Car Insurance

A range of car insurance options including GAP cover, vehicle warranty, loan protection and much more

Last updated on April 21st, 2022 at 03:43 pm by Thomas Perrotta

Car Insurance

Cars are among the most valuable purchases you’re likely to make, so it makes sense to want to cover it financially in case anything goes wrong. Car insurance is a great way to do this, but it can be costly. Fortunately, there are many ways you can avoid having to pay exorbitant amounts for your car insurance. By comparing and reviewing the best car insurance providers and policies on the market, you can save yourself hundreds, if not thousands. Find out more about how you can secure the best car insurance policy in this comprehensive guide.

What is car insurance and how does it work?

Car insurance is a policy that you can take out that’s designed to cover you in case something happens to, or with, your car that causes you to have to pay a bill. If your car insurance policy covers a certain type of damage, such as accidents, you can avoid having to pay for repairs or replacements entirely out of pocket thanks to assistance from your insurance provider, who will provide partial or full financial coverage depending on the situation. Depending on the type of car insurance policy you take out, your provider may cover some, or all, of the following instances of damage:

  • Damage to your car due to an accident
  • Damage to another car due to an accident
  • Damage to your car due to theft/theft of your car
  • Damage to your car due to fire
  • Damage to your car due to a weather-related incident (e.g., falling tree or flood damage)
  • Injury or death caused by you in an accident

All of these examples can set you back thousands of dollars without insurance, particularly if your car or another driver’s ends up being written off by damage it sustains.

Which different types of car insurance can I choose from?

There are a few different choices you’ll have to make when it comes to the type of car insurance you choose to go with. Let’s walk through them and determine whether they’re right for you.

Does the provider cover you for: CTP Comprehensive TPPD TPFT
Damage to your car due to an accident?
Damage to another car due to an accident?
Damage to your car due to theft/theft of your car?
Damage to your car due to fire?
Damage to your car due to a weather-related incident?
Injury or death caused by you in an accident?

*Not all comprehensive car insurance providers will provide cover for weather-related incidents, nor are all weather-related incidents covered.

Compulsory Third Party (CTP) insurance

You don’t have a great deal of choice when it comes to determining whether CTP insurance is right for you: it’s compulsory in every state and territory of Australia. This type of insurance is known as the Transport Accident Charge in Victoria and a Green Slip in New South Wales. Essentially, these policies cover injuries or deaths that occur to another party due to a road accident you may be held responsible for.

This insurance differs between states in terms of the ability to choose your provider, as some will allow you to decide from several options while others won’t. The cost of CTP is usually built into your car registration, but it can be purchased independently in some cases like in NSW. It’s important to note that CTP doesn’t cover any injury sustained by you or damage sustained by your car, nor does it cover damage to other vehicles or property.

Comprehensive car insurance

True to its name, this type of car insurance is the most wide-ranging in terms of the different forms of damage it can cover. Unlike CTP insurance, it does cover you for damage caused to vehicles and property in accidents, as well as damage sustained by your own car. In addition to this, it provides coverage in the event of theft or fire damage, while some providers will also include weather-related damage like flooding in their coverage. Depending on your provider, you may also be able to add various optional cover types such as temporary vehicle replacement during your car’s repairs. Buyers may also get the choice between market and agreed value for their coverage, which alters the amount you’ll be reimbursed for damage.

Compared to the other non-compulsory forms of insurance, comprehensive car insurance brings the greatest level of security to the buyer and, as a result, it’s often the most expensive option. Depending on your personal circumstances, you could pay anywhere between $30 per month to upwards of $150 monthly in premiums. However, there are a wide range of providers when it comes to comprehensive car insurance, so there are plenty of points of comparison between the best options.

Third Party Property Damage insurance

Of all the optional car insurance services, this is the most barebones in nature. It’s designed to cover you in the event of damage to other vehicles or property, but not your own. This is a cheaper option for insurance that would typically be used by buyers with low-value cars or other vehicles who are more concerned about being left in the lurch financially by causing damage to another party’s property in an accident, particularly if that property is considered more valuable than your own.

Third Party Fire and Theft insurance

Sitting as a middle point between comprehensive and Third-Party Property insurance, Third Party Fire and Theft insurance is another less expensive alternative that is more focused on damage to your own car. This type of insurance usually covers not only damage done to other property, but also expenses caused by fire or theft damage or the loss of a vehicle entirely due to theft. You’re not likely to be able to receive cover for damage to your car resulting from an accident, though.

