Is Car Insurance Cheaper for a New Car or Used Car?
In a Nutshell: New cars are more expensive to insure than used cars — typically 20–50% more for comprehensive cover. But used cars may need a lower level of cover (third party), which can make them much cheaper overall. The sweet spot is usually a car aged 3–8 years, where repair costs are known and depreciation has levelled off.
New Car vs Used Car Insurance Costs
| Car Type | Value | Typical Comprehensive (Safe Driver, 40yo) |
|---|---|---|
| New small hatch (2025, $25,000) | $25,000 | $850–$1,100 |
| Used small hatch (2019, $15,000) | $15,000 | $650–$850 |
| New SUV (2025, $45,000) | $45,000 | $1,100–$1,600 |
| Used SUV (2020, $28,000) | $28,000 | $850–$1,100 |
| New luxury (2025, $80,000) | $80,000 | $1,800–$2,800 |
| Used luxury (2018, $35,000) | $35,000 | $1,000–$1,500 |
💡 Rule of thumb: A car loses about 20% of its insurance cost each year for the first 3–5 years (due to depreciation reducing the payout amount).
Why New Cars Cost More to Insure
| Factor | New Car | Used Car |
|---|---|---|
| Replacement cost | Higher — insurer pays more if written off | Lower — depreciated value |
| Repair costs | New OEM parts are expensive | Parts may be available cheaper (including aftermarket) |
| Technology | Sensors, cameras, ADAS = expensive to repair | Fewer sensors = cheaper repairs |
| Theft risk | Some new models are high-theft targets | Lower theft risk generally |
| Safety features | Better safety (5-star ANCAP) — reduces accident risk | May be lower safety rating |
| Loan requirement | Lenders usually require comprehensive | No loan → comprehensive is optional |
When a Used Car Might Cost More
Surprisingly, some used cars can cost MORE to insure than some new cars:
| Scenario | Why It Costs More | Example |
|---|---|---|
| High-performance used car | Sports car risk profile | 2018 Subaru WRX costs more than 2025 Hyundai i30 |
| Used luxury car | Expensive parts, even when old | 2018 BMW 5 Series costs more than 2025 Mazda 3 |
| Used imported car | Rare parts, specialist repairs | 2015 Japanese import vs 2025 Australian-delivered equivalent |
| Modified used car | Performance modifications increase risk | 2010 car with turbo upgrade |
Cover Type by Car Age
| Car Age | Recommended Cover | Annual Cost | Rationale |
|---|---|---|---|
| 0–3 years | Comprehensive (agreed value) | $800–$2,500+ | Still has value — protect your investment |
| 3–7 years | Comprehensive (market value) | $600–$1,500 | Good balance of cost and cover |
| 7–12 years | Comprehensive OR Third Party Fire & Theft | $400–$900 | Decide based on car's value vs premium |
| 12+ years | Third Party Property or TPF&T | $200–$500 | Premium may exceed 10% of car's value |
| 15+ years or under $5,000 | Third Party Property | $150–$350 | Not worth comprehensive |
The "10% Rule"
If your annual comprehensive premium is more than 10% of your car's market value, it's probably not worth having comprehensive cover.
| Car Value | Max Premium for Comprehensive to Be "Worth It" |
|---|---|
| $5,000 | $500/year |
| $8,000 | $800/year |
| $10,000 | $1,000/year |
| $15,000 | $1,500/year |
| $20,000 | $2,000/year |
Key Takeaway
- New cars cost 20–50% more to insure comprehensively than used cars.
- The sweet spot for insurance cost vs car value is usually 3–8 year old cars.
- Used luxury and performance cars can still be expensive to insure.
- Apply the "10% rule" — if comprehensive costs >10% of the car's value, consider dropping to third party cover.
- Always get an insurance quote BEFORE buying a used car — especially imports and performance models.
- Depreciation is your friend for insurance costs — each year reduces your premium.
- The cheapest option overall is a 5–8 year old standard model (Corolla, Camry, Mazda 3, i30) on comprehensive cover.
Last updated: July 2026
Disclaimer: This article provides general information about car insurance costs for new vs used cars in Australia. Individual premiums vary by insurer, driver profile, and specific vehicle model.