How can I get affordable car insurance if I'm under 25?
Under 25s tend to pay more for car insurance than older drivers, but that doesn't mean finding affordable cover is impossible. By following a few steps and making sure you stay on top of your insurance policy, getting cover that fits your budget becomes a lot easier.
This guide explains how to make it happen, what kind of car insurance options are available to you and everything you need to know about finding car insurance as an under 25 no matter what you're driving.
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- I'm under 25, what kind of cover can I get?
- Choosing car insurance for young drivers
- What kind of cover do different cars need?
- I'm thinking about buying my car privately, anything I should know?
- How can I pay less for car insurance?
- Do's and don’ts for under 25 drivers
- Car insurance for P-platers and learner drivers
- Young driver insurance FAQs
No matter how old you are, there are four different types of car insurance and one of them, CTP insurance, is mandatory.
You should also pick one of the other three, depending on your price range and cover needs.
|Type||What does it cover?||Do I need it?||How much does it typically cost young drivers?|
|Compulsory Third Party (CTP)||Third party injuries and death||Yes, it is mandatory, always active, and you cannot register a vehicle without it||Typically $400 to $800 per year in NSW, and considerably less in other states|
|Third Party Damage||Third party liability, when you must pay for damage to other people’s vehicles or property||It is not mandatory, but is considered the bare minimum of car insurance cover||About $600 to $1,200 per year for mid-range vehicles|
|Third Party Fire and Theft||Third party liability as well as damage to your own car from fire and theft||You should get this if you want third party cover (you do), as well as basic protection for your own car against fire and theft||About $800 to $1,400 per year for mid-range vehicles|
|Comprehensive||Third party liability as well as damage to your own car from most things, and extra benefits||You should get this if you have a valuable car, or want the highest level of vehicle protection||About $1,000 to $2,000, or more, per year for mid-range vehicles|
The prices stated here are relative indications only. The cost of your car insurance may be considerably higher or lower than these based on your age, driving history, location, vehicle and other factors. Compare quotes from multiple providers to find out how much different types of car insurance will cost for you.Back to top
Now that you know what you’re looking for, you need to know how to find the policy that’s right for you. Here are the important things to look for and what they mean.
- Coverage. This refers to what is covered by a particular insurance policy, or, in other words, what the insurance policy will provide you with financial compensation for. For example, a third party damage policy will only provide you with financial compensation if you have to pay for the repairs of someone else’s property, while a comprehensive policy will do this as well as pay out in the event of certain damage to your car.
- Limits. Limits are the maximum amount something is covered for. For example, you might get car insurance that covers you for up to $5,000 worth of accidental damage. This means the insurance company will pay for up to $5,000 of repairs, but not more
- Exclusions. These are the conditions under which the insurance company won’t pay out. For example, you might be covered for car theft, with an exclusion for unlocked vehicles. This means you can make a claim if your car is stolen, but if it was unlocked at the time of theft the insurance company won’t pay out.
- Excess. These are flat fees you must pay when making a claim. There are three types of excesses. The first is a basic excess, of which you can choose a higher amount for lower premiums, or a lower amount for higher premiums. The second is an age excess, which is a fee for young drivers under 25. The third is a special excess, which is an amount specific to you based on your claims history, driving record and similar things. The excess you must pay when making a claim is the combined total of all three of these.
- Premiums. This is the main cost of your car insurance policy. The premium is the regular, ongoing amount you pay to have an active policy. It can usually be paid either monthly or yearly.
- Fees. These are additional costs you must pay on top of your premium. Your policy may require you to pay administration fees, cancellation fees, support fees and, of course, excesses.
- Discounts. There are many discounts available for most car insurance policies. Some of the most common are Pay As You Drive, which cuts prices if you don’t use your car a lot, multi-policy discounts, which are usually about 10-15% off premiums if you’ve taken out multiple insurance policies with the same provider, discounts of up to 20% for buying car insurance online, and no claims discounts which gradually reduce premiums for each year you go without making a claim.
Choosing a policy
After finding several policies that suit you, it’s time to compare price by getting quotes. Remember that your goal is to find the car insurance that’s right for you. This might not always be the cheapest.
- Use an online comparison site to compare quotes from a number of different insurers. Use these quotes to establish a ballpark price range for your insurance needs. If you receive a quote offering you a suspiciously good price, try to find out why and make sure it’s not missing something important.
- Always read the fine print in the Product Disclosure Statement (PDS) and understand the terms and conditions. Know what is included in and what is excluded from your cover.
- Compare insurers as well as their policies. Research their reputation, their claims record and their level of customer service on their websites and social media platforms.
When you buy your vehicle from a car dealer, the car insurance you take out will depend on the value of the vehicle and the requirements of your loan provider if applicable.
