Obtaining your licence is a rite of passage, giving you the freedom and independence to do all the exciting things that you want to do. However, with this freedom comes responsibility, and for younger drivers that means learning about car insurance.
We’re here to help you navigate the car insurance landscape with this guide to insurance for young drivers.
Car insurance options for drivers under 25
We understand it could be overwhelming with the types of car insurance available to both younger and older drivers. We’re here to help break it down so you understand the policies to help you get your car on the road quicker.
There are four options of insurance coverage:
Did you know? It’s a legal requirement to have Compulsory Third Party (CTP) on any car that’s driven on Australian roads; in some states, CTP is automatically included in your registration.
The table below highlights the differences between the four types of insurance coverage and what they offer.
|Type||Damage to your vehicle||Damage to other cars and property||Damage or loss caused by theft or fire||Liability of injuries or death to others |
|Compulsory Third Party (CTP)||No||No||No||Yes|
|Third Party Property Damage||No||Yes||No||No|
|Third Party Fire and Theft||No||Yes||Yes||No|
Before taking out car insurance it’s important that you read the Product Disclosure Statement (PDS) to understand your policy’s inclusions, exclusions and conditions to find the right type of policy for you.
How is the cost of car insurance for young drivers calculated?
There are various factors that insurers use to determine the cost of coverage for all Australians, including younger drivers. These factors include:
- The make, model and value of your car
- The condition of your vehicle
- Your age, gender and address
- Your driving history
- The level of coveryou choose
- Any optional extras you add to your policy (such as roadside assistance).
Our car insurance comparison tool helps you compare a variety of insurance policies and prices. It takes just a few minutes, is easy to use and is completely free.
Young drivers more likely to be involved in accidents
According to the Queensland Government, drivers aged between 16 and 24 are 60% more likely to be involved in serious crashes than mature drivers.1 This is a reason why car insurance for a 17-year-old, for example, would usually cost more than it would for a more experienced driver.
Some key reasons younger drivers are more likely to be involved in accidents include:2
- Driving while intoxicated
- Driving while tired
- Being distracted behind the wheel
- Failing to wear a seatbelt
- Being over-confident
- Driving with other risk-takers in the car.
As a result of these factors, car insurance for young drivers in in this age group would generally cost more than it would for people over 25.
Ways to reduce the cost of car insurance for young drivers
By now, you know that car insurance for younger drivers will likely cost more than it would for older motorists. Still, there may be ways you can reduce your premiums. Here are some factors to take into consideration:
- The type of car you buy. Cars that are modified and expensive models may attract higher premiums. You can often avoid these by opting for safe and reliable models that won’t cause concern for insurers.
- How you protect your car. Protecting your vehicle with anti-theft devices such as alarms or immobilisers may lead to more affordable cover.
- Where you park your car. Premiums are usually more expensive if your car is parked on the street, so, where possible, park it in a garage, carport or another secure location. Your insurer may require this information when you purchase a policy.
- How you pay your insurance.It may be cheaper to pay your annual premium in full rather than in instalments. It’s a higher upfront cost, but you could save in the long run.
- How you use your car. The less you drive your vehicle, the lower premiums are likely to be.
- How safely you drive. By not claiming on your insurance and avoiding fines and licence suspensions, you could lower your insurance premiums long-term.
Read our guide for more helpful tips on how you can reduce your car insurance premiums.
Is there a way to get cheaper insurance for young drivers?
There are cheaper insurance options like Third Party Property Damage (TPPD) and Third Party Fire and Theft (TPFT) insurance. These policies are typically more affordable than Comprehensive car cover. That said, TPPD and TPFT insurance will not cover your car in the event of an accident, only a third party’s property that you damage in an incident.
Comprehensive car insurance offers the highest degree of protection on the road. While it’s more expensive than third party insurance, that doesn’t mean it’s unaffordable.
One way to find a great-value policy is by comparing policies, and shopping around allows you to compare the cost of deals. Before you decide on car insurance, consider the type of protection you require. Keep in mind that the factors listed above (such as the car you drive and where you park it) may impact the amount you pay.
Here’s a breakdown of what’s included in each level of car insurance.
Other car insurance costs to be aware of
Other factors may impact your premium and what you pay when you claim. Here are a few things you may want to consider:
- The excess you pay. An age or inexperienced driver excess may apply for drivers under a certain age in addition to the usual excess you agree to pay.
- Additional fees. Some insurers may charge you a fee if you cancel a policy outside the agreed cooling-off period.
It’s important to understand the terms and conditions of your policy, which is found in your Product Disclosure Statement (PDS).
Meet our car insurance expert, Stephen Zeller
Compare the Market’s General Manager of General Insurance, Stephen Zeller, wants to make sure young drivers are equipped with knowledge and understanding so they can navigate their car insurance policies with ease.
Stephen has more than 30 years of experience in the financial services industry, and is an Allied Member of the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) and helps review general insurance content on Compare the Market to ensure it accurately breaks down complex insurance topics.
Ready to compare car insurance for young drivers?
Whether you’re looking for car insurance for 18-year-olds or a policy for someone in their early 20s, we make it easy for drivers under 25 to compare a range of car insurance options. Our comparison tool is free, takes just minutes to use and provides you with a variety of deals, prices and features to consider.