Millions of Australians are scaling back or ditching their car insurance altogether amid cost-of-living pressures, according to new data, with survey results revealing around 15 per cent (equivalent to 3.2 million people) of Aussie drivers either cancelled or reduced their car insurance policies in the past 12 months, as premiums and the cost-of-living soar.

With the war in the Middle East continuing to push up the cost of living, Australians are forking out more for mortgage repayments, utilities like water and electricity, fuel, and groceries, with many trying to reduce spending to keep their heads above water.

While cutting discretionary spending, such as eating out, clothes and travel, is a common way for many to alleviate financial pressure, research by Australia’s most visited financial price comparison site, Finder, has also revealed that car insurance is another area many Australians are cutting back on.

With comprehensive car insurance costing an average of $1,362 and third-party insurance costing $522, the research – a survey of 1,011 Australians – conducted in February shows that these prices have contributed to 5 per cent of Australians ditching their car insurance policies entirely.

As well as broader financial pressures, the rising premiums continue to push some Australians to make difficult trade-offs when it comes to insurance, with the survey showing that a further 10 per cent have downgraded to a lower level of cover, such as switching to third-party insurance only.

Interestingly, albeit alarmingly, 3 per cent of respondents said they had no insurance beyond compulsory cover to begin with, highlighting a persistent gap in protection among drivers.

In total, the results suggest a significant portion of motorists are driving with limited or no cover beyond compulsory third-party insurance.

Taylor Blackburn, a personal finance and insurance specialist at Finder, said the number of uninsured vehicles on Australian roads is on the rise.

“Millions of Australians are looking for ways to reduce spending, and car insurance is one area where some are choosing to cut back,” said Blackburn.

While cutting car insurance might seem like an efficient way to save some big bucks, Blackburn warns that driving without sufficient insurance carries significant financial risks.

“While it may offer short-term savings, going without adequate cover can leave drivers financially vulnerable in the event of an accident, theft or severe weather damage,” said Blackburn.

“An at-fault accident could result in substantial out-of-pocket costs, particularly if multiple vehicles or property are involved.”

With research indicating that more than half of Australians have made at least one car insurance claim in their lifetime, having the bare minimum coverage is statistically the safest bet.

“It’s important for drivers to carefully consider their options before cancelling their cover entirely.”

While there is a clear increase in Australians driving without car insurance, the research found that the majority (61%) had not made any changes to their car insurance in the past year.

Meanwhile, 10 per cent of drivers said they had switched providers to secure a better deal while maintaining the same level of cover, which Blackburn says is the best option for those finding car insurance costs difficult.

“The single best way to save on car insurance whilst keeping your level of cover is to shop around,” said Blackburn.

“The best deals go to new customers. If you haven’t checked in the last two years, you are probably paying too much.”