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In the market for a new car insurance policy?
Insurance is a critical part of owning a car, and it's essential to have the right coverage to protect yourself, your vehicle and your finances in case of an incident on the road. However, with so many options available, finding the best car insurance isn’t as simple as picking the first offer you find.
We’ve partnered with Compare the Market so you can compare a range of car insurance policies and providers in one place to find the cover you need.
Types of car insurance
When it comes to choosing a car insurance policy, it’s important to ensure you have the level of coverage you need. In Australia, there are four main types of car insurance available, one mandatory for all registered vehicles and three optional levels of cover:
Compulsory third party (CTP)
Compulsory third party (CTP) insurance – known as Green Slip insurance in New South Wales and Motor Accident Injuries (MAI) insurance in the ACT – is the only mandatory type of car insurance in Australia, required for all registered vehicles.
CTP insurance provides cover for personal injury or death caused by a vehicle's owner or driver to other road users. However, it doesn’t cover any damage to property or other vehicles, nor does it cover the driver or owner of the vehicle for any injury or damage caused to themselves or their vehicle.
Each Australian state and territory has its own regulations for CTP insurance, so the cost and coverage can vary depending on where the vehicle is registered.
Third party property damage (TPPD)
Third party property damage (TPPD) insurance is the most basic optional car insurance in Australia. It covers damage to another person’s vehicle or property if you’re at fault in an accident.
TPPD insurance is usually the cheapest car insurance option, which can make it a good choice if you don’t need extensive cover or own an older car that wouldn’t justify a higher premium.
Third party fire and theft (TPFT)
TPFT insurance includes the same coverage as TPPD but also protects your car against fire damage and theft.
This type of insurance is a reasonably priced option for those wanting some protection for their own vehicle. It may be especially useful if you live in an area with higher risks of theft or fires, or don’t have a secure place to park.
Comprehensive
Comprehensive car insurance offers the highest level of coverage, protecting your car against accidental damage, fire, theft, vandalism and weather-related events. It also covers damage to other people’s property.
While comprehensive insurance is the most expensive option, it offers peace of mind for those who want full protection for their vehicle.
Here’s a breakdown of what you may be covered for:
| Does the provider cover you for: | CTP | TPPD | TPFT | Comprehensive |
|---|---|---|---|---|
|
Damage to another car due to an accident?
|
✖ |
✓ |
✓ |
✓ |
|
Damage to or loss of your car due to theft?
|
✖ |
✖
|
✓
|
✓
|
|
Damage to your car due to fire?
|
✖ |
✖ |
✓
|
✓
|
|
Damage to your car due to an accident?
|
✖ |
✖ |
✖
|
✓
|
|
Damage to your car due to a weather-related incident?
|
✖ |
✖ |
✖ |
✓* |
|
Injury or death caused by you in an accident?
|
✓ |
✖ |
✖ |
✖ |
*Not all weather-related incidents are covered under a comprehensive car insurance policy. Check your PDS to find out what's covered and what isn't.
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How much is car insurance?
Car insurance can cost anywhere from hundreds to thousands of dollars each year, but how much you’ll pay for your cover depends on a number of factors. As well as the type of insurance you choose, your premium will be influenced by:
- Age and driving experience: younger and less experienced drivers like P-platers usually face higher premiums due to the higher risk associated with inexperience.
- Gender: statistically, women are safer drivers, with male drivers more likely to be involved in accidents. This means that men, especially younger drivers, tend to pay more.
- Type of vehicle:Â more expensive, powerful and newer vehicles tend to cost more to insure due to higher repair or replacement costs. Likewise, electric cars tend to have higher insurance costs.
- Location:Â your state and postcode also play a part. Living in an area with higher accident or theft rates may lead to higher premiums.
- Driving history:Â a clean driving record typically results in lower premiums, while past accidents or traffic violations may raise your rates.
- Usage:Â if you use your vehicle for business purposes such as ridesharing or if you frequently drive long distances, you may have a higher premium.
- Car parking: cars parked on the street often cost more to insure than those in a driveway or garage.
- Excess: in many cases, choosing a higher excess means lower car insurance premiums – but you’ll pay more out-of-pocket if you make a claim.
What is an excess in car insurance?
An excess is the amount you pay out-of-pocket when you make a claim on your car insurance. For example, if your excess is $200 and you claim for $2,000 worth of damage, your insurer would cover $1,800, and you would pay the remaining $200.
