Obtaining your licence is a rite of passage, and yet car insurance for young drivers is usually more costly than it is for older drivers. Unfortunately, the statistics see under-25s painted with the same higher liability brush, often resulting in higher insurance premiums.
With 225 drivers between 17-25 dying in road accidents in 2018,[i] car insurance for drivers under 25 is often more expensive because insurers pay more claims for this age group than any other.[ii] Car insurance for p-platers, who are often younger drivers, may also be expensive. Provisional drivers are required by law to display p plates while driving.
While it may be more expensive, younger people can still be covered by the exact same types of car insurance.
In fact, it’s a legal requirement to take out Compulsory Third Party (CTP) on any car that’s driven on Australian roads. Aussie motorists also have the option of purchasing alternative car insurance products. The table below highlights the different 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 | No | Yes | No | No |
| Third party property, fire and theft | No | Yes | Yes | No |
| Comprehensive | Yes | Yes | Yes | No |
There are various factors that insurance providers use to determine the cost of coverage for all Australians, including younger drivers. These factors include:
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The Department of Transport and Main Roads for Queensland states that drivers aged between 16 and 24 are 60% more likely to be involved in serious crashes than mature drivers.[iii] 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 of the top reasons why younger drivers are involved in accidents include:[iv]
Meanwhile, young drivers are four times more likely than other age groups to be involved in an accident.[v] Those aged between 20 and 24 are most likely to cause an accident under the influence of alcohol. As a result of these factors, car insurance for people in this age group would generally cost more than it would for drivers over 25.
By now you know that car insurance for younger drivers is likely going to 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:
Read our guide for more helpful tips on how you may reduce your car insurance premium.
There are cheaper insurance options like Third Party Fire and Theft, and these policies are typically cheaper than Comprehensive car cover. That said, Third Party Fire and Theft insurance will not cover your car in the event of an accident. Conversely, Comprehensive car insurance offers the highest degree of protection on the road. While it’s more expensive than Third Party Property Fire and Theft cover, that doesn’t mean it’s unaffordable. One way to find a great-value policy is by comparing policies. 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 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 for each level of car insurance for young people.
The highest level of car insurance. Covers your car if its damaged in an accident, by weather events, damaged by fire, if it’s vandalized or stolen. As well as cover for your vehicle, other cars and property damaged by you are also included.
This covers other driver’s property and vehicles if you cause an accident. It may also offer limited cover for your car’s value in an accident – but only in some circumstances. This includes if another driver causes an accident and they’re not insured.
You’ll be covered for damage to other vehicles if you cause a crash. It also provides limited cover if your car is damaged by fire or stolen.
It’s a requirement in all states and territories to take out CTP insurance (also known as Green Slip insurance in New South Wales). It only covers costs associated with the death or injury to others if you cause an accident. It doesn’t cover damage to any vehicle or property.
Other factors may impact your premium and what you pay when you claim. Here are a few things you may want to consider:
It’s important to always understand the terms of your policy – which is found in your Product Disclosure Statement (PDS).
Car insurance insures a vehicle and not individual people. Generally, you will not need to purchase a separate insurance policy to drive your parents’ car, provided that the car is insured. It’s important that your parents contact their insurer to advise that you’ll be driving their car.
Their insurer will be able to confirm whether you are covered while driving their vehicle, any amendment to premiums and what excesses may be applicable if you have an accident. Some insurers have hefty excesses for drivers under 25 or unlisted individuals. If your parents don’t advise their insurer that you are driving their vehicle, there’s a risk that the insurer will not pay out the claim or they may incur an excess that is much higher than anticipated.
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As each insurance company states different terms and conditions on their policies, there are no specific promises of lowering premiums as you get older. It generally comes down to years of driving experience and a blemish-free record that helps reduce the cost of premiums.
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If your friend will regularly be driving your car, it’s a good idea to list them as an additional driver. This is usually as simple as providing your insurance company with their information. Keep in mind that this may affect your premiums and the excess you’ll pay in the event of an accident.
Generally, insurers will require the following information:
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Every policy differs and you may not need to list a learner driver – depending on your insurer. To be safe, it’s recommended you contact your insurer so you know if learners will be covered under the policy you take out or if there are specific guidelines you need to follow. Rules surrounding those who move onto their provisional or unrestricted license can also vary between providers, so also discuss this with your insurer.
Keep in mind that if a learner is the registered owner of a car, they will need to be listed as the person insured.
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Whether you’re looking for car insurance for 18 year old’s 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.
[i] National Road Safety Strategy – ‘Road deaths by age group’ – Accessed October 2019
[ii] Understand Insurance (by Insurance Council of Australia) – ‘Car insurance’ – Accessed October 2019
[iii] Department of Transport and Main Roads – ‘Young drivers – the facts’ – Accessed October 2019
[iv] Department of Transport and Main Roads – ‘Young drivers – the facts’ – Accessed October 2019
[v] Australian Institute of Criminology – ‘Death and Injuries on the Road: Critical Issues for Legislative Action and Law Enforcement’ – Accessed October 2019
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.
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