How are car insurance premiums calculated?

Insurance providers operate by pooling money from their members paid through insurance premiums. These are essentially the service costs for maintaining your ongoing insurance cover on your car and will usually be charged on a monthly or annual basis. There are several key factors that insurers will look at when determining the rate to set your premiums at. Let’s look at these categories so you can determine where you fit in the grand scheme of things.

Your car

Each insurance provider will have different policies when it comes to the types of cars that they will and will not insure, as well as those which are more expensive to insure than others. This will largely depend on how much certain models are to repair or replace. Higher-powered cars tend to come with more costly premiums as a result of this, while more common, standard models are far more likely to attract cheaper insurance premiums. Insurers will also favour newer cars rather than older and take into consideration any modifications you’ve made to your vehicle.

Your age

Insurers typically perceive younger drivers to be riskier to cover, as they’re more likely to get into accidents and cause damage than older age groups who have driven for longer. Unfortunately, those in this position can’t really do too much to work around that factor, but they can be secure in the knowledge that their premiums will eventually fall as they get older (assuming they stay out of trouble on the road).

Your carparking situation

You’ll always have to pay more in insurance premiums for cars that remain parked on the road rather than in a driveway or garage. This is because your car is inherently more vulnerable to theft and damage when out in the open and in clear view of the public in comparison to keeping it out of sight from anyone outside your home. Depending on where you live, your insurer may consider your area to be particularly high-risk in terms of crime, which may also lead to an increase in the premiums you’ll have to pay.

Your excess

The excess on your car insurance is your contribution to any potential expenses in the future when you make a claim for an incident you’re at fault for. These are used when insurance providers aren’t able or willing to cover 100% of the cost. Generally, providers are willing to reduce their premiums if you’re able to increase your excess payment. However, be mindful of not setting your excess payment too high so that they become unaffordable when you make a claim.

Your record on the road

Insurers will look more kindly on drivers with clean driving records when it comes to determining insurance premium rates. Understandably, insurance companies won’t be willing to slash their prices for someone with several at-fault accidents in their history. They’ll want to guarantee that you’re a safe driver when deciding on premium prices, so bear in mind your record when entering the process of getting insurance. If you can show that you’ve had an excellent record for many years despite accidents in your past, it may benefit your back pocket.

How much you drive

The equation is simple: the more you drive, the more at risk you are of having an accident. Insurance providers are acutely aware of this and as such will usually offer lower-cost premiums to those who drive less often.

For example, let’s compare two customers looking to buy an insurance policy for their car. The first customer drives 45 minutes both ways to get to and from work every day, equating to 7.5 hours on the road each week before factoring in weekends and other commitments. The second customer cycles to work every day and only uses their car for shopping once or twice a week, taking their kids to and from school sport and going out every now and then on weekends. The second customer is clearly lower risk if you’re looking solely at the time spent on the road between the two, and if they were similar in every other respect the second customer would be more likely to receive a cheaper premium rate.

The insurance you take out

As previously mentioned, the different optional insurance policies will all dictate what you’ll end up having to pay for your premiums. Comprehensive car insurance is the most expensive of the bunch, with Third Party Property insurance the cheapest and Third-Party Fire and Theft falling between them. You may decide that added costs for premiums are worth it for added protection, which would lead you towards a more expensive car insurance type.

Take a look at the table below to see how much you can save over just one year with a better insurance premium rate.

Cost per month Saving on $90 premium Total paid in 12 months Saving on $90 premium

How do I compare car insurance?

It’s always important to compare when looking for car insurance. There are a few of simple ways to compare the best and cheapest car insurance policies, which we’ll unpack here. Identifying the best overall deal using these pointers will allow you to make an informed decision on which policy is best for you.

What coverage you’ll receive

This is perhaps the most important aspect to get right on an insurance policy. Each insurer will differ when it comes to the level of coverage that they provide on their insurance policies. Some will offer more coverage than others, while others may be able to offer you a wider range of optional extras to choose from.

The level of coverage you need for your car will likely inform your choice of insurance type, as those who want the maximum coverage will almost always buy a comprehensive car insurance policy while those not as concerned by damage to their car may opt for TPPD or TPFT cover instead. The best car insurance will almost always be the one which provides you with the most wide-reaching coverage.

