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How can I calculate my car insurance premium?

Alex Ritchie avatar
Alex Ritchie
- 4 min read
How can I calculate my car insurance premium?

When it comes to insurance, every driver in Australia has a unique driving profile. Even drivers of a similar age living in the same neighbourhood may be paying entirely different premiums, or costs, for car insurance.

Every insurer has its own metrics and algorithms for calculating your insurance premium. But you can do some of the guesswork yourself by taking stock of your specific situation and utilising car insurance calculators. 

How car insurance premiums are calculated

To crunch the numbers yourself on how much you may need to pay for car insurance, you’ll need to know how insurance companies come to these conclusions. Insurers will look at the following key factors and circumstances, including:

  • Your age
  • Your gender
  • The make, model and year of manufacture of the vehicle
  • Your location
  • The excess you agree to pay
  • The type of policy you are considering
  • Optional extras (if applicable)
  • Any insurance claims history

To get a rough idea of what it may cost you, you could hop online to an insurance company’s car insurance premium calculator. Most insurers will provide this feature for you. Using a range of insurers’ calculators could give you a good idea of the potential cost of premiums from different insurers. 

Using an online car insurance calculator usually requires providing personal information, like that listed above. You may also be asked for your policy type preference, which may be in addition to your CTP insurance, such as third-party or comprehensive.

Alternatively, you may compare car insurance premium quotes online to see how a range of insurers compare. It may also assist in identifying if any changes in your profile may get you a lower rate somewhere else, such as an additional year of not making a claim. 

You may still need to speak to one or more insurers in order to finalise your policy and ensure you get the necessary coverage at an affordable price. But using a car insurance premium calculator may guide you in the right direction for comparing a range of options.

Consider reading the insurer’s Product Disclosure Statement (PDS) to verify that the information suggested to you online matches with the insurer’s stated policy coverage. 

How much should I be paying for car insurance?

Depending on where you live in Australia, car insurance can cost you around $1,000 every year, but it can easily climb higher, based on the make, model, and age of your car and your preferred coverage.  

There are so many different factors that can affect the cost of car insurance premiums that it is worthwhile taking the time to compare a range of options based on your personal circumstances with different insurers. 

For example, choosing a policy that covers how you value the car, also known as the agreed value, rather than the market value of the car may also cost you more. Also, if you’re a younger Australian below the age of 25, you’ll typically pay a lot more if you buy a policy in your name. This is because younger drivers are placed into a higher risk category by insurers, as they are statistically more likely to get into accidents.

The cost of your premium can vary further if you live in an area which has a higher incidence of adverse events, such as flooding or crime. You may be able to lower your car insurance premium by agreeing to pay a voluntary excess, but that usually means you’ll end up spending more out of pocket in case you are held at fault for an accident.

By understanding the key elements that influence your premium, you can make informed decisions about your coverage and costs. Remember to regularly review your policy to ensure it still meets your needs and remains competitive in the ever-changing insurance market.

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Product database updated 15 Jul, 2024

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.