Cover types, costs and 2026 rules
What affects car insurance premiums in Australia, and which factors you can change
The rating factors Australian insurers use for car insurance, from postcode and driver age to excess and kilometres, and which ones you can legitimately change.
Your car insurance premium is built from the insurer's estimate of how likely you are to claim and how much a claim would cost, plus its expenses, reinsurance, GST and state stamp duty. The biggest factors are usually where the car is kept, who drives it, the car itself, your claims and driving history, the cover level and insured value, and the excess you choose. Some of those you can change honestly, such as the excess, the listed drivers or optional extras; others, like your postcode or age, you can only describe accurately.
This guide is part of the Australian car insurance overview. How taxes are added to the risk premium is covered in GST and stamp duty on car insurance.
The main rating factors
| Factor | Why insurers price it | Can you change it? |
|---|---|---|
| Garaging address (suburb or postcode) | Local rates of theft, crashes, hail, flood and repair costs | Only by giving the correct address; never use a different address |
| Where the car is parked overnight | Garage, carport, driveway or street affect theft and hail risk | Yes, if you actually change where it is parked |
| Age and licence experience of drivers | Crash risk is higher for young and newly licensed drivers | You can choose who is listed, but must list regular drivers |
| Claims and driving history | Past claims and licence suspensions predict future claims | Over time only |
| Car make, model, age and value | Repair cost, theft attractiveness, parts availability | When choosing a car |
| Modifications and accessories | Performance and cost of replacement | Remove or declare; never hide |
| Use: private, commuting, business, rideshare | Business and rideshare driving increase exposure | Must be declared accurately |
| Kilometres per year | Less driving, less exposure | Some policies price by kilometres |
| Cover level and insured value | More cover, more payouts | Yes |
| Excess | A higher excess shifts small claims to you | Yes |
| Optional extras | Hire car, windscreen waiver, no claim bonus protection | Yes |
| Payment frequency | Monthly payments often cost more in total | Yes |
Insurers also price differently from one another. Two insurers can weigh the same factor quite differently, which is why quotes for identical cover can vary widely.
Location: the factor drivers notice most
The same car and driver can be quoted very different premiums in different suburbs. Insurers look at local claim patterns: theft and break-ins, crash frequency on busy roads, exposure to hail, flood and bushfire, and the cost of repairs and hire cars in the area. After severe hail seasons or floods, premiums in affected regions can rise across the market.
The one rule that matters: always give the address where the car is actually kept overnight. Using a relative's address in a cheaper suburb is a misrepresentation, and the insurer can reduce or refuse a claim. See misrepresentation and underinsurance.
Drivers: listing them correctly
Most policies let you list drivers by name or choose a driver age restriction (for example, no drivers under 25). Adding a young or inexperienced driver raises the premium and may add an age excess if they crash. Leaving them off and letting them drive anyway usually triggers a large unlisted driver excess, or a refused claim if the policy restricts drivers. See young driver car insurance.
The car itself
Insurers price the cost of repairing a model, the cost of its parts and whether it is popular with thieves. Modern safety features can reduce crash frequency, but sensors and cameras in bumpers and windscreens can make repairs more expensive. Electric vehicles can be more expensive to repair after some types of damage. These effects show up in quotes; you cannot change them after you have bought the car, but you can get quotes before buying.
Factors you can change legitimately
Worked example (illustrative)
Josh's comprehensive renewal is $1,520 a year with a $700 basic excess. Options he tests with his insurer, each shown as an illustrative change:
| Change | Illustrative effect on premium |
|---|---|
| Increase basic excess to $1,200 | -$140 |
| Remove the hire car after accident option (he has a second car) | -$85 |
| Pay annually instead of monthly | -$60 in total cost |
| Restrict drivers to those aged 25 and over (his nephew no longer drives it) | -$110 |
| Switch from agreed value $26,000 to market value | -$45 |
Combined, $1,520 - $140 - $85 - $110 - $45 = $1,140 a year, and paying annually saves another $60 compared with monthly instalments. Each change has a trade-off: the higher excess means $500 more out of pocket in a claim, and market value cover might pay less in a write-off. Only the driver restriction is "free", because it reflects a real change in who drives. The premium reduction calculator lets you test discounts and removed extras.
Factors you should not try to game
- Garaging address: must be true.
- Regular drivers: must be listed if the insurer asks.
- Use: rideshare, deliveries and business use must be declared.
- Modifications: performance or appearance changes must be declared if asked.
- Claims history: answer the insurer's questions fully for the period it asks about.
Misstating any of these can cost far more than any premium saving.
Why premiums rise even when nothing changed
Premiums can rise at renewal because the insurer's costs rose: repair costs, parts and labour, hire cars, reinsurance, natural disaster claims across the market, and the ageing of a car's technology. If you bought directly from the insurer, the General Insurance Code of Practice requires the renewal notice to show last year's premium so you can see the increase. A rise does not mean you have done anything wrong, but it is a signal to compare. See the renewal checklist.
Frequently asked questions
Does my credit score affect car insurance in Australia?
Insurers decide their own rating factors and disclose what they ask. The common factors are those listed above. If you are unsure what an insurer uses, ask it or read its PDS and pricing information.
Does a speeding fine increase my premium?
Insurers usually ask about licence suspensions, cancellations and some driving offences. Answer the questions you are asked accurately. The effect depends on the insurer.
Is a red car more expensive to insure?
There is no general rule that colour affects price. Make, model, value and modifications matter far more.
Will a dashcam reduce my premium?
It may help prove fault in a claim, which can protect your no claim bonus, but most insurers do not advertise a dashcam discount. Ask.
Sources
- Moneysmart — how car insurance premiums are set and how to compare
- ASIC — insurance pricing and conduct
- Insurance Council of Australia — natural disaster and industry information
- Australian Financial Complaints Authority — complaints about premiums and claims
