Car insurance premium increases Australia

Car insurance premiums have increased by an average of 20% in just under 4 years, according to Finder research.

Gary Ross Hunter's headshot

By

Gary Ross Hunter

Edited by

Jason Loewenthal

Updated

Fact checked
Car Insurance

Car insurance hasn't been immune to the impact of high inflation. In fact, Finder research has found that car insurance premiums have increased by an average of 10.6% in the last 12 months and 19.8% since the beginning of 2021, rising faster than the overall rate of inflation.

While the official inflation rate hit a 30-year high of 7.8% in the December 2022 quarter, it looks to be slowly coming down.

The same can't generally be said for insurance though. Insurance and financial service costs were up a whopping 8.6% in the latest quarterly ABS inflation report.

Key statistics

  • Car insurance premiums have increased by an average of 10.6% in the last 12 months and 19.8% since 2021.
  • Car insurance premiums in Queensland have gone up the most – 25% since 2021.
  • In the last 12 months though, the biggest increase has been in Victoria (16.7%).

Our research is based on Finder Awards data going back to 2021. We got quotes from 26 comprehensive car insurance policy providers based on 36 driver profiles across all major states. Keep in mind, while our research was extensive, prices may differ based on various circumstances such as your age, gender and the car you drive.

Car insurance premium increases over time

Car insurance premiums have increased by an average of 10.6% in the last 12 months. Since early 2021, they've increased by nearly 20%.

Average cost of car insurance from 2021 to 2023

Year
Average cost
2021
$1,376
2022
$1,402
2023
$1,551

State breakdown of premium increases

Queensland has seen the biggest increase in car insurance premiums overall. This is largely due to the fact it has been heavily impacted by severe weather, including the South East Queensland floods, over the last few years. However, in the last 12 months, car insurance costs in Victoria have gone up the most.

State
2021
2022
2023
% increase (22–23)
WA
$1,262
$1,300
$1,364
4.95%
SA
$1,148
$1,191
$1,369
14.91%
QLD
$1,215
$1,280
$1,437
12.23%
NSW
$1,734
$1,807
$1,903
5.33%
VIC
$1,702
$1,692
$1,976
16.77%
TAS
$1,136
$1,124
$1,251
11.29%

Why have car insurance premiums increased?

Like many other goods and services, the cost of car insurance has been increasing due to very high inflation.

However, higher premiums are also being impacted by the increase in natural disasters such as bushfires, cyclones and floods. Australians are paying more "even if the area hasn't been specifically affected by recent disasters," AFCA says.

In 2022, the Insurance Council of Australia reported that there were more than 302,000 disaster-related claims lodged from 4 declared insurance events across the country. It cost $7.28 billion in insured losses.

The majority of these losses ($6 billion) were from the Northern New South Wales and South East Queensland floods. This was the costliest insured event ever recorded in Australia and the second costliest in the world in 2022.

Global events, such as Hurricane Ian in Florida, have also contributed to rising reinsurance costs which reached a 20-year high in the 2022–23 financial period. The impact on Australian insurers has been cost increases of up to 20–30%.

Inflation has compounded the recovery costs. CoreLogic's Cordell Construction Cost Index (CCCI) found prices increased by 11.9% over the 2022 calendar year, the largest annual increase on record.

Thankfully, cost increases have slowed in 2023. The September 2023 quarterly growth rate was 0.5%, the smallest lift since the 3 months to June 2019.
​​
As a result of all this, insurers have increased their prices and the average Australian is paying more for their car insurance now than ever before. There currently is no cap on how much insurers can increase their prices. Insurers are generally able to charge what they want. Premium increases are typically not open to review by the Australian Financial Complaints Authority (AFCA).

How to save on your car insurance

Don't just settle for the insurer you know

In our research of 26 comprehensive car insurance policies, we found a $1,871 difference between the cheapest and most expensive providers. Make sure you compare quotes from at least 4 brands to find a better deal.

Choose a higher excess

In return, your insurer will offer you a lower premium. Just make sure you can afford to pay the excess.

Restrict drivers

This is a good option if you're over 25. Many policies lower your premiums by restricting your policy to drivers over a certain age.

Low kilometre benefits

Many insurers, including Budget Direct, AAMI and Everyday, will lower your premiums if you drive less. There are also some insurers, such as KOBA car insurance, that let you pay by kilometre.

Discounts

Discounts can lower costs but insurers will often increase prices after 12 months – so don't automatically renew until you've shopped around.

Review annually

As car insurance costs continue to soar, it's the renewing customers that tend to get hit hardest. Make sure you review your policy every year to find the best car insurance for your needs and avoid big price increases.

Jason Loewenthal's headshot
To make sure you get accurate and helpful information, this guide has been edited by Jason Loewenthal as part of our fact-checking process.
Gary Ross Hunter's headshot
Journalist

Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio

Gary Ross's expertise
Gary Ross has written 609 Finder guides across topics including:
  • Health, home, life, car, pet and travel insurance
  • Managing the cost of living

More guides on Finder

Go to site