Under 25 car insurance for cheap cars
If you are purchasing a second-hand vehicle from a dealer and the market value is only a few thousand dollars, you may choose to only take out third party property insurance or third party fire and theft.
Under 25 car insurance for expensive cars
If the vehicle is a late model with a higher market value, or a classic or modified car, then comprehensive insurance may be worth the additional cost although in some cases prices may be very steep.
that you took out a loan to purchase, many lenders, including car dealer finance companies, will require that under 25s take out comprehensive car insurance as a condition of their loan. This can be expensive, but your lender may insist on it. While they can require you to get comprehensive insurance, they can’t tell you which insurer to get it from, so you should always shop around for a deal.
One of the most effective ways to keep the cost of car insurance down is to drive an inexpensive vehicle.
Buying a vehicle privately involves a certain level of risk. Not only does the car not come with a warranty of any kind, but its history is often unknown.
- You should always do a free REVS check (Register of Encumbered Vehicles) on any vehicle you are looking to buy privately. This will tell you if the vehicle has any outstanding debt on it.
- Have it checked over by a mechanic prior to purchase and make sure you have insurance cover before you drive it away.
- As with buying from a dealer, whether you choose third party damage or comprehensive cover will depend on your finances, the value of the vehicle and the requirements of your loan provider (if you’ve taken out a loan).
While insurance for under 25s can be more expensive than it is for older drivers, there are ways you can reduce the cost of your premiums. These include:
- Buy a smaller, less expensive car, rather than a sports model or highly modified vehicle. If finding the cheapest car insurance is your number one priority, then this is your number one tip.
- Drive safely at all times, no matter the vehicle or the insurance, to enjoy safe driver discounts.
- Resist the urge to make claims just because you can. It might save you money in the short term, but it will wipe out any No Claims Bonus you may have and mark you as a risky driver, which increases your premiums.
- Package all your insurance with one provider to receive a multi-policy discount.
- Consider increasing your excess to reduce your premium, but make sure it is not higher than you can afford if you have to make a claim.
- Restrict the number of people who can drive your car, and preferably limit it to those who are over 25, with the exception of yourself.
- Park in a garage, not on the street, and add security such as an alarm, tracking device or engine immobiliser for lower premiums.
- Insure your vehicle for the less expensive market value rather than the more expensive agreed value. This is not recommended for classic or modified cars, only more standard ones.
- Take a safe driving or defensive driving course. Insurers are willing to extend discounts to those who have completed them.
- If you don’t plan to drive a lot, look for a Pay As You Drive insurance policy.
- Buy your insurance online, as most insurers will give you a discount.
- DO tell your insurer if your circumstances change, or they might use this as a reason to refuse to pay a claim later.
- DON’T lie to your insurer. This also includes telling half-truths or trying to mislead them. If you are found to have been deceptive for the purpose of obtaining lower premiums it could cost you dearly by voiding your insurance.
- DO add a second responsible driver to your policy if you have one, as this may help reduce your premium. But...
- DON’T nominate them as the first driver if it is your car. That would be deceptive.
- DO drive safely at all times. A consistently safe driving record will help your No Claim and Safe Driver bonuses and decrease the cost of your premiums.
- DON’T modify your car without telling your insurer. Even then it’s best to stick with modifications that they approve of (a sunroof rather than a spoiler or sports exhaust, for example) or you can expect raised premiums. Needless to say, you should also avoid making illegal modifications to your car.
Car insurance for P-platers and learner drivers
There are generally no special conditions or restrictions on insurance for learner drivers or P-platers. Learner drivers are typically driving someone else’s vehicle and do not yet have their own insurance, but will increase the premiums when included on someone else’s plan. Being on either a learner or probational driver’s license is more likely to raise your premiums than lower them, but this is mostly due to age rather than driver’s license status.
Learner drivers (L-platers) and probational license holders (P-platers) will generally only face significant price differences if they’re over the age of 25.Back to top
Why does car insurance for under 25s cost so much?
Can I get specialist car insurance for younger drivers under 25 in Australia?
I want to learn to drive in my parent’s car. Do they need to inform their insurer?
I am under 25 and a nominated driver on my parent’s insurance policy. If I have an accident in their car, what will they have to pay?
Do I need to tell my insurer about a new sound system?
Is third party insurance enough cover if my vehicle is not worth much?
Compare car insurance policies
When it comes to car insurance, being under 25 isn’t great. Fortunately, there are ways to pay less for cover. Using online research and car insurance comparisons, along with a good dose of common sense, you can reduce your premiums considerably and find the right insurance for your needs, whether it’s sharply discounted comprehensive insurance for your heavily modded car, or a cheap bare-bones third party liability package for your rusty Holden.