Car insurance costs up 42%: How to avoid overpaying

Millions of Australian drivers are being hit with soaring car insurance premiums, but experts say a simple phone call could save hundreds of dollars a year. New ASIC research reveals many motorists are overpaying by automatically renewing their policies, even as insurance costs have surged 42% in just five years.

Australians have become accustomed to price rises in years - groceries, rent, energy bills, you name it. But one of the most notable has been comprehensive car insurance.

Between 2019 and 2024, premiums jumped 42%, a new report released by the Australian Securities and Investments Commission (ASIC) has revealed.

Then in the 12 months to July 2025, they rose a further 8%.

Despite the increases being well above the rate of inflation, ASIC contends that insurers haven't been providing adequate explanations to their customers as to why.

"With many households already facing cost-of-living pressures, consumers deserve to know why premiums are going up so they can decide whether to stay with their current insurer or shop around," says ASIC commissioner, Alan Kirkland.

"Most insurers gave only generic explanations in supplementary documents, with some providing no explanations at all."

Why some drivers are overpaying

Soaring premiums and a lack of transparency aren't the only issues though. The corporate regulator found that many customers are paying much more than they need to.

The main culprit? Apathy. Two thirds of consumers renewed their latest policy with their existing insurer, with 40% of those admitting that they didn't shop around or try to negotiate a better deal.

As ASIC's research found though, pushing back against your insurers' renewal offer can be beneficial, with a third of customers walking away with a cheaper premium for doing so.

"The problem is that not everyone has the time, confidence or capability to negotiate with their insurer, and many may not even know that this is possible," Kirkland says.

"Sadly, these findings indicate that sometimes loyalty is not repaid."

The case for comparing quotes

For customers who are determined to get a better car insurance deal, one of the first steps worth taking is comparing their existing offer to the broader market.

Sarah Orr, a spokesperson at Compare the Market, explains that this may be particularly important for those who haven't shopped around in recent years.

"When you sign on for a car insurance policy, a lot of the time you'll get discounts upfront - the little sweeteners that insurers use to entice you in.

"But then year on year, you'll often see a quite a significant premium increase because all of those introductory discounts will have fizzled away."

So how many quotes should customers aim to get? Orr suggests that a quote from five or six different insurers should give people a good sense of their options.

"You can use comparison sites to you get quotes from several insurers - to see how they compete on price side by side.

"But if there are brands you like that aren't featured, go directly to the insurers sites to run some quotes yourself."

Asking your insurer for a better deal

With competing quotes in hand - especially if they're better value - insurance customers will be in a stronger position to go back to their insurer to ask for an improved offer.

"I would also look at the insurer's website and what they're offering new customers. Sometimes they'll give 10% off to new customers who sign up online, so see if they can match that," Orr recommends.

Ultimately though, Orr says that whether or not someone is successful in negotiating may come down to the individual's situation and the insurer's desire to retain them.

"Insurers used to have more of an appetite for negotiating, but they seem to be playing that retention game a bit less.

"But going in informed won't hurt. And if they [the insurer] say no, then perhaps it's time to switch.

"Interestingly, the home loans market is actually a bit different. Lenders are really competitive and want to retain their customers, so people are getting some good results negotiating there."

Four more ways to cut your car insurance costs

Even if customers don't have any joy negotiating a cheaper premium with their current insurer, Orr says that there are other levers they can pull.

1. Increase your excess

"A lot of people choose a really low excess and pay a higher premium for the privilege. But if you're a safe driver who hopefully won't need to claim, then setting a higher excess could help you save.

"You could even put the money you save into your emergency fund or offset account. That way it's working for you, but if you do need to make a claim, it's there."

2. Opt for a low-kilometre policy

"Drive less, pay less or low-kilometre policies are becoming increasingly popular.

"If you're spending less time on the road, it could be worth updating your kilometre estimate and seeing if one of these policies would be suitable, because the premiums can be more reasonable."

3. Update your details

"If you've recently moved and you're parking your car in a garage rather than on the street, that can help shave money off your premium. Or if you're in a suburb that's considered safer by your insurer.

"You can't build your life around your insurance policy, but if your life circumstances have changed, then it's possible that you could be paying less."

4. Switch to annual payments

"It's not true for every insurer, but many do charge extra for monthly payments. So, when you generate a quote, toggle the options to see what it would cost you to pay monthly versus annually.

"Then if you are able to pay upfront, sometimes that can take a decent chunk off the premium."

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