The ups and downs of being a first time driver!

Obtaining your licence is a rite of passage, and yet you’ll often end up with more expensive car insurance just for being the age you are! Understandably, this may feel a little unfair. Finding cheaper car insurance for under 25s can be a challenging proposition, especially when younger drivers are statistically more likely to be involved in road accidents than other demographics. Unfortunately the statistics see Aussie drivers under the age of 25 painted with the same higher liability brush, and as a result, are likely to experience higher insurance premiums.

With our helpful service in comparing a variety of comprehensive car insurance policies, young drivers can find a level of cover that is right for them.

Determining the cost of car insurance for drivers under 25

The table below highlights the different types of insurance coverage.

Type Damage to your car Damage to other people’s property (e.g. other cars) Damage or loss caused by theft of your car Injuries or death to other people in an accident
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 Australian insurance providers use to determine the cost of coverage for younger drivers. A recent review by the Australian Transport Safety Bureau (ATBS), found drivers under 25 years of age were at greater risk for the following reasons:

  • Lack of experience
  • Deliberate risky behaviour
  • Limited ability and judgment
  • Underestimation of risks, and
  • Use of alcohol and drugs

The report also found that young drivers in Victoria are almost four times more likely to be involved in a motor vehicle crash than more experienced drivers. To put figures into perspective, 19% of drivers in Victoria who were killed in accidents fell into the 18 to 25 age bracket, despite only representing 10% of Victorian licence holders.

In New South Wales, young drivers represent almost a quarter of annual road fatalities, despite making up only about 15% of all licence holders.

As of July 2017, young drivers in Queensland made up 27.5% of the road toll, with 39 fatalities recorded. In addition to these troubling figures, 805 Queenslanders under the age of 25 have been hospitalised as a result of a car accident in 2017.

Unfortunately for young men, statistics reveal that males are at greater risk of being involved in a car accident, particularly those which total the vehicle. 80% of motorists who die due to speeding are male, and one in three drivers involved in car accidents are males under the age of 25. Therefore, it is understandable why insurance premiums tend to be marginally higher for younger males.

Important information about car insurance for young drivers

Okay, so you’re young and it’s likely you’re going to be shelling out more on car insurance than older and more experienced drivers – but don’t despair, it’s not all doom and gloom! There is a specific course of action you can take to give yourself the best possible chance of reducing your premium, both in the short term and long term.

Some handy information and tips to consider when searching for cheaper car insurance when you are young:

  • Perhaps the biggest factor that will influence your premium is the type of car you drive. Owning a sport’s, luxury or highly modified vehicle can sometimes (but not always) attract higher premiums. To potentially avoid higher insurance premiums, you can look for a car that’s safe, reliable, and doesn’t raise any alarm bells with insurance providers.
  • Alarms, immobilisers, and other anti-theft devices can contribute to a more competitive premium, and may even lead to cheaper cover.
  • Look at where you park your car. If it’s stored in a secure garage or car port – as opposed to being parked in the street – insurers may lower your premium. It’s important to advise your insurer about how and where your vehicle is parked.
  • The area and suburb you reside in may impact the cost of your premium, with some insurance providers increasing prices for riskier locations.
  • Take a close look at how you pay for your insurance. You may find that a lump annual payment works best for you – as opposed to fortnightly or monthly payment instalments.
  • Think about how you drive and use your car. Just because you own a car, doesn’t mean you need to drive it all the time. Low kilometre drivers (for some insurers, 10,000 or even 20,000 km or less annually) will attract a more affordable premium. Consider catching public transport or taking lifts from mates rather than always relying on your own car.

Above all, developing a safe driving record (i.e. not claiming on your insurance) and maintaining a good driving history (i.e. no speeding or running red lights) are sure-fire ways of progressively lowering your insurance premiums long-term. If possible, take a defensive driving course and equip yourself with skills to handle accident scenarios.

Furthermore, it’s important to ensure you service your vehicle regularly, and to keep a close eye on your tyres.

Is there such a thing as cheap insurance for young drivers?

There are cheaper insurance options like third party property with fire & theft, and these policies are considerably less expensive than comprehensive cover. However, third party insurance will not cover your own car in the event of an accident in most circumstances. You could end up losing the most valuable possession you own, or at the very least be left with a massive repair bill.

Comprehensive car insurance offers the highest degree of protection on the road. While it’s more expensive than Compulsory Third Party (CTP) cover, that doesn’t mean it’s unaffordable! Fill out a quote and compare comprehensive car insurance to find a reasonably priced policy that protects your car under any circumstance.

FAQs about car insurance for under 25 year olds

Can I drive my parent’s car without insurance

The insurance provider must be informed of any other person/s before driving the vehicle, and may add another person to the policy if required. Some insurance providers have hefty excesses for drivers under certain age brackets (25 and 30 are the most common), and if a driver were to be involved in an accident without being on the policy, the insurer may refuse to pay the claim. In short, it’s safest not to drive your parent’s car without insurance, or risk being heavily out of pocket.

At what age does my car insurance premium go down?

As each insurance company stipulates 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 lower the cost of premiums. With this in mind, it’s imperative to read and understand the fine print on your Product Disclosure Statement (PDS).

Can I add my friend to my car insurance?

You can usually add another person onto an existing policy but the insurance company will need to acquire any relevant driving information about the added person. This information normally includes their age, gender, number of years they’ve held their licence (not including Learner’s), their driving claims and history. Adding another person to your policy may increase and change the details of your premium. Again, it’s wise to check the PDS before changing your current car insurance policy.

Can I add a learner driver to my car insurance?

Most insurance providers don’t require you to list a learner driver on your policy until they receive their restricted (provisional) or unrestricted (open) licence. Learner drivers generally attract an excess (in addition to any other excess on your policy) if the driver at the time of an accident is a learner.

Compare the Market can help compare and find the best car insurance for young Australian drivers under 25 years of age. We’ve got your back. Simples.

Sources: https://www.moneysmart.gov.au/insurance/car-insurance/young-drivers