Car insurance for under 25s and young drivers

Drivers aged under 25 years can choose from the same three types of optional car insurance that are available to other drivers in Australia: Comprehensive, Third Party Fire and Theft and Third Party Property Damage insurance. Not to be confused with Compulsory Third Party insurance (or a Green Slip in NSW), which is a legal requirement for all registered vehicles in Australia, and it covers your legal liability for injuries and fatalities you cause on the road. It doesn’t cover vehicle or property damage.

The following policies cover vehicle damage to varying extents:

• Comprehensive car insurance typically offers the most coverage for your own vehicle. It can provide financial protection if your car is stolen or damaged by other vehicles, vandalism and weather events such as storms, hail, fire and floods. It also includes cover for other vehicles and property you damage with your car.
• Third Party Fire and Theft insurance provides cover for your car if it’s damaged by fire or it’s stolen, and some insurers may cover your car if it’s damaged by an uninsured driver. It also covers damage your car causes to other vehicles and property.
• Third Party Property Damage insurance typically only covers damage to other vehicles and property. Some insurers may provide limited coverage for your car if it’s damaged by an uninsured driver.

Always read the relevant Product Disclosure Statement (PDS) for more specific details on policy inclusions, exclusions, terms and conditions (T&Cs) and more. The Target Market Determination (TMD) could also help you figure out if an insurance product is right for your circumstances.

Car insurance is designed to help protect young drivers from the financial blow of paying for damage:

• to other cars and people’s property
• to your own car caused by another person
• caused by fire, weather or other insured events.

Meanwhile, comprehensive car insurance is the pick to get you back on the road after accidental damage that you’ve caused to your own car.

Compare the Market survey data shows that drivers aged 18-26 years are the most likely to have a car accident within the first two years of owning their vehicle.²

CTP insurance is mandatory cover for all registered vehicles in Australia. This means you can typically drive a parent’s vehicle without needing to purchase your own, separate car insurance.

To be covered by your parents’ car insurance though, many insurers will require you to be listed on the policy. If you’re not listed on the policy, and you need to make a claim, your parents may have to pay an unlisted driver excess or your claim might be denied altogether.

Your parents will need to contact their insurance provider to add you to their policy. Keep in mind that your parents’ car insurance premiums may also increase when adding you or any other younger driver to their policy.

Insurers will calculate your car insurance based on several risk factors, such as your location, type of vehicle, driving experience and claims history. For younger drivers, age will also be considered, as insurers may see inexperienced drivers as a higher risk to insure. As a result, young drivers typically end up paying higher premiums.

Other factors that may influence your premium include:

• your level of cover
• the market value of your car
• any optional extras you add to your policy
• your location
• your driving history.

Yes, young drivers can find ways to get cheaper car insurance, including comparing quotes from a range of insurers, parking more securely, being behind the wheel less, paying premiums yearly and bumping up your basic excess.

Here’s how these things may help you save:

• Parking in a secure location. Parking your car on the street could leave it more exposed to theft and damage from other vehicles and weather events. Insurers may offer a lower premium if you park your car in a garage.
• Driving less. Some insurers may offer low-kilometre policies to motorists who drive infrequently. These policies are typically cheaper than standard comprehensive cover.
• Paying annual premiums. Paying for your insurance in one lump sum may be cheaper in the long run, as fortnightly and monthly instalments typically include additional fees.
• Adjusting your excess. Increasing your excess may decrease your overall premium. However, it’ll also increase the amount you’ll pay at claim time so always make sure your excess is set to an amount you could afford to pay.

Other methods to consider include picking a lower-value but still safe car, maintaining a clean driving record and opting for Third Party Property Damage cover only. Remember, though, if you drop down to TPPD, you’ll foot the bill for any accidental damage you cause to your car.

Find out more about how you could potentially reduce your car insurance premiums.

There’s no specific age where your car insurance premium will go down, since every insurer calculates this risk differently. While age may be a factor in your car insurance premiums, driving experience and having an unblemished claims history may play a bigger role in decreasing your premiums in the long run.

Yes, you can generally add your friend to your car insurance policy. To do this, you’ll need to contact your insurer and provide information about the person you’re adding to your policy. This may include details such as their name, date of birth and driver’s licence details, as well as their driving and claims history.

Yes, some insurers will allow you to add a learner driver to your car insurance policy, but not all of them will require you to do so. Consider contacting your insurer to check if you need to add a learner driver before they get behind the wheel of your car.

Some things to consider when adding a learner driver to your policy may include:

• Increased premiums. Your premiums may increase if you add a learner driver to your policy. Insurers generally see inexperienced drivers as a higher risk to insure and may adjust your premiums accordingly.
• Age excess. The L-plate driver on your policy may have to pay an additional excess at claim time if they’re under a certain age.
• Inexperienced driver excess. Your insurer may include an additional excess for drivers who haven’t been on an open licence for a certain period of time.
• Unlisted driver excess. If a learner driver isn’t listed on your policy, and your insurer requires you to list them, they may charge an unlisted driver excess if the L-plater needs to make a claim. Some insurers may deny the claim altogether.

You can find out more about additional excesses by reading the Product Disclosure Statement.