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.
Car insurance options for drivers under 25
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|
How is the cost of car insurance for young drivers calculated?
There are various factors that insurance providers 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
- your gender
- your address
- your driving history.
Our car insurance comparison tool helps you compare a variety of insurance policies and prices. It takes just a few minutes and is easy to use and completely free.
Why young drivers are more likely to be involved in an accident
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]
- 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.
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.
Ways to reduce the cost of car insurance for young drivers
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:
- the type of car you buy. Cars that are modified and expensive models may attract higher premiums. These higher costs can often be avoided 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; and
- how safely you drive. By not claiming on your insurance and avoiding fines, you could lower your insurance premiums long-term.
Read our guide for more helpful tips on how you may reduce your car insurance premium.
Is there such a thing as cheap insurance for young drivers?
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.
Other costs associated with car insurance for young people
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 25 for example – 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 always understand the terms of your policy – which is found in your Product Disclosure Statement (PDS).
Frequently asked questions
Ready to compare car insurance for young drivers?
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.
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.