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Australian drivers battling high insurance costs are turning to cost-cutting measures to save – some savvy and effective, others potentially risky trade-offs – according to Canstar.
Canstar research shows the annual cost of comprehensive car insurance has risen by 5.8% over the past year, or an average of $122, based on the analysis of over 67,000 quotes.
In response to rising premiums and growing pressure on household budgets, new research reveals that close to half of all drivers (48%) have taken steps since their last renewal to lower their car insurance costs.
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| Have you taken any steps since your last renewal to reduce your car insurance costs? | |
|---|---|
| Yes | 48% |
| No | 52% |
Source: Canstar. National survey of 2,454 Australian adults with car insurance conducted online in April 2025.
Steps taken to save on car insurance
Of those who have taken action, the survey found people are focused on paying their premiums annually (32%) and switching insurance for a competitive price (30%) to reduce costs.
However, others are opting for more risky strategies such as reducing their estimated kilometres (17%), removing listed drivers who still regularly drive the car (7%) and switching to third-party property cover (6%).
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| If you have taken steps since your last renewal to reduce your car insurance costs, what have you done? | |
|---|---|
| Paid my premium annually instead of monthly | 32% |
| Switched insurers for a cheaper price | 30% |
| Increased my excess | 24% |
| Bundled my car insurance with other policies (e.g. home insurance) | 19% |
| Adjusted my estimated annual kilometres | 17% |
| Reduced my cover limits or optional extras | 9% |
| Removed listed drivers who regularly use the car | 7% |
| Opted for usage-based or pay-as-you-drive cover | 7% |
| Changed how and where I park my car to lower my premium | 6% |
| Switched from comprehensive to third-party property cover | 6% |
| Paid cash for minor accidents so it hasn’t impacted my no-claim bonus | 5% |
| Added an alarm system to my car to reduce the cost | 4% |
| Other (please specify) | 2% |
Source: Canstar. National survey of 2,454 Australian adults with car insurance conducted online in April 2025.
Switching can reduce your premium by more than 30%
Drivers willing to switch insurers could save hundreds on their comprehensive car insurance. Someone paying an average premium of $2,226 who switches to one of Canstar’s top-rated policies could potentially save $692 in one year.
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| Average annual car insurance premiums compared to top-rated | ||
|---|---|---|
| Average annual premium | Average of 5-star rated Canstar policies | Potential savings |
| $2,226 | $1,534 | -$692 (-31.1%) |
Source: Canstar. Based on comprehensive policies rated in Canstar’s 2024 and 2025 Car Insurance Star Ratings. Premiums include quotes for both new and used cars for a range of scenarios, with a state-specific target excess ranging from $800 to $1,000.
Canstar Data Insights Director, Sally Tindall says, “It’s understandable that drivers are looking for ways to reduce the cost of their cover, but it’s critical to understand when the savings are wise and when they carry serious risks.”
“Some steps, such as paying your premium annually and comparing your options every year, could save you money without compromising on cover.
“However, it’s important to know where to draw the line. Underestimating your kilometres or removing regular drivers from your policy might seem harmless, but if you need to make a claim, it could have consequences that outweigh any savings from a lower premium.
“If you don’t drive often, you may be eligible for a low-kilometre discount. However, accurately reporting your mileage is often required to qualify for these discounts.
“While many policies cover unlisted drivers, this depends on the insurer and the specific terms of a policy. Some insurers will charge you a higher excess if you weren’t driving when the accident occurred.
“Another cost-cutting tactic is to downgrade from comprehensive cover to third-party property. While this will deliver noticeable savings upfront, it offers no protection for your own car if you’re at fault in an accident, potentially leaving you with significant out-of-pocket repair costs, or worse, being left without a car altogether.
“For drivers looking to cut costs without sacrificing protection, switching insurers can be a straightforward way to achieve this. While your annual renewal notice is a good opportunity to compare prices, don’t let it be a roadblock to savings if you want to switch sooner. Drivers may not realise you can usually switch at any time, although some insurers may charge a cancellation fee for ending a policy early.
“As with all insurance, check the fine print of your new policy before you switch to make sure you’re covered for everything you expect in your insurance.”
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