Save hundreds, risk thousands: The hidden cost of downgrading your car insurance

As car insurance premiums continue to climb, motorists looking to ease the pressure on their household budgets may be tempted to cut back on cover.

Switching from comprehensive to third party property damage (TPPD) can lower your premium, but it also reduces your protection, including if your vehicle is stolen.

Even the most careful drivers can’t prevent every theft, and without the right insurance, they could be left facing a bill running into thousands of dollars.

Car theft hits 17-year high, despite falling in most states

Motor vehicle theft in Australia has reached its highest level in 17 years, with 66,625 victims recorded in 2025, according to the latest figures from the Australian Bureau of Statistics (ABS).

That’s an increase of 1.6% on the previous year and 38.5% since 2020. While theft numbers remain well below their 2001 peak of 139,895, they’ve been climbing steadily in recent years.

However, the increase wasn’t uniform across the country. Motor vehicle theft actually declined in six of Australia’s eight states and territories in 2025, with Victoria and New South Wales the only two to record increases.

Victoria recorded 24,929 motor vehicle theft victims in 2025, up 10.8% from the previous year and its highest annual figure since 2002. The state accounted for 37.4% of all motor vehicle theft victims nationwide, with numbers increasing by 56.2% in just two years. NSW recorded a smaller increase of 3.0%.

The Northern Territory saw the biggest percentage decline, down 24.1%. Western Australia recorded the largest reduction in numbers, with 740 fewer victims than in 2024.

Motor vehicle theft by state and territory

Despite the declines, hundreds or thousands of motor vehicle theft victims were still recorded in every state and territory. Falling numbers don’t mean the risk has disappeared.

Where are motorists most exposed to vehicle theft?

While Victoria recorded the highest number of motor vehicle theft victims in 2025, looking at thefts relative to the number of registered vehicles reveals a different picture.

Savvy analysis of ABS and BITRE data shows the NT had the highest rate, at 7.60 thefts per 1,000 registered vehicles.

That’s more than double the national rate of 2.93, despite the NT recording a 24.1% reduction in thefts during the year.

Victoria ranked second at 4.30 thefts per 1,000 registered vehicles, followed by Queensland at 3.43. 

Motor vehicle thefts per 1,000 registered vehicles

What’s behind Victoria’s rise in car thefts?

Victoria Police has pointed to repeat offenders, youth crime and increasingly sophisticated theft methods as factors behind the state’s sharp rise in stolen vehicles.

One of the biggest concerns is the growing use of technology that allows thieves to get around modern car security systems.

Improved vehicle security played a major role in reducing car theft across Australia in the early 2000s. The introduction of compulsory electronic engine immobilisers in new passenger cars in 2001 made vehicles much harder to steal without the keys. By 2014, motor vehicle theft in Australia had fallen 64.1% from its 2001 peak.

But technology has also given thieves new ways to get around these security measures, with electronic devices that clone or reprogram car keys allowing them to start certain vehicles without the original key. 

These methods aren’t unique to Victoria. While theft rates vary across the country, cars in every state and territory can be vulnerable to the same tactics.

Which cars are most commonly targeted?

Although most states and territories don’t publish detailed rankings of stolen car models, figures from Victoria and South Australia offer some insight into which vehicles thieves are targeting.

In Victoria, the Toyota Corolla was the most stolen car in the year ending March 2026, followed by the Holden Commodore and Toyota HiLux.

Meanwhile, RAA data from South Australia identified the Holden Commodore as the most commonly targeted model, followed by the Toyota LandCruiser and Ford Ranger.

Queensland data from 2023 also placed the Toyota HiLux, LandCruiser and Corolla among the most frequently stolen models.

These figures suggest that popular, everyday vehicles are among the common targets, rather than just expensive or luxury cars. And as car thefts increase, so do the costs for insurers, with rising claims putting further pressure on premiums.

Rising car insurance premiums add to household budget pressures

Morgan Stanley research reported in January 2026 linked Victoria’s growing car theft problem to rising insurance costs, with premiums increasing by more than 15% in the state.

But rising premiums aren’t just a Victorian issue. According to an August 2026 report from the Australian Securities and Investments Commission (ASIC), motor vehicle insurance premiums rose 8% in the 12 months to July 2025, following an increase of more than 42% between 2019 and 2024.

With insurance becoming an increasingly expensive part of owning a car, it’s understandable that motorists facing ongoing cost-of-living pressures might look for ways to reduce their premiums.

For those driving an older car, the temptation to cut back on cover may be even greater. As vehicles depreciate, owners may start to question whether paying for comprehensive insurance is still worth the cost.

The potential cost of downgrading

Switching to a cheaper policy can make a big difference to your insurance bill, but the level of protection you get depends on the type of cover you choose.

There are three main types of car insurance in Australia:

• Comprehensive insurance: covers damage to your own car from accidents, theft, fire and other insured events, as well as damage you cause to other people’s vehicles or property.
• Third party fire and theft (TPFT): covers damage you cause to other people’s vehicles or property, plus theft or fire damage to your own car.
• Third party property damage (TPPD): covers damage you cause to other people’s vehicles or property, but not theft or accidental damage to your own car.

While TPPD is the cheapest option in many cases, it also offers the least protection for your vehicle. If your car is stolen and isn’t recovered, you’ll have to shoulder the full cost of replacing it.

To see what this means in practice, we compared comprehensive and TPPD insurance quotes for a 2021 Toyota Corolla Ascent Sport.

The Corolla topped Victoria’s most-stolen car rankings in 2026. At five years old, it’s also the kind of vehicle whose owner might be considering whether comprehensive insurance is still worth the cost.

For a 35-year-old driver in Melbourne with a full licence and no previous claims, comprehensive insurance for the Corolla ranged from $997 to $2,793 annually, while TPPD cover ranged from $378 to $1,181.

Based on these numbers, switching to TPPD would save an average of $103 a month and $1,235 a year. For households looking to cut expenses, that’s a substantial saving.

However, it’s worth weighing that against what you’d stand to lose if your car was stolen.

According to RedBook, a 2021 Toyota Corolla Ascent Sport still has an estimated private sale value of between $17,100 and $20,300.

If the car was stolen and never recovered, someone with only TPPD insurance would receive no payout for the theft, leaving them to fund a replacement themselves. 

Comprehensive and TPFT insurance both provide protection against theft. While the amount you receive will depend on how much your car is insured for, whether that’s an agreed or market value, and any applicable excess, it can still provide a substantial sum towards the cost of replacing your vehicle.

Ultimately, the question isn’t just how much you can save on your premium, but whether you could afford to replace your car if it was stolen and you had no insurance to cover the loss.