'Same car, same conditions, twice the price': Why has your car insurance gone up so much? (2024)

A perfect storm of factors has seen the average car insurance premium rise by almost 20 per cent in 2024. Here's how to save money.

If you've received a renewal notice for your car insurance that's almost double the cost of last year's, you're not alone.

According to March 2024 inflation data from the Australian Bureau of Statistics,insurance prices in Australia rose by 16.4 per cent annually – the strongest annual rise in 23 years.

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Across the insurance sector, an increase in "natural disasters and claims costs" drove higher premiums for all product types – from home and contents insurance to motor vehicle insurance.

However, car insurance premiums have been the most talked-about expense amongst consumers, who have seen their quotes double and even triple in the space of 12 months.

"My comprehensive car insurance was $1500 last year and I have just been sent a renewal for $2250 this year for the same car, same conditions," one insurance customer shared on Facebook.

Unfortunately, even if you have a perfect driving record and your circ*mstances haven't changed, you might still receive a pricier renewal notice for your car insurance in 2024. Here's why.

In a nutshell, car insurance has gone up because cars are becoming more expensive to buy and, thus, more expensive to repair.

"Cars are now more complex and sophisticated – a small ding that might have once sent you to the panel beaters for a straightforward repair now requires fixing and testing the complex sensors that are used for navigation and safety systems," a spokesperson for the Insurance Council of Australia (ICA) told Drive.

Inflation has also raised repair costs, meaning insurers have to cover higher costs when customers make a claim.

"Motorinsuranceclaims costs rose by 43 per cent between 2017 and 2023, which is double the rate of inflation for the same period," the ICA spokesperson added.

Additionally, we're driving more than ever, which increases our likelihood of an accident, and climate change means we're also more at risk of being exposed to a natural disaster like a bushfire or flood.

"Currently motor vehicle premium prices are rising because of the increasing value of motor vehicles making them more costly to replace, inflation and supply chain issues driving up repair labour costs and the price of motor parts, and the increasing cost of capital for insurers driven by ongoing extreme weather events," the ICA spokesperson explained.

According to comparison siteCanstar, the average cost of comprehensive car insurance in Australia is $2184 for females under 25 and $2437 for males under 25. For the other age groups, the average is $1733 for those 25–29 years, $1312 for ages 30–49 years old and $1006 for those over 50.

For those buying an electric car, it's worth noting there can be a 40.1 per cent difference in quotes for comprehensive car insurance when compared to comparable petrol cars.

“Someone on average could pay around $690 less for an annual comprehensive car insurance policy for a petrol car than if they were to have an EV," said Adrian Taylor, Executive General Manager of General Insurance and car insurance expert at Compare the Market.

“These higher-priced quotes could be due to factors like EVs' complex technological components that cost more to replace or repair, and a lack of specialists who can currently carry out these repairs. However, as more service personnel and auto shops complete these qualifications, we anticipate a potential decrease in these costs.”

Don't assume your loyalty will be rewarded. If you receive a hefty renewal notice, shop around and get quotes from other insurers.

If you find a lower quote for the same cover, you can either take it to your current insurer to see if they will lower your premium, or jump ship.

According to Roy Morgan data, in the 12 months to October 2023, an estimated 2.6 million car insurance policies were switched to another provider.

Obviously, a good driving record will keep your premium low, but so will leaving your car at home whenever possible.

It may seem counterintuitive, but some insurers will offer lower premiums for drivers who use their cars infrequently, so if this relates to you, be sure to let your insurer know.

"It's not uncommon for insurers to charge renewal policies a higher premium than they charge new customers," Steve Mickenbecker, Group Executive of Financial Services for financial comparison siteCanstar, has previously toldDrive.

"So, get a quote as if you're a non-customer."

Use the same parameters as you used for your current policy to see if your insurer is simply charging more and hoping you won't notice.

If you manage to catch them out, be sure to call them and cite your new quote to have your renewal notice reduced.

Unfortunately, having drivers under 25 on your policy will push up your premium.

If you have young drivers in your family, confine them to only driving one car so you don't have to pay for coverage across multiple family cars.

If you're able to garage your car in a secure location, rather than park it on the street, do so.

Companies like Parkhound will connect you to people with car spaces for rent near you. You might find the cost of renting a secure space is cancelled out by the reduction to your insurance costs.

If the ongoing costs are killing you and you drive infrequently, or only short distances, it might be worth increasing your excess to lower your premium.

Of course, this will mean your upfront cost if you get into an accident is higher, so be sure to weigh that risk against the benefit of a cheaper premium.

If you're paying a fortune to insure your 16-year-old Corolla, consider opting only for third-party cover.

"A car gets to a point where the premium hasn’t fallen enough relevant to the price of the car," Mr Mickenbecker has previously said.

"However, do noteverconsider going without third-party fire and theft. Even if you are driving a $5000 car, you can still run into a Ferrari!"

Some cars – like electric cars, luxury cars, sports cars or large utes – are more expensive to insure than others.

If you're worried about insurance costs, get a quote before you commit to buying a specific model.

Similar to playing with your premium, opting to insure for market value instead of agreed value is an easy way to reduce ongoing costs – but you risk receiving a smaller payout if your vehicle is written off.

"When you insure your car for market value, you are covered for the reasonable replacement cost based on what your car’s worth ‘in the market’," explains insurer Budget Direct.

"On the flip side, insuring your car for an agreed value means exactly that — you’ll be covered for an amount that your insurer agrees to insure your car for, regardless of your car’s depreciation during the policy term, which means should your car be written off or stolen and not recovered, you’ll know exactly how much money you’ll receive.

"Insuring your car for its market value will likely be cheaper in terms of the premium you pay, but the market value of your car at the time of the loss or damage would generally be less than what you paid for it initially."

Some insurers offer a discount for people who can afford to pay their insurance premiums upfront.

Alternatively, if you can't afford to pay a large sum upfront, consider switching to a monthly payment to make the costs more manageable.

If you're with a major provider, it might be worth switching to a smaller provider as they can often provide more competitive pricing.

Finder's 2024Car Insurance Awards found Bingle was Australia's cheapest car insurer, with comprehensive cover costing just $862 a year on average.

Runners-up in the 'Low Cost' category were Rollin' car insurance – which proved particularly affordable for young drivers – and Hume Bank, which cost an average of $959 a year for comprehensive cover.