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Car Insurance For First Time Drivers

New drivers, we envy you! There’s nothing like driving on your own for the first time. But before you hit the open road, you’ll need to make sure you have all the peace of mind and protection Car Insurance can offer.
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Updated 30/06/2023
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Written by

Francis Taylor

Updated 30/06/2023

What changed?

Updated sources
Our aim is to help you make better informed decisions. That’s why iSelect’s content is produced in accordance with our fact-checking and editorial guidelines.

Edited by

Laura Crowden

Find out more about how we make money.

View our Privacy Policy.

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As there’s no car insurance product for first time drivers, car insurance for new drivers works more or less the same as it does for other drivers.  You have the same mandatory requirements and you can get covered for the same kinds of accidents and repairs as a more experienced driver. 

The one big difference is that you might end up paying more on your premiums than a more experienced driver.1 Yep, sorry to burst your new driver bubble - you’ll most likely be paying a lot more than your parents would for the same cover.  I know, unfair right, given most young drivers aren’t exactly flush with cash.  Luckily, there are also plenty of ways that you can lower your premiums—and we’ll touch on them throughout the article. 

What types of Car Insurance can new drivers get?  

Compulsory Third Party (CTP) Insurance 

This is the one you have to get. Compulsory Third Party or CTP goes by a different name in some States and Territories (in New South Wales they call it Green Slip Insurance2 while the ACT calls it Motor Accident Insurance or MAI.3) But no matter where you live or what it's called, CTP is always mandatory if you’re driving on public roads. 

So what does CTP actually do? Well, if you get into an accident and injure someone else, it will cover the costs of their medical treatments. It can also cover the compensation costs if the accident kills anyone.4 In some states and territories (like the ACT), this policy will also cover for your own personal injuries5.

Third Party Property Insurance 

CTP is good protection, but it won’t cover you for every cost if you get into an accident. Case in point—if you damage someone’s car or crash into their house, CTP won’t help you with those costs (and even if your car isn’t worth much, you might be unlucky enough to crash into a Tesla!) The cost of repairs or replacement can be pretty hefty here! 

Third Party Property Insurance gives you cover for these things.6 You’re not legally required to get it, but it might be able to save you from some significant costs down the track, so it’s well worth considering. 

Third Party, Fire and Theft Insurance 

This beauty covers you for the same things as Third Party Property Insurance, but as the name suggests, Third Party, Fire and Theft also protects you if your car gets stolen or catches fire.7 Everything else being equal, it will usually cost more than Third Party Property Insurance however it won’t cover you if your car gets damaged in a collision. For that, you’ll need something a little more… comprehensive (see what we did there?)  

Comprehensive Car Insurance 

This is the top-of-the-line cover. It gives you everything that Third Party, Fire and Theft Insurance does and then goes a step or two further. It will usually cover the costs of repairs if your car is damaged in an accident and—depending on the insurer—a whole range of other things. Depending on the policy, this might include cover for storm damage, vandalism or repairs to your windscreen.8  

Comprehensive Car Insurance policies can also offer a wide range of optional extras: add-ons to your policy that come at an extra cost. This can include cover for the daily costs of a hire car, getting to choose your own repairer and other extra benefits.9 

Do first time drivers pay more for Car Insurance?

Yes—generally speaking. See, insurers are like any other business: they want to make money. To do this, they have to balance the money they make from premiums against the risk of paying a claim. And first time drivers can be especially risky here. 

For instance, P-platers tend to be involved in more car accidents than fully licensed drivers.10 They tend to lack the experience of more seasoned drivers and may find it harder to cope with distractions or high-risk situations. 

Of course, just because you’re driving for the first time doesn’t mean you’re a bad driver. And it doesn’t necessarily mean that some experienced drivers aren’t reckless or dangerous! But, due to their higher crash statistics, new drivers are still regarded as a greater risk to insure, and this usually reflects in their premiums.

How can first time drivers reduce their premiums?

Thankfully, new drivers do have a few options to try and reduce their premiums. If the figures you’ve seen quoted for a car insurance policy have already got your wallet aching, then you might want to explore some of the options below: 

  •  Increase your excess 
    Most insurers will charge an excess whenever you make a claim. This is how much you need to pay out-of-pocket; your insurer covers the rest of your claim. If you agree to pay a higher excess then this will usually bring down your premiums.11  
  • Choose the right car 
    A safe car is a good car to insure. A safe car that’s cheap to repair is even better. In fact, if it’s cheaper to find replacement parts and repair your vehicle, you’ll may pay less in premiums.12 Less expensive cars that don’t skimp on safety features can also be cheaper to insure than flashy, high-performance models.13  
  • Beef up the security 
    Even if you’re stuck with driving granny’s old Mercedes-Benz (lucky!), you can still reduce your premiums by keeping your car safe. Parking it in a locked garage means it’s less likely to be stolen or vandalised. A car alarm provides some added security and can also lower your premiums.14
  • Look for discounts 
    Some insurers will reduce your premiums if you accept certain conditions on your policy. For example, you might agree to be the only person who drives your car.15 Or, if you got your P plates a little later in life, restricting your policy to drivers of a certain age (even just to those over 21) might also be an option.16

These are just some of the ways new drivers can possibly lower their premiums from ouch! to alright! Comparing different policies can go a long way when it comes to finding a great deal at an affordable price. Getting estimates from at least three different insurers is a good place to start, and iSelect can help you get multiple quotes all at once, saving your time as well as (hopefully) money! 

Helpful Tip:

It’s true that first time drivers might pay a little more for Car Insurance. However, they still get the chance to reduce their premiums over the years. Drivers who avoid making a claim might be eligible for a no claim discount after just one year, and they might also see their premium come down after they’ve held a full driver’s licence for a decent while.  

So speak to your insurer and ask them what kind of concessions or discounts are in store once you rack up a safe driving record. Don’t be afraid to be picky, either. Not all of them offer things like no claim discounts, so it pays to ask around! 

Author Sarah McKay

Paul Maric, Managing Editor and co-founder of CarExpert.

Where can I compare Car Insurance policies?

Many new drivers (and many old ones) don’t have the faintest idea where to begin when it comes to Car Insurance. And hey — no judgement! — it’s a complicated business. That’s why iSelect has got you covered. 

We’re here to make looking for Car Insurance easy. With us, you can compare Car Insurance policies from a range of providers*. This makes weighing up the different costs and coverage on offer easy and quick. So get started today! A great deal might already be waiting for you. 

1 Budget Direct - How Much Does Car Insurance Cost? 
2 NSW Government | State Insurance Regulatory Authority - CTP insurance (Green Slips) 
3 ACT Government | Motor Accident Vehicles Commission - Learn about your MAI insurance policy 
4 Moneysmart - Choosing car insurance 
5 ACT Government | Motor Accident Vehicles Commission - Learn about your MAI insurance policy
6 Moneysmart - Third party property insurance
7 Moneysmart - Third party, fire and theft insurance 
8 pd.com.au - Comprehensive Car Insurance 
9 Auto General - Budget Direct Car Insurance PDS Part B (Page 2) 
10 Vicroads - Reducing P Plater driver crash risk 
11 Moneysmart - Choosing Car Insurance 
12 Budget Direct - How Much Does Car Insurance Cost? 
13 As above 
14 pd.com.au - How Much Does Car Insurance Cost for a New Driver 
15 pd.com.au - 7 Financial Perks of Being the Only Driver of Your Car 
16 Budget Direct - Comprehensive Car Insurance