Australians pay 47 percent more than they did five years ago for car insurance, surging to an average cost of $1,472 (US$930) per year, or $123 monthly, according to a new car insurance report.
Financial comparison website Mozo released the report on Sept. 28 titled “Pedal to the Metal,” which showed a 24 percent increase in premiums in 12 months.
Mozo PR & Communications Manager Rachel Wastell said the “staggering” figures came from comparing 10,000 insurance quotes and a nationally representative consumer survey.
“It’s only when you don’t have car insurance, and something goes wrong that you realise how important it is, but that doesn’t mean you have to pay through the nose to get a good cover,” Ms. Wastell told 2GB radio.
“As insurance costs continue to rise yearly, shopping around to get the best deal that suits your needs becomes even more important. Several factors can dramatically change how much drivers pay for cover, so pre-purchase research is paramount.”
Male drivers were found to pay $1,578 more on premiums than female drivers ($1,358) because men are more likely to get into car accidents, accounting for nearly 55 percent of driver deaths and severe injuries in New South Wales (NSW) between 2015 and 2019.
Young drivers also pay significantly higher premium than older drivers, meaning young male drivers cop the highest annual car premiums compared to any other demographic.
The report also found differences in premiums when it came to car colours. Ms. Wastell said neutral car colours cost just $1,373 to insure on average compared to black cars ($1,564) and white cars ($1,464). Meanwhile, bright-coloured car costs changed dramatically, with green the cheapest colour to insure.
Premium costs also changed dramatically with a car’s age.
“After 11 years, the car costs can drop to around $1,300, but brand new cars can cost around $1,731 to insure,” Ms. Wastell said.
Drivers in the most populous states of Victorian and NSW pay the most on average ($1,817 and $1,717, respectively). The Northern Territory is surprisingly also at the high end ($1,685) due to wet season flood risk.
Meanwhile, Tasmanian and Western Australian drivers pay the least ($1,183 and $1,264, respectively), and Queensland ($1,285), ACT ($1,310), and South Australia ($1,295) make up the middle.
Electric Vehicle Insurance Soars
Further, the report found electric vehicles (EVs) are generally the most expensive fuel type to insure, at an average annual premium of $2,517 compared to $1,816 for hybrid vehicles and $1,380 for standard petrol vehicles.“EVs and hybrids are becoming increasingly popular, but current high purchase and insurance costs will need to come down to ensure better value and accessibility for drivers,” it said.
Underdeveloped EV supply chains cause escalated upfront and repair costs, which in turn makes many classic car insurance claims more expensive or uncertain to the provider, according to a statement from the Insurance Council of Australia (ICA).
“Far less could go wrong with an EV, making the likelihood of filing a claim pretty small. However, if something goes wrong, it’s unclear how long it will take to fix it,” Electric Vehicle Council chief executive Behyad Jafari said.
EV insurance uncertainty was a barrier for Australians to change from standard petrol vehicles, according to insurance company Youi.
“Now EV ownership is becoming a more real possibility, customer thoughts are turning to practical aspects like car insurance,” Youi Head of Vehicles Marni Jackson said.
Insurers were warned that EV premiums would rise unless manufacturers improve access to battery data and address barriers to repairs after minor collisions.
However, Youi Products and Partnerships Executive General Manager Tony Antonucci said, “Car insurance premiums on our electric and newer Internal Combustion Engines (ICE) vehicles tend to be very similar—for insurers, the switch to electric vehicles should be an easy swap-over. For example, it’s not the dramatic change we expect with driverless cars.”
Ways to Save, According to Experts
However, Finder insurance spokesperson James Martin said rising car insurance premiums are partly due to increased costs for parts and repairs. Additionally, pandemic-related supply disruptions meant long delays in new car imports, forcing motorists to drive older vehicles for longer.Mr. Martin said while the increase in old car usage and breakdowns led to higher costs, several ways exist to decrease them.
“Car owners could also remove cover for under-25 drivers if that’s not a household necessity, and those who drive fewer kilometres, especially those driving less than 10,000 kilometres a year, might also be eligible for a discount because the less you drive, the lower the risk of an accident and reduced wear on the car.”
Meanwhile, Canstar Finance Expert Steven Mickenbecker said switching from a pricier insurance deal to a cheaper option could save Australians $700.
Mr. Mickenbecker said car insurance is unavoidable, and the cost of unexpectedly replacing a car is “too big to handle on our own.”
“Drivers should always treat receipt of the annual insurance renewal as a reminder to compare policies,” he said.
“Go online and obtain a fresh quote from your insurer and quotes from the five-star rated policies. It’s never been easier to switch lanes to a new insurer to try and save money.”
