Car Insurance in Australia 2025: Cheapest vs. Best Value

Car insurance is mandatory in Australia, but not all policies are equal. In 2025, the cheapest option may not always provide the best coverage. Here’s how to compare policies and choose what’s right for your budget and protection.

Car insurance is about balancing cost with protection.

Types of car insurance in Australia

• CTP (Compulsory Third Party): Mandatory. Covers injury to others but not your car.
• Third Party Property: Covers damage to other people’s property, not your car.
• Third Party Fire & Theft: Adds coverage for your car if stolen or damaged by fire.
• Comprehensive: Covers your car and others, regardless of fault.

Cheapest vs. best value

Policy Type	Typical Annual Premium	Coverage Level	Best For
CTP only	$350–$600	Injury cover only	Legal minimum requirement
Third Party Property	$450–$900	Others’ property damage	Older/low-value cars
Comprehensive	$1,200–$2,500+	Own car + others’ damage, theft, fire, weather	New/valuable cars, peace of mind

Tip: Best value usually means comprehensive coverage for newer cars, while third party may suit older vehicles with low market value.

Policy choice depends on car value, driving habits, and budget.

Factors affecting car insurance premiums

• Driver’s age and driving history.
• Car make, model, and age.
• Location (postcode risk factor).
• Usage (daily commute vs occasional use).
• Extras like roadside assistance or rental car cover.

What to avoid when choosing car insurance

• Choosing purely on lowest price without checking exclusions.
• Overlooking excess fees in case of claims.
• Not reviewing policies annually as premiums change.

Warning: The cheapest premium can become the most expensive mistake if coverage doesn’t meet your needs after an accident.

Always compare at least three insurers before renewing or switching.

FAQs

Is car insurance compulsory in Australia?

Yes, CTP insurance is mandatory, but comprehensive and other policies are optional.

Does cheapest mean worst?

Not always. Cheapest may be fine for low-value cars, but best value usually includes broader protection.

How can I lower my premium?

Increase your excess, bundle policies, park in secure locations, and maintain a good driving record.

Next steps

1. Identify your car’s market value. 2. Decide minimum coverage vs peace of mind. 3. Compare quotes online and via brokers. 4. Review your policy every renewal period.

Compare car insurance quotes (Australia)

Disclosure: This article is for information only, not financial advice. Always confirm with licensed insurers. Affiliate links may earn commissions at no cost to you.

Updated: 19 September 2025 • Location focus: Australia