Kayonews+Car insurance in Australia has become a significant household expense, and many drivers are looking for ways to reduce their premiums without giving up important protection.
Recent guidance from Moneysmart says motor vehicle insurance premiums increased by 8% in the 12 months to July 2025, while 74% of consumers who received a renewal notice in the previous 12 months were quoted a higher premium than the year before.
The good news is that there are several ways Australian drivers can potentially reduce their car insurance costs in 2026.
1. Compare Car Insurance Quotes Before Renewal
One of the most important ways to reduce your premium is to compare policies before automatically renewing.
Insurance companies can charge different prices for similar levels of cover, and policies can also have different exclusions, conditions and discounts.
When comparing car insurance quotes, check:
- Annual premium
- Excess
- Coverage limits
- Exclusions
- Optional extras
- Repair options
- Rental car coverage
- Roadside assistance
Don’t compare the price alone. Make sure you’re comparing similar levels of protection.
2. Ask Your Current Insurer for a Better Price
You don’t always have to switch insurers to save money.
Moneysmart reports that 31% of customers who contacted their insurer and asked received a lower premium without reducing their cover.
Before accepting your renewal price, ask:
- Can you match a competitor’s quote?
- Am I receiving every discount I’m eligible for?
- Is there a cheaper option with a different excess?
- Can I remove extras I don’t need?
- Has anything changed that should lower my premium?
A short conversation with your insurer could potentially save money without changing your policy.
3. Increase Your Excess
Your excess is the amount you generally pay when making a claim.
Choosing a higher excess can reduce your insurance premium.
However, this strategy comes with a trade-off.
A lower premium means you may save money each year, but you’ll have to pay more out of pocket if you make a claim.
Only choose an excess that you could comfortably afford.
4. Pay Your Premium Annually
How you pay can also affect the total cost.
Moneysmart says recent ASIC research found that paying insurance by instalments can cost 10–20% more over a year than paying the premium upfront.
If you have enough savings available, ask your insurer whether paying annually would reduce your overall cost.
Before choosing this option, make sure the upfront payment fits comfortably within your budget.
5. Remove Optional Extras You Don’t Need
Some drivers pay for features they rarely use.
Depending on the policy, optional extras can include:
- Rental car coverage
- Roadside assistance
- Accommodation
- Additional transport benefits
- Other optional protections
Moneysmart recommends reviewing your existing cover and checking whether you are paying for extras you don’t need.
Don’t remove important protection simply to save money. Instead, identify features that duplicate coverage you already have or that don’t fit your circumstances.
6. Take Advantage of Discounts
Australian insurers may offer different discounts depending on the company and your circumstances.
Potential discounts can include:
- Online discounts
- No-claim bonuses
- Multi-policy discounts
- New-customer discounts
- Loyalty discounts
- Family discounts
Moneysmart notes that discount availability and conditions can vary between insurers.
Ask your insurer for a complete list of discounts rather than assuming they have automatically applied every discount available.
7. Tell Your Insurer If You Drive Less
Your driving habits can affect your insurance premium.
If you now work from home, use public transport, carpool, or have otherwise reduced your annual kilometres, tell your insurer.
Moneysmart specifically notes that changes such as teleworking or retirement may reduce premiums because the vehicle is used less for commuting.
Make sure your information is accurate. Providing incorrect information about how the vehicle is used can create problems if you need to make a claim.
8. Choose the Right Type of Car Insurance
Australia has several types of car insurance, including:
- Compulsory Third Party (CTP)
- Third Party Property Damage
- Third Party Property Damage, Fire and Theft
- Comprehensive insurance
Each type provides a different level of protection.
The cheapest option isn’t necessarily the best option.
For example, comprehensive insurance generally provides broader protection for your own vehicle, while third-party policies provide less extensive protection.
Consider the value of your vehicle, your financial situation and how much risk you can afford to take.
9. Consider Your Vehicle Before Buying
Your choice of vehicle can influence insurance costs.
Insurers may consider factors such as:
- Vehicle value
- Repair costs
- Theft risk
- Safety features
- Driver profile
- Vehicle usage
- Claims history for similar vehicles
If you’re planning to buy a new car, get an insurance quote before completing the purchase.
A vehicle that looks affordable to buy may cost considerably more to insure.
10. Review Your Policy Every Year
Don’t assume your current policy remains the best deal forever.
Your circumstances may have changed since your last renewal.
Review your policy if:
- You drive fewer kilometres
- You move to a new suburb
- You start parking in a secure garage
- You buy a different vehicle
- Your vehicle becomes older
- Your household drivers change
- You no longer need certain extras
Moneysmart recommends comparing insurers before renewal rather than simply accepting the same policy each year.
What Determines Car Insurance Costs in Australia?
Your insurer may consider factors including:
- Your age
- Driving history
- Where you live
- Where the car is parked
- Vehicle type and value
- How often you drive
- Type of cover
- Excess
- Claims history
Moneysmart explains that insurers consider both the likelihood of a claim and the potential cost of repairing or replacing the insured vehicle when determining premiums.
Is Cheap Car Insurance Always Better?
No.
A policy with the lowest premium may provide less protection or have a higher excess.
When comparing cheap car insurance Australia options, look at:
| Factor | What to Compare |
|---|---|
| Premium | Annual total cost |
| Excess | Amount paid when claiming |
| Coverage | What is protected |
| Exclusions | What isn’t covered |
| Limits | Maximum claim amounts |
| Extras | Optional benefits |
| Repairer choice | Who can repair your vehicle |
| Value | Overall protection for the price |
The best policy is usually the one that provides appropriate protection at a price you can afford.
Be Careful With Comparison Websites
Comparison websites can be useful, but they may not show every policy available in the market.
Moneysmart warns that many comparison websites receive payments from insurers and may not include every insurance product.
For that reason, consider using comparison websites as a starting point and then checking insurers directly.
What About Add-On Car Insurance?
Be cautious when you’re offered additional insurance products when buying a vehicle.
Examples can include:
- Mechanical breakdown insurance
- Tyre and rim insurance
- Other dealership add-ons
Moneysmart says you don’t have to buy add-on insurance and recommends considering whether you already have similar protection or could cover the potential expense another way.
FAQ: Car Insurance Australia 2026
How can I reduce my car insurance premium in Australia?
Compare multiple quotes, ask your insurer for a discount, review optional extras, consider your excess, check available discounts and tell your insurer if your driving habits have changed.
Is it cheaper to pay car insurance annually?
It can be. Moneysmart says paying by instalments may cost more over a year, although the exact difference depends on the insurer and policy.
Does increasing my excess reduce my premium?
It can. A higher excess generally means you accept more of the cost when making a claim, which may reduce the premium.
Should I compare car insurance every year?
Yes. Comparing quotes at renewal can help you determine whether your current policy remains competitive.
Does driving less reduce car insurance?
It can, depending on the insurer and policy. If your annual kilometres have decreased, tell your insurer and ask whether your premium can be adjusted.
Is comprehensive car insurance worth it?
It depends on your vehicle, finances and risk tolerance. Comprehensive insurance generally provides broader protection, but it also typically costs more than less extensive forms of cover.
Bottom Line
The best way to reduce car insurance costs in Australia in 2026 isn’t simply to choose the cheapest policy.
Instead, compare several car insurance quotes, review your coverage, ask your insurer for discounts, consider your excess, remove unnecessary extras, and update your insurer when your driving circumstances change.
With premiums continuing to put pressure on household budgets, spending a little time comparing policies before renewal could help you find better value without sacrificing the protection you actually need. (*)
Editor : Fanda Yosephta
