The term ‘excess’ is commonly used when dealing with insurance documents, but what does it mean, and what will it cost?
Motoring
How much does car insurance cost?
Understanding how much car insurance costs in Victoria is essential for every driver, whether you're just starting out or reassessing your cover.
Whether you're a new driver preparing to hit the road or a seasoned motorist reviewing your insurance options, knowing what influences premiums and how to get the best value can save you hundreds of dollars each year.
In Victoria, car insurance isn't just about legal compliance. It's about financial protection in a state where weather events, high traffic volumes, and urban driving risks can contribute to accidents and claims.
This guide breaks down typical car insurance costs, the key factors that influence premiums, and practical ways to get the best value.
Average car insurance costs in Victoria
The average cost of car insurance in Australia varies widely depending on the type of cover and the driver's circumstances.
Comprehensive car insurance generally costs more than third party policies, as it provides broader protection, including cover for your own vehicle.
Premiums can range from several hundred dollars per year for basic third party property damage insurance to more than a thousand dollars annually for comprehensive cover on newer or high-value vehicles. Location, age, driving history and vehicle type all influence where you fall within this range.
Rather than focusing on averages, it's important to compare policies based on your individual needs and the level of protection offered.
Car insurance costs vary widely depending on your car, your circumstances, and the type of cover.
What factors affect car insurance costs?
Car insurance premiums - the up-front cost for your car insurance - are based on a range of factors that help insurers assess risk.
Age and driving experience
Younger drivers, especially those under 25 or with limited driving experience, generally pay higher premiums. Insurers statistically view this group as higher risk. Conversely, experienced drivers, particularly those with a clean driving history, often enjoy lower premiums.
Driving record and claims history
Your past driving behaviour is a major determinant of insurance cost. Drivers with traffic violations or past claims often pay more.
Vehicle make and model
The type of vehicle you drive also affects cost. Cars with higher market values, powerful engines, or expensive repair costs usually cost more to insure. On the other hand, safety features such as autonomous emergency braking, parking sensors, and anti-theft systems can help reduce premiums.
Location within Victoria
In Victoria, and Australia, location plays a significant role, as insurers consider local traffic conditions, theft rates, and weather risks. Urban areas with higher traffic density may attract higher premiums, while regional areas can sometimes be cheaper to insure.
Usage and annual kilometres
How much and where you drive affects risk and cost. Vehicles driven frequently, used for commuting long distances, or parked on the street overnight may attract higher premiums than cars used occasionally and stored in a secure garage.
Excess amount
Your car insurance excess is the amount you agree to pay out of pocket when you make a claim. A higher voluntary excess typically lowers your premium. However, if you need to claim, you must be prepared to pay that amount.
Some policies include different excesses depending on who was driving at the time of the incident, such as an age-based excess for younger drivers.
Car insurance premiums are based on a range of factors that help insurers assess risk.
How to lower your car insurance premium
There are several ways Australian drivers may be able to reduce the cost of car insurance.
Review your policy
Regularly reviewing your policy and comparing cover can help ensure you are not paying for features you no longer need, while still maintaining appropriate protection.
Maintain a clean driving record
Maintaining a clean driving record and avoiding at-fault claims can help keep premiums down over time.
Choose a practical vehicle
Choosing a car with strong safety ratings and lower repair costs may reduce insurance costs, as can parking your vehicle in a secure garage.
Adjust your excess strategically
Increasing your excess can lower your premium, provided you are comfortable paying more if you need to make a claim.
The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.
