Australians could be paying hundreds of dollars too much for car insurance, as new figures reveal average premiums rose 18 per cent over the past year.

Canstar analysis published on Wednesday showed comprehensive car insurance costs increased by $274 in just 12 months, with those in New South Wales paying the highest premiums.

The comparison firm’s finance expert Steven Mickenbecker said Australians could save up to $700 by switching from one of the pricier insurance deals on the market to a cheaper option.

“Car insurance is one of our big bills, and like other expenses it has gone up, adding to the pressure on household budgets,” he said.

“But it is a bill we can’t eliminate, with the cost of replacing our car unexpectedly too big to handle on our own.”

Who pays the most

The figures are just the latest pressure to arise out of the cost-of-living crisis, with Australians also being slammed by soaring energy bills as well as higher rents and mortgage repayments.

Mr Mickenbecker said such enormous rises were “never in doubt” with inflation driving up business costs and insurers navigating higher replacement costs for cars and parts.

A series of natural disasters over the past year – namely historic flooding across Australia’s east coast – made things even worse.

“The magnitude of the increased cost of car insurance will have surprised people, coming in at 18 per cent on average and far outstripping the inflation rate,” Mr Mickenbecker said.

“All states had large premium increases, but prices still vary dramatically depending on where you live.”

Drivers in NSW had the highest car insurance premiums, but those in Queensland have been squeezed hardest by increases over the past 12 months, Canstar’s analysis revealed.

Motorists in the Sunshine State are paying, on average, $287 more – up about 21 per cent.

That compares to an annual cost of $2312 in NSW, where prices have risen 17 per cent.

Victorians, meanwhile, will pay an average of $2195 in 2023, up $310 (16 per cent) on 2022.

The variation in prices across states makes sense, Mr Mickenbecker said, because factors like theft rates and natural disasters differ wildly across the nation.

“NSW drivers can be paying a third more than South Australians,” Mr Mickenbecker said.

Ease the squeeze

The good news is there are ways to save money on car insurance, with Canstar also on Wednesday publishing awards for the best plans on the market.

Depending on where you live and what policy you’re currently paying, you could save hundreds.

“Drivers should always treat receipt of the annual insurance renewal as a reminder to compare policies,” Mr Mickenbecker said.

“Go online and obtain a fresh quote from your own insurer and quotes from the five-star rated policies. It’s never been easier to switch lanes to a new insurer to try and save money.”

Customers in NSW could save up to $995 by switching to a top-rated policy, Canstar found, while those in Victoria could wipe up to $813 off their annual bills and Queenslanders could save $649.

Canstar’s top value policy award winners in 2023 were Bingle, Budget Direct and RolliN’ Insurance – RolliN was particularly successful; winning in NSW, Qld and Western Australia.

The National Roads and Motorists Association (NRMA), meanwhile, took out the top spot in South Australia.

National Seniors won in Tasmania and the Northern Territory.