The amount you’ll be covered for

It’s not just a matter of what your insurance policy covers you for: the amount that you’ll receive for a claim is also a relevant consideration. Not every insurer will be the same across the board when it comes to the amount they’ll be willing to insure your car for. This is where market value cover and agreed value cover comes into play.

Market value is what your provider believes your car would be worth on the market at the time of the claim (prior to the damage it sustained), which is calculated using various factors including its age, make and model, kilometrage, condition and service history. Contrastingly, agreed value is a pre-determined figure that you’ll receive from your insurance provider if your car is damaged or stolen. It’s signed off on by you and your insurer at the start of your policy agreement and will remain that way until it comes time for you to renew your policy.

When it comes to agreed value cover, you’ll find that some insurers will offer you a greater amount of financial coverage than others, which may be useful to you if your car is more valuable than the standard. This may also happen with market value offers, as different insurers will value your car in different ways. You should take this into account when choosing your car insurance, as you could be left underinsured by your policy in the worst-case scenario.

How much you’ll pay for premiums

This is another key area to consider when comparing car insurance providers and policies. Insurance premiums will be a constant cost throughout the time that you insure your car, so you should try to avoid paying too much where you can. Premiums have to be affordable and manageable for you; even if you’re getting great coverage on your car, it counts for nought if you can’t keep up with insurance payments. Premium rates are one of the easier aspects of an insurance policy to compare, as you’ll be able to find them readily with any good quote from an insurer.

However, cheap car insurance isn’t always good car insurance. If you find yourself a fantastic deal with extremely cheap premiums, the chances are that it probably won’t cover you as much as you might like. As such, always look for the cheapest car insurance that covers you in the areas you’re looking for, rather than simply the cheapest.

Any discounts available

Insurers will often entice new customers with discounts on their car insurance deals. These are usually introductory or online discounts, which tend to only last for the first year or so before reverting back to average or above average premiums. You might also be able to receive a discount if you’ve been a customer for an extended period of time, bundled together several different policies with the same insurer or if your car is fuel efficient. Make sure to check with insurers ahead of time to see if you could qualify for a handy discount on your premiums.

Case study #1 – market value insurance policy

Olivia, 26, wants a new insurance policy for her Toyota sedan. She just received the car from her mum, who had bought it brand-new for herself eight years prior for $10,000. She doesn’t want to pay too much in premiums as she’s just finished studying and has moved out of home, so she’s looking to take out a market value comprehensive car insurance policy for greater cover. Olivia is taking out a more expensive policy, but the car she’s insuring is in good working condition and is common enough that the premiums she’ll have to pay aren’t sky-high. The fact that she’s elected to insure it at market value also means her premiums will be lower than if she’d agreed an amount with her provider.

Nine months later, Olivia is involved in an accident which writes off her car. She makes a claim to her insurance company, who determines that her car’s market value directly before the accident was $5,000 due to its kilometrage, wear and tear and working condition. This suits Olivia, as she knew that she wouldn’t realistically receive a big payout for her eight-year-old Toyota and she didn’t think being covered for an amount of a few thousand more was worth paying more in premiums. The payout will be enough to cover most of her new car purchase, with the rest funded by her savings.

Case study #2 – agreed value insurance policy

James, 35, is looking to insure his brand-new Mercedes-Benz, which he just bought for $50,000. He wants to ensure that he gets adequate coverage for his car in case it’s stolen or written off, so he decides to get some quotes for an agreed value comprehensive car insurance policy. James asks his chosen insurance provider to agree to insure the car for the value he just paid for it, $50,000. He accepts that his premiums will be higher under this agreement as a necessary cost for covering his car.

Three months later, James’ car is stolen. He goes back to his insurance provider and makes a claim, after which he’s granted the agreed $50,000 sum. In this instance, James receives more than what he would’ve under a market value policy, as his car would’ve depreciated substantially in value over the three months he’d owned it.

Top tips on how to reduce the amount you’ll pay for your premiums

Reduce your car use

Where possible, you should look to avoid using your car for all forms of travel. Even catching public transport a few days per week or carpooling with a co-worker and chipping in for their petrol will save you quite a bit in premiums.

