Explore Car Insurance

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.

TypeDamage to your vehicleDamage to other cars and propertyDamage or loss caused by theft or fireLiability of injuries or death to others
Compulsory Third Party (CTP)NoNoNoYes
Third Party Property DamageNoYesNoNo
Third Party Fire and TheftNoYesYesNo
ComprehensiveYesYesYesNo

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

  • Speeding
  • 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.

Group of friends driving while protecting by car insurance for young drivers

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.

Comprehensive

As the highest level of car insurance, Comprehensive covers your car if it's damaged in an accident or by weather events (like storms or fires) and if it’s vandalised or stolen. Included with cover for your vehicle are other cars and property that you could accidentally damage.

Third Party Property Damage (TPPD)

This covers damage to other drivers’ property and vehicles if you cause a car 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.

Third Party Fire & Theft (TPFT)

You’ll be covered for damage to other vehicles if you cause a crash and provides limited cover if your car is damaged by fire or stolen.

Compulsory Third Party (CTP)

It’s a requirement in all states and territories to take out CTP insurance (also known as Green Slip insurance in NSW). In some states, it's included in your car registration. 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 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).

Frequently asked questions

Can I drive my parent’s car without insurance?

Car insurance covers 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. However, your parents must contact their insurer to advise that you’ll be driving their car. You’ll also need to be added as a listed driver to your parents’ policy to be covered when you drive it.

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 or guardians don’t advise their insurer that you’re driving their vehicle, there’s a risk that the insurer will not pay out a claim, or they may incur a much higher excess than they anticipated.

Compare car insurance through our free comparison service today.

At what age does my car insurance premium go down?

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 driving record that helps reduce the cost of premiums.

Can I add my friend to my car insurance?

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:

  • Your friend’s name
  • Their gender
  • Their date of birth
  • How long they’ve been driving
  • Their insurance claims history

Can I add a learner driver to my car insurance?

Every policy differs and, depending on your insurer, you may not need to list a learner driver. To be safe, it’s recommended you contact your insurer to check if learner drivers are covered under your policy or if there are specific guidelines you need to follow. Rules surrounding those who move onto their provisional or unrestricted licenses can also vary between insurers, so discuss this with your insurer.

If a learner is the registered owner of a car, they will need to be listed as the person insured.

Stephen Zeller, General Manager

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.

Tips for young drivers from Stephen

  • Consider opting for a higher excess in exchange for lower premiums. Your insurer might offer you this option, or the same in reverse (i.e. higher premiums for a lower excess). Just keep in mind that should you need to claim for an at-fault incident, you’ll have to pay this amount.
  • Look for low kilometre discounts. If you don’t drive all too often, some insurers might offer you discounted premiums or specific insurance products in recognition of this.
  • Take good care of your car. Keeping your car in good condition and working order will not only keep you safe on the roads, but also lead to fewer issues if you have to claim.

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.

Sources

1 Queensland Government – Young drivers. Last updated March 2021. Accessed October 2021.
2 Department of Transport and Main Roads – ‘Young drivers: The facts’. Accessed October 2021

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