We get that young drivers need cheaper car insurance. Find cover that won't break the bank.
Being under 25 isn’t great for your car insurance. 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 less expensive bare-bones third-party liability package for your rusty Holden.
This guide explains how to make it happen and what kind of car insurance options are available to you.
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Young drivers need cheaper car insurance
We totally get that when under 25s are searching for car insurance, one of their main priorities is cost.
Being strapped for cash is a problem young drivers know all too well. It's understandable that when you've got a bit of extra cash, you don't want it to go to things like insurance.
Unfortunately, car insurance costs more for drivers under 25. Statistically, you're a lot more likely to be involved in an incident.
But don't fret too much, there's a few simple hacks you can use to save some money on your policy.
How much does insurance for under 25s cost?
|Provider||Monthly Cost||Get quote|
|Budget Direct||$98.89||Get quote|
To determine this estimated cost, we sourced quotes using this profile:
- Female driver born in 1995
- 2016 Ford Falcon
- Comprehensive car insurance
- Driver located in Sydney
- Drives more than 20,000 kilometres per year
- Adjusted excess to $600-$700 where possible
- Safe driver with no claims made in the past 3 years
- Quotes sourced on 30 January 2018
Your cost will differ depending on your circumstances. Some things that can affect the cost of your quote include your gender, the type of car you drive, the colour of the car, how long you have been driving, the amount of cover you need, plus more. Be sure to read the PDS to find cover that suits you.
What affects the cost of under 25s car insurance?
How much you fork out on insurance depends entirely on your circumstances. There are four main things that will affect your premium - your gender, where you live, the type of car you drive, and - yep, you guessed it - your age.
According to Young Driver Factbase, drivers under the age of 25 represent one-quarter of all Australian road deaths, despite only being 10-15% of the licensed driver population. A 17 year old driver on their P's is four times more likely to be involved in a fatal crash than a driver over 26 years.
Unfortunately, statistics show that 80% of drivers who die of speeding are male, and 1 in 3 drivers involved in fatal speeding crashes are under the age of 25. This means that if you're a young bloke, your insurance will naturally be slightly more expensive.
Other factors that affect how much your car insurance costs include:
- Where your car is parked. Keep it in a secure garage and your likely to have cheaper premiums than if you were to park it on the street.
- What suburb you live in. If you live in an are with a higher crime rate, you'll find that your premiums will be more expensive on average.
- Your driving record. If you've got a history of bad driving expect to pay more. But if you're a good driver, many companies will reward this.
- Your pay frequency. Some companies will charge you extra if you choose to pay monthly as opposed to annually.
- Your chosen excess. If you opt for a higher excess, you can benefit from cheaper premiums. Just make sure you can afford it if you do need to claim!
8 hacks to help you pay less for your policy
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:
- If you have the choice, buy a smaller, cheaper car, rather than a sports model or highly modified vehicle. If finding the cheapest car insurance is your number one priority, then this will be a huge contributing factor.
- 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.
- Park in a garage, not on the street, and add security such as an alarm, tracking device or engine immobiliser for lower premiums.
- 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.
So what kind of cover can I get?
No matter how old you are, there are four different types of car insurance available.
Compulsory Third Party is mandatory for all Australian drivers. It covers injuries and death to other drivers.
If you need cover for yourself, you're might consider the following options.
|Type||Injuries or death to other people||Damage to other people's property (like their car)||Damage to your car as the result of theft or fire||Damage to your car as the result of an accident|
|Third Party property|
|Third party property, fire and theft|
What should I look for in a policy?
Now that you know what you’re looking for, you need to know how to find the policy that’s best 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.
- 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.
I don't have my full licence yet. What should I know?
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 and probational license holders generally only face significant price differences if they’re over the age of 25.
Can I just latch on to my parents’ plan?
If you live at home and only drive your mum or dad’s car, one way to save a bit of money is to get added to your parents’ car insurance policy as a listed driver. This works out cheaper overall than if you purchase a separate policy to your parents, but there are a few potential downfalls you should be wary of when choosing this option:
- Policyholder must own car. You can only add yourself to a parent’s car insurance policy if that parent actually owns the car. In other words, if you own the car, you’re not allowed to buy cover in your mum or dad’s name just to enjoy cheaper premiums.
- An additional excess may apply. Many insurers impose a young driver excess for claims that arise when the vehicle is being driven by someone under 25 years of age. This excess amount can be substantial, even as high as $2,500, so paying it could well and truly outweigh the cost of simply buying your own policy.
- You’ll need to check the fine print. It’s also important for you to be aware of exactly what a policy does and does not cover. Make sure you take a look at the PDS and read the terms and conditions before adding yourself to a particular policy.
Do I really need comprehensive cover?
Comprehensive car insurance for under 25s can be pretty damn expensive, so you could be forgiven for wondering whether you actually need such a high level of cover. The good news is that, depending on your circumstances, you a lower-level policy may actually provide sufficient cover for your needs.
If you’re driving a second-hand car that’s relatively cheap, you may be better off settling for one of the following:
- Third party property damage cover. This is the most basic level of optional car insurance available in Australia. It provides financial protection when you cause damage to other people’s vehicles or property.
- Third party fire and theft cover. A mid-range policy option, this type of insurance includes third party property damage cover and also protects your vehicle against fire and theft.
Both of these options allow you to maintain a certain level of protection for your vehicle, but for a more affordable cost than comprehensive cover.
On the other hand, there are some situations where comprehensive cover is a wise investment. If your vehicle is relatively new or expensive, comprehensive insurance makes good sense because of the potential for you to suffer increased financial loss if something goes wrong. Comprehensive insurance is also often a condition of car finance details, so check the fine print to find out whether this level of cover is a must-have.
Car insurance terminology
Having trouble making sense of your car insurance policy? Let’s take a closer look at the meanings of a few key terms:
- Cooling-off period. This is the period of time you have after purchasing a policy to cancel cover for no cost. Most general insurance products come with a minimum 14-day cooling-off period.
- CTP. Stands for Compulsory Third Party. This type of insurance is mandatory if you want to register your vehicle in Australia. It covers you against compensation claims from people injured in an accident for which you were at fault.
- Excess. This is the amount you must contribute towards the cost of a claim.
- PDS. Stands for Product Disclosure Statement. This document contains essential information about a car insurance policy, including its benefits and risks. You should always read the PDS before buying a policy.
- PED Guide. Stands for Premiums, Excesses, Discounts and Claims Guide. Some insurers include this information in a separate document to the PDS, providing full details of how much a car insurance policy costs and when and how benefits are paid.
- Premium. This is the amount you pay to insure your vehicle.
- Total loss. Your vehicle is declared a total loss when it has either been damaged beyond repair, or when the cost of repairing the damage exceeds the vehicle’s market value. This is also commonly referred to as a write-off.
Car insurance for under 25s: other questions you may have
*Disclaimer: The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best', 'Top', 'Cheap' including variations, are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.