Choose a car that’s cheaper to cover

When deciding on the car you wish to buy, you should keep its insurability in the back of your mind. If you can’t split the difference between a car manufactured in or close to Australia and one made in Europe, for example, you can almost guarantee the latter will attract a more expensive premium.

Raise your excess where possible

While this increases the amount you pay out of pocket upon making a claim, it’ll also probably reduce the amount you’ll have to pay in premiums. Make sure that it’s a manageable total, though.

Think about whether minor accident cover is worth it

If you’re a good driver with a clean record when it comes to accidents, you might want to consider whether cover for damage caused in a minor accident will be worth the fee hike. Paying for this yourself if it occurs will help keep your driving history spotless to an insurer.

Don’t claim for every little ding

Excessive claims will come into consideration with your insurer when it comes time to renew your policy. If you’re claiming on very minor damage like scratches or dents, it could cost you in your next policy.

Frequently asked questions about car insurance

Which car insurance companies offer the best deals?

There are obvious pros and cons for each type of car insurance provider, so the answer may differ for each customer. You might look to go for a cheaper specialist provider which operates online, such as Budget Direct or Youi, or a bigger, more premium insurance provider like GIO, SGIC or Suncorp.

Should I pay for car insurance monthly or annually?

The answer to this depends on your financial situation but if you’re looking solely at the cheapest option overall, paying annual premiums are 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.

How long does a car insurance policy last?

Most car insurance policies you’ll come across will extend to a 12-month period. If you decide you don’t want cover to last for that period, you can cancel your policy early (although this will usually incur a fee).

Should I still insure my car if my licence is suspended?

Yes – while car insurance won’t cover you if you make an accident claim while your licence is suspended, it’s still important to insure your car in case of fire damage or theft. In this instance, you may wish to take out a Third-Party Fire and Theft insurance policy to cover your car.

Will I be able to include my child as a driver on my car insurance policy?

Yes – however, including a driver under the age of 25 on your policy is likely to result in an increase in premium cost. Not including them in your policy and allowing them to drive your car could result in an undeclared driver excess if they get into an accident.

Should I list my child as a driver on my car insurance policy if they’re a learner?

Usually, you won’t have to include your child as a driver if they’re still on their L-plates. This only really comes into effect once they obtain their provisional license or P-plates. However, an accident with a learner at the wheel could mean that you’re charged an additional excess.

Will my medical expenses be covered by the driver’s car insurance if I’m a passenger in an accident?

Maybe – each state’s requirements for CTP insurance differs, so it’ll depend on where you live.

Is my car insurance policy affected by my credit score?

No – insurers won’t look at your credit score when processing your policy, nor will monthly payments increase your score over time.

Can my insurance premiums still increase in cost when the value of my car depreciates?

Yes – your premium rate may increase over time even if your car depreciates in value significantly. This is down to a variety of variables, such as the age, condition and kilometrage of your car and your evolving profile as a driver. Premium rates can also be affected by changes to tax laws by the government or inflation.


Can I pay insurance by the month?

Yes, however this incurs loading due to government charges compared to an annual lump sum payment.

I have had an accident, what should I do?

You should make sure you and others around you are safe. Call 000 for further assistance. Once you have eliminated any dangers, get the details of all parties involved in the accident. Some insurers may have an app so you can capture this information with your mobile device.

Do I need to list other drivers on my policy?

Yes. If other people are driving your car, especially those under a certain age, you must report this to your insurance company. If the driver is not listed and causes an accident, you may not be able to make a claim.

What is an excess?

An excess is an administrative fee you must pay upon making a claim. A basic excess applies to all claims, while an additional excess my apply to other factors such as window damage or drivers under a certain age. Lowering or increasing your excess may do the same for your premium.

What are exclusions?

Exclusions are provisions that your policy does not cover. These may include accidents caused by non-listed drivers, or damage caused under the influence of alcohol.

What is a rating?

A rating, or No Claim Discount, is a risk assessment based on how often you claim on insurance. A rating 1 means you have not claimed for over 5 years and are eligible for the lowest premium price. No rating is a provisional rating, attracting a higher price due to bigger risk.

Why do you need to know where my car is parked, and other information?

This gives your insurer a better picture of the risk they are taking on when assessing your policy. The lower a risk (i.e., a car with an immobiliser that is protected in a garage) the lower your premium.