Just got your P's? Find affordable car insurance that still gives you the protection you need.
Car insurance for both red and green P-platers is often pricier than that of a full-licensed driver. Some policies are more reasonable than others, so it pays to shop around. Alternatively, you could ask your parents to be included under their policy as a nominated driver.
This guide will explore how you can overcome the hurdles facing P-plate drivers and what you can do to get affordable cover that will keep you safe on the road.
Compare policies from Australian brands and apply securely
There are four different types of car insurance: compulsory third party (CTP), third party property, third party fire and theft and comprehensive.
As its name suggests, CTP insurance is compulsory for every vehicle on the road. The other three insurance types are optional.
|CTP||Third party property||Third party fire and theft||Comprehensive|
|Injuries and medical costs|
|Third party property damage|
|Property damage, fire damage or theft of your own car|
|Other damage to your vehicle|
CTP: CTP insurance is mandatory everywhere in Australia. It covers the potentially extreme medical costs that may result from an accident. If you injure someone else your CTP insurance will cover their medical bills, and if they injure you then their CTP insurance will cover your medical bills. No other form of car insurance does this.
- In QLD and NSW you will need to choose your own CTP insurance provider and compare quotes the same as you would when buying any other insurance. In all other states CTP insurance is automatically included and renewed with car registration.
Third party property: Cover for third party property damage is the other “essential” form of insurance. This is because the risk of damaging someone else’s car is fairly high and the potential costs are extreme. If you can’t afford to repair a Ferrari after rear-ending it, this insurance is for you.
- This type of car insurance is not mandatory, but it is affordable and can protect you from potentially devastating expenses.
- All types of car insurance except CTP come with third party property damage cover.
Third party fire and theft: Significantly cheaper than comprehensive car insurance but pricier than third party property cover alone, this type of policy gives you all the benefits of third party property cover, while also covering you for fire damage or theft of your own car.
- Fire and theft are two of the most common causes of car insurance claims.
- Depending on the insurer, this type of policy may include additional benefits.
Comprehensive: This is the highest level of cover available and a popular option for those who want a high level of protection. It covers everything that the cheaper policies do, as well as a wide variety of other damages to your car. For cover against storms, flooding, hail and more, comprehensive car insurance is necessary.
- Comprehensive policies typically include a range of extra benefits such as cover for rental vehicle costs, roadside assistance, towing, vehicle storage costs and more.
The best car insurance policy for any P-plater is one that delivers effective cover at an affordable price. You might already have a good idea of which type of car insurance is best for you, but the final choice comes down to the exact policy details. Factors to consider include:
The sum insured: The sum insured is the total amount that you are covered for. It’s essentially the value of your car for insurance purposes and the maximum amount you can claim. If the cost of repairing your car following an accident is higher than the sum insured, then your car is a write-off.
- Should I choose agreed or market value? There are two different ways to calculate the sum insured: agreed value or market value. The agreed value is decided upon by you and the insurer ahead of time. The market value is formulaically calculated based on the retail price of your car, factoring in depreciation and other commonly accepted variables.
The excess: This is an amount you must pay each time you make a claim. You might think of it as a “fee” you have to pay before the insurer starts working on your claim. Often you’ll be able to choose your own excess and select either a lower amount for a higher premium, or a higher amount for a lower premium.
- What excess should I choose? A good amount is not so low that it drives your premiums way up, but not so high that you can’t afford to make a claim.
The limits: Limits are the maximum amounts that will be paid out for certain types of claims. They may be further broken down with sublimits. For example, if your policy has a $500 limit for broken glass, then you won’t be able to claim more than this amount for smashed car windows.
- What’s the maximum limit? Your sum insured can be thought of as the overarching maximum limit.
- What sublimits typically apply? Expect sublimits for almost all extras, including storage and towing, specific types of damage such as broken glass or electrical, rental car costs and more.
Extras and features: The extras and features included in your cover usually depend on your policy type and how you customise it. They also depend on which insurer you go with. For example, some insurers might always let you choose your own repairer while others will never do so, some might offer it as an option with all policies and others will only offer it with comprehensive policies. Some of the extras you might want to look for include:
- Emergency travel, accommodation and repairs. If your car is undriveable and you’ve made a claim, you can also get reimbursed for necessary travel, accommodation and emergency repairs, as long as you’re far from home at the time.
- Storage and towing costs. Cover for the cost of towing and storing your car following a claimable event.
- Hire car after theft. Cover for rental car expenses after your car has been stolen.
- Personal property. Cover for damage or loss of belongings kept in the car.
- Locks and keys. Cover for the cost of replacing and re-keying your car if your keys are stolen.
- Caravans and trailers. Some policies include cover for caravans and trailers. Some insurers might automatically add this, while others leave it as an option.
Exclusions: These are conditions in which the insurer will not pay out. There are a lot of standard exclusions you can expect to find with all insurers, while others may be specific to individual brands or policies.
- What are some of the general exclusions? General exclusions are broad conditions that apply to the policy as a whole. These typically include driving under the influence, having an unlicensed driver behind the wheel, repossession of your vehicle, damage caused by natural wear and tear and other conditions that car insurance wasn’t designed to cover.
- What are some of the specific exclusions that may apply? Cash, cards and documents are often excluded from personal property cover, as are trade tools. Specific exclusions vary widely depending on the insurer, the options and the policy, which is why it’s important to thoroughly read and understand your policy before signing up.
