A study by Money.com.au has found that 15% of Australians view car insurance as their most burdensome expense, amounting to roughly 2.8 million people nationwide.
The survey placed car insurance as the third most disliked bill, trailing behind electricity bills (27%) and council rates (18%) for property owners.
The study found that younger Australians were more likely to view car insurance as a financial burden. Among respondents, 18% of Gen Z listed it as their least preferred bill, followed by 17% of Millennials. In comparison, 14% of both Gen X and Baby Boomers expressed the same concern.
Finance expert Sean Callery from Money.com.au said car insurance remains an unavoidable expense but continues to be a pain point for many, particularly younger drivers.
“Car insurance is one of those things you’re relieved to have when you need it, but it’s clearly also a significant source of frustration, particularly for Australians under 25 who are often on lower incomes and just starting their careers, but they face higher premiums due to their risk profile,” he said.
According to figures from the Australian Automobile Association (AAA), the average annual cost of car insurance in major cities is $2,736, while regional households pay an average of $2,371 per year.
Survey results indicated that residents of New South Wales (17%) were most likely to find car insurance to be their most dreaded expense, followed by those in Victoria (15%) and Queensland (14%). Western Australia and South Australia had the lowest percentages, with 13% of respondents listing car insurance as their least preferred bill.
AAA data also highlighted a significant cost gap between metropolitan and regional areas. In New South Wales, Sydney households pay an average of $1,386 more per year on car insurance compared to those in regional parts of the state.
Figures from the Australian Bureau of Statistics (ABS) showed that insurance costs increased by 1.1% in the December 2024 quarter and have risen 11% over the past year.
The latest data highlighted the role of insurance brokers in identifying the best deal for consumers, including:
“If you’re not comparing your insurance at least every 12 months, you could be leaving money on the table and letting insurers cash in on your loyalty,” Callery said.
Meanwhile, a separate report published in December 2024 by the Council of Australian Life Insurers (CALI) found that Australians are nearly three times more likely to insure their vehicles than take out life insurance.
Based on a survey of more than 5,000 working Australians, the research found that while 79% of respondents have car insurance, only 34% hold life insurance.
The CALI report outlined coverage preferences among different age groups:
The data indicated that Australians prioritise insuring physical assets such as vehicles and homes, while life insurance uptake remains lower across all age groups.
With rising living costs, the study found that nearly half of those surveyed would reduce voluntary superannuation contributions before cutting other expenses. Life insurance was identified as one of the first expenses that Australians consider reducing, with respondents being three times more likely to cut life insurance than car or home insurance.
CALI chief executive Christine Cupitt said the findings highlight challenges in accessing financial advice, which could be contributing to underinsurance.
The advice accessibility crisis in this country is leaving far too many people underinsured and unprotected when it comes to their future financial security,” she said.