You’ll need to pay an excess each time you claim for an incident, in most cases before work can begin on your vehicle. Whether an excess will apply – and how much you’ll need to pay – depends on your policy and the type of claim. You’ll typically pay in cases like at-fault accidents, theft, vandalism or damage from weather events. However, if you’re not at fault and the other party’s insurer covers the costs, you may not need to pay your excess.
The amount of your excess can vary based on your policy and can affect your premium. Generally, choosing a higher excess can lower your premiums, while a lower excess may lead to higher premiums.
Cheap car insurance
When it comes to finding cheap car insurance, there’s not one provider that offers the lowest rates across the board. The cost of your policy depends on your individual circumstances, so what may be the cheapest option for one person could be more expensive for another. However, there are a number of ways you could reduce the cost of your premium:
Look for discounts
Many insurers offer discounts for new sign-ups, safe driving or bundling your car insurance with other policies. Additionally, you may be able to find special promotions or loyalty rewards, such as discounts for remaining claim-free for a certain period. some insurers offer discounts or bonuses for safe driving, no-claim periods or other factors that reduce your level of risk.
Consider additional benefits
Some insurers offer additional perks, like frequent flyer points or discounts on everyday purchases like supermarket shopping, which can provide extra value beyond just a low premium.
Choose market value insurance
Insuring your car for its market value – where the insurer will determine how much the car is worth at the time of the claim – instead of an agreed value determined at the start of the policy can lower premiums.
Raise your excess
Opting for a higher excess often results in a lower premium. If you're comfortable paying a higher excess in the event of a claim, this can help reduce your annual costs.
Pay annually, not monthly
While it’s a bigger upfront cost, paying in one lump sum rather than monthly can mean lower premiums as many insurers charge extra fees for monthly payments.
Avoid unnecessary extras
While extras like roadside assistance or hire car coverage may be useful, they can add to your premium. If you don't think you'll need them, consider skipping these add-ons to keep costs down.
Compare your options
Car insurance premiums vary widely between providers, so it's important to shop around and compare quotes.
Providers you can compare
How do I compare car insurance?
What optional extras are available with car insurance?
Most insurers offer a range of optional extras that can be added to a policy for an additional cost. These extras can vary depending on the insurer, but some common ones include:
- Roadside assistance:Â roadside assistance provides immediate help to drivers during breakdowns or unexpected incidents while on the road. This can include emergency towing, fuel delivery, jump-starting, lockout assistance and flat tyre repair.
- Windscreen cover:Â this can cover the cost of repairing or replacing a damaged windscreen.
- Excess-free glass cover:Â additionally, you can often choose to have the cost of repairing or replacing any glass on your vehicle covered without you having to pay an excess.
- No-claim bonus protection: no-claim bonus protection can keep your no-claim bonus discount intact even if you make a claim. Without this protection, your premium may increase if you make a claim.
- Hire car cover:Â this can provide you with a temporary replacement vehicle if your car is damaged or stolen.
- Lifetime repair guarantee:Â with this extra, you can ensure any repairs made to your car are guaranteed for the life of the vehicle. This is often included as part of comprehensive car insurance automatically.
Case studies: market value vs. agreed value car insurance
One option you may have when taking out car insurance is to insure your vehicle for its market value or agreed value.
Market value means you’ll receive the estimated value of your car in the current market if it’s written off or stolen. Agreed value, on the other hand, is a value agreed upon before the policy begins in the event your car is stolen or written off.
Case study #1 – market value insurance policy
Lauren wants a new insurance policy for her ten-year-old sedan. She decides to take out a market value car insurance policy, as it has a lower premium than the agreed value option and she doesn’t think being covered for a few thousand dollars more on an older car is worth the extra cost.
Nine months later, Lauren is involved in an accident that writes off her car. She makes a claim to her insurance company, which determines her car’s market value to be $7,500. This suits Lauren, as she knew she wouldn’t realistically receive a big payout for her car. The payout will be enough to cover most of her next car purchase, with the rest funded by her savings.
Case study #2 – agreed value insurance policy
James is looking to insure his brand-new sports car, which he just bought for $70,000. He wants to ensure he has adequate coverage in case it’s stolen or written off, so he chooses an agreed value policy. This means James can ask his chosen insurer to agree to insure the car for the amount he just paid for it, though his premiums will be higher.
