurance duty and stamp duty information
- Product Disclosure Statements (PDS) from major Australian car insurers
- General market data from Australian insurance industry reports
Important Disclaimer
This article is for general information only and is not financial advice. It does not take into account your personal objectives, financial situation, or needs. Car insurance products, prices, and rules can change. Always read the Product Disclosure Statement (PDS) and consider seeking advice from a licensed financial adviser or checking official government resources before making decisions.