The price of car insurance can vary by as much as $860 a year, depending on which state the cover is for. That's one of the startling conclusions stemming from research by independent analysts Cannex. Its latest report shows Sydneysiders pay an average premium of $1430, 68% more than the national average of $853.

While state-imposed taxes and stamp duties vary in each state, there are also differences in the assessed risks. Cannex says the higher population density in the country's largest city means "more cars on the road and more accidents and thefts".

Cannex also found significant differences between the average premium in each state - and the cheapest reliable insurer. It believes motorists can save an average of $572 by switching to the best-value providers in its star-ratings report.

Across the country, Budget Direct Insurance achieved the best results. Cannex says Budget Direct's policies are particularly attractive for families with young drivers. Second-placed Cashback Australia provided the best policies for mature drivers in a majority of states while the only other 5-star-rated insurer, Allianz, is achieving particular success in Victoria and WA.