Three months later, James’ car is stolen. He submits a claim with his insurer and is paid the agreed $70,000 sum. In this instance, James receives more than he would have under a market value policy, as his car’s value would have dropped over the three months he’d owned it.
Frequently asked questions about car insurance
If you’re looking solely at the cheapest option overall, paying annual premiums is less expensive than monthly payments. This is because they’re easier to process, as it’s one payment compared to 12. While monthly premium payments ensure that the cost is much more manageable in smaller chunks, they tend to attract more service fees as a result of their frequency (though this is not the case with all providers).
However, whether you should pay for one or another depends on your situation and whether you can afford to make a lump sum payment towards your insurance or would be more comfortable paying in monthly instalments.
Many insurers will let you choose your own repairer when making a car insurance claim. This can provide greater peace of mind that your car is being serviced and repaired by someone you trust. However, not all policies will offer the choice of repairer, so it’s important to check with your insurer if you’re unsure about whether you can select where your car is able to be fixed.
Windscreen repairs can be expensive, ranging from a few hundred dollars to over $1,000. If replacing a windscreen would be a financial burden, or if you drive regularly, adding this cover to your policy could be worthwhile. Some comprehensive car insurance policies include windscreen cover, while others offer it as an optional extra with reduced or no excess.
No – cover notes are no longer available. They were a type of temporary insurance that provided short-term cover until a full policy was arranged. Today, car insurance can be purchased quickly online or over the phone, giving immediate cover. If you’re not satisfied with your policy after purchase, insurers offer a cooling-off period of 14 to 31 days, allowing you to cancel for a full refund.
Not all situations and events will be covered by car insurance. Exclusions will vary depending on the insurance provider and policy terms, but common ones include:
- Wear and tear
- Mechanical or electrical breakdown
- Intentional damage
- Racing or reckless driving
- Driving under the influence
It’s important to carefully review the terms and conditions of your car insurance policy to understand the specific exclusions that apply.
Your car insurance can be voided if you breach policy terms, meaning your insurer won’t cover any claims and you could face financial and legal consequences. Common reasons include:
- Providing false information when applying for insurance
- Driving unlicensed
- Driving under the influence of alcohol or drugs
- Driving an unroadworthy car with safety issues
- Reckless driving such as excessive speeding or illegal activities
- Using your car for business if your policy doesn’t cover commercial use
To change your car insurance provider, first compare quotes and coverage from different insurers. Then, check your current policy for any cancellation fees or requirements. Once you’ve found a new policy that fits your needs, cancel your old one and make sure the new policy starts as soon as the old one ends, so there’s no gap in coverage. While you can switch at any time, be aware that you might face cancellation fees if you’re cancelling mid-policy.
While insurance policies for electric vehicles are the same as for petrol or diesel cars, insuring them is often more expensive because EVs typically have higher purchase prices and repair costs. Their batteries are expensive to replace, and advanced technology and electronics can make repairs more complex. In addition, there are fewer specialist mechanics, which can lead to higher labour costs.
PAYD car insurance is designed for drivers who use their car less than average (typically under 15,000km per year). It works by tracking your mileage, allowing your insurer to calculate premiums based on how much you actually drive. This can make it a cheaper alternative to standard comprehensive insurance.
If you're involved in an incident, you’ll need to file a claim with your insurer, providing details like photos, witness statements and a police report if required. You can typically submit your claim online, over the phone or by filling out a paper form. Your insurer will assess the damages and determine the amount of compensation you’re eligible for. If you’re not at fault, you’ll still need to provide your insurer with all the relevant details of the incident and the at-fault party’s information.
Helpful guides on car insurance
Compare car insurance policies with Compare the Market
Disclaimer:
Savvy (ABN 78 660 493 194, ACR 541 339) provides readers with a variety of car insurance policies to compare. Savvy earns a commission from our partnered insurers each time a customer buys a car insurance policy via our website. All purchases are conducted via our partners’ websites. The integrity of our comparison service is unaffected by our partnerships with those businesses and our effort remains to bring further brands that do not already use our comparison service onboard.
Savvy’s comparison service includes selected products from a panel of trusted insurers and does not compare all products in the market. Any advice presented above or on other pages is general in nature and doesn’t consider your personal or business objectives, needs or finances. It’s always important to consider whether advice is suitable for you before purchasing an insurance policy. We always recommend readers to consult the Product Disclosure Statement (PDS) of different policies before purchasing your car insurance.