Discounts and costs: Premiums are often calculated differently, depending on the insurer, meaning you’ll get different quotes depending on where you go. Added discounts will also alter the potential costs. You might want to specifically look at:
- No-claims bonuses. This is your safe driver discount. The longer you go without making a claim, the bigger the discount. Many insurers will recognise no-claims time earned with competitors, so you can often take this discount with you when switching car insurance providers.
- Multi-policy discounts. If you already hold another type of insurance with a provider, you may be able to receive a multi-policy discount for your car insurance if you go with the same provider.
- Premium loadings. Premium loadings are extra costs added to your premiums, based on increased levels of risk. Premium loadings apply to young drivers under 25, seniors, people with a history of traffic infringements or those with a poor driving record. They can have a major impact on cost and are one of the main reasons you will get different prices quoted by different insurers.
There are two main reasons why car insurance for P-platers is so expensive:
- Age. Most P-platers are under 25 and incur premium loadings based on age. Simply by being under 25 you can expect to pay a lot more for car insurance.
- Provisional license. Being on a provisional license indicates less driving experience. On the whole, L-platers will generally cost more to insure than red P-platers, who will in turn cost more to insure than green P-platers.
The type of car you’re driving also has a major impact on the cost of your premiums:
- How much is your car worth? The higher the total value of your car, as determined by the sum insured, the more it will cost the insurer to pay a claim, so the more you’ll be charged.
- How new is your car? Newer cars are often more expensive to insure because they’re worth more on the whole, but they can also be cheaper to insure because they’re easier to repair and spare parts are more common.
- How popular is your car? The popularity of a certain type of car in Australia at any given time is a reasonable indication of how much it costs to insure. The more popular a car is, the higher the availability of spare parts and the more likely the manufacturer has service centres nearby.
Some P-platers who are driving the family car choose to get insured under the family policy, instead of taking out their own insurance. This can sometimes, but not always, be considerably cheaper.
Sometimes, the question of whether or not this is worth it will come down to your state, or even your gender, as well as the insurer and the policy. The prices below are rounded averages for comprehensive car insurance, based on quotes from some of Australia’s most widely-used car insurance providers.
So, is it cheaper to insure P-platers separately, or under the family policy?
|Under 25, new car|
|Under 25, old car|
|Family policy, new car|
|Family policy, old car|
- F and M indicate prices for female and male policyholders under 25.
- The prices listed for family policies are based on the cost of adding one additional driver under 25 to an existing comprehensive policy for two.
Overall, family car insurance policies deliver much more value for money, in some states more than others, particularly when the younger driver is a male or when it’s a new car. With a family policy, you’re typically paying as much for cover for multiple people as you would for a solo policy for just the P-plater. However, this doesn’t mean it’s always the best choice.
Getting insured on your parents’ policy is a good way to save money, but it might affect the level of cover you have and will often limit your options.
- The family policy may have less cover, more exclusions, or less preferable terms and conditions.
- Different insurers calculate risk levels differently. The above are average prices and the trend may not hold true for all insurers.
- You may not be eligible for all the same discounts and savings with a family policy. These can make a significant difference to the overall price.
- The above prices are for under 25s and not specifically for P-platers. A provisional license holder over the age of 25 can expect significantly lower prices than those listed.
In order to keep costs manageable, consider the following to save money on car insurance:
- Car security. Reduce the chances of your car being stolen by using vehicle security systems like steering wheel immobilisers, microdotting, VIN etching and others. Some insurers will reward you for taking these precautions by lowering your premiums.
- Garage security. Keep your car securely garaged to reduce premiums. Some insurers will offer increasing discounts depending on if your car is parked on the street, in a carport, or in a fully enclosed and lockable garage.
- Safe driving courses. When you’re facing premium loadings because you’re an inexperienced P-plater, driving courses can help. AAMI, for example, offers free driver training courses for under 25s and a resulting 10% premium reduction for those who pass.
- Adjust your policy. Take advantage of renewal periods and take steps to lower your premiums. For example, try reevaluating and adjusting your excess every year, or updating your included extras.
- Look for discounts. Did you know you can get as much as 25% off just for buying a policy online? Did you know that some insurers will price match competitors? Car insurance is an evolving area and many Australians are constantly on the lookout for lower prices. Providers will frequently update their discounts and special offers to remain competitive. It’s a good idea to take advantage of this wherever possible.
There are some pitfalls that snare even the most experienced car insurance buyers, but by knowing about them you can avoid making the same mistakes.
- The sum insured. Choose the appropriate sum insured. If it’s too high you’re paying more than you need to, but if it’s too low you aren’t fully covered in the event of a write-off. It’s all about striking a balance.
- Car dealer insurance. Don’t buy car insurance along with the car until you’ve had a chance to compare the policy to other options. The first car insurance policy you see will rarely be the best.
- Car finance insurance. If you’re buying a car under finance, as many P-platers do, it’s worth bearing in mind that some financiers will require comprehensive car insurance as a condition of the loan. This isn’t necessarily a downside, but you shouldn’t let yourself be pressured into an unsuitable or overpriced policy.
- Unlisted drivers. If the driver of a car isn’t listed on the policy, then the car is usually uninsured as long as that unlisted driver is behind the wheel. Some insurers and policies have exceptions to this rule, but you will generally need to remember that there is no cover for unlisted drivers.
- Unapproved modifications. Before modifying your car, bear in mind that you’re usually adding to the total value, which will raise the price of your insurance. You should also bear in mind that mods that affect performance are typically not covered by car insurance. Generally, you should get permission from your insurer before modifying your car.