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Car Insurance for Students
Car Insurance for Students
Written by
Kervin Mathew
Edited by
Laura Crowden
Reviewed by
Adrian BennettCompare car insurance policies the easy way
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What is student car insurance?
Long story short
Choose from different levels of cover
From compulsory third-party (CTP) to comprehensive cover, your policy choice affects how much you’ll pay and what’s covered – think theft, damage, or accidents.
Most young drivers pay more for insurance
Younger drivers are statistically more likely to have an accident. This is it usually costs younger drivers more to insure their car.
Where you live and what you drive matters
Insurance costs can change based on your postcode and vehicle type. High-performance cars or living in an area with a high theft rates can mean higher premiums.
You can still save on car insurance
Paying for your insurance annually or opting for a higher excess (more on this later) can help lower your premium. Some insurers also offer rewards and discounts for safe driving or safer car choices.
Parents’ policy vs. getting your own
Staying on a parent’s policy can work out cheaper for you (not them!) but if you own your car, then you’ll need to take out your own car insurance policy.
What is student car insurance?
It’s worth clarifying that there is no such car insurance product or policy type that specifically caters for students. But as a student who has access to a slew of discounts, you may be wondering: can I get a student concession or discount on car insurance?
The answer unfortunately is no. In fact, younger drivers are likely to pay more – not less – for car insurance.
Insurers look at several factors when they decide how much you should pay for your insurance – your age is one of them. Younger drivers are considered riskier to insure than those who’ve spent more time behind the wheel. For example, in Victoria, first year drivers are nearly four times more likely than experienced drivers to be involved in a fatal accident or one that causes serious injury.1For more information, see Victoria Police – Young drivers
The good news is that age isn’t all that matters and there certainly are other factors within your control that can help you lower your car insurance premium. A premium is much you pay for your car insurance (or any type of insurance). More on this later – first, let’s look at how car insurance works for students.
Why do students need car insurance?
When you’re in the driver’s seat, it helps to have a financial safety net to protect yourself from the unexpected – accidents, theft or car damage.
Say, you cause a crash while driving to your part-time job and end up damaging your car and hurting someone. You could be left burning cash over costly repairs or legal fees – not ideal when you’re a student who simply can’t afford the unnecessary expenses nor the distraction.
Car insurance provides that safety net for almost 80% of Australians.2For more information see, Council of Australian Life Insurers – Financial security takes back seat exposing advice crisis as Australians prefer to protect cars over themselves In a survey of working Australians aged 18 and over, car insurance stood out as the most popular kind of insurance product among 18 to 34 year olds.3As above.
If you feel your hard-earned cash would be better spent on tuition fees, a new gadget or the occasional link up with friends than car repairs, then it might pay to invest some of it in car insurance. Let’s look at what car insurance options are out there for students.
What types of car insurance are available to students?
Here’s a high-level breakdown of the types of car insurance policies you can get and what each of them can cover. Remember, there is no such thing as student car insurance. So, the options available to students are the same as any other driver.
Comprehensive Car
Insurance
highest level of cover
covers damage, fire, and theft of your car
covers damage to other people’s cars and property
covers accidental damage, even if you’re at fault
97% of online iSelect customers with comprehensive cover choose to stay at this level4Customers who used iSelect’s online comparison service between September 2023 and September 2024
Third-party fire
and theft
covers damage to other people’s cars and property
covers fire damage to your car
covers you if your car is stolen
doesn’t cover accidental damage to your car
doesn’t cover flood damage
Third-party
property
covers damage to other people’s property and cars
gives peace of mind that you won’t have to pay someone else’s bill
doesn’t cover damage to your own car
Compulsory third party
(CTP)
compulsory if you want to legally register and drive your car on Australian roads
covers your liability for people harmed in an accident
part of your car registration costs, unless you’re in NSW (called a Green Slip)
doesn’t cover property damage
How much does car insurance cost for students?
As harsh as it seems, young drivers (particularly males) tend to pay more for car insurance. This is mainly because they’re statistically more likely to have an accident when they’re behind the wheel.
Check out this graph of the average car insurance premiums for iSelect customers from last year.
What other factors can affect insurance costs for students?
Though age is the big one for young drivers, there are other factors that help decide the cost of your car insurance.
What type of car you drive
High-performance or expensive cars attract higher premiums. Modifications can increase your insurance costs too.
How much you drive
The more you drive your car, the more likely you are to have an accident. For context, the average Aussie vehicle is driven around 15,000km a year.
Where you live
If you live in an area that’s known for car thefts or accidents, it can push up your insurance costs.
Your driving history
This may be irrelevant if you’re a first time driver, but previous car insurance claims or traffic offenses can mean you’ll pay more.
How you use your car
If you use your car to earn money (think Uber or similar rideshare services) you’re likely to pay more for car insurance.
How do I find the best value car insurance policy for me?
If you’re already thinking about this, then you’re on the right track. Here are a few things to keep in mind when you’re looking for a policy that won’t break the bank.
- Shop around – Look beyond your parents’ insurer and shop around for one that’s more suited to your age and lifestyle. Confused? That’s where iSelect can help!
- Consider pay as you drive – If you don’t drive your car all that much a pay as you drive policy might help you save some cash as they generally come with lower premiums.
- Cheapest isn’t necessarily best – You may be missing out on useful features that can come in super handy – like roadside assistance or a hire car – if your car breaks down or is in an accident.
- Get you head around the jargon – There’s going to be lots of it, and it helps to know what different insurance terms means when if you need to make a claim.
- Understand the general exclusions – General exclusions tell you what you aren’t covered for.
General exclusions (and other important stuff!) are outlined in a policy’s product disclosure statement (PDS). It’s always a good idea to read through the PDS before you commit.
An excess is what you agree to pay your insurer if you need to make a claim on your car insurance. This is not the same as a premium, which you have to pay regardless of whether or not you claim. Think of an excess as your contribution towards repairs and then your insurer takes care of the rest.
Tips for students to save on car insurance
No doubt, insurance is an ongoing expense and as a student you’re likely always looking for ways to save money. Here are a few tips on how you can cut down your insurance costs.
Consider a higher excess
Opting for a higher excess can help bring down your annual premium but be sure you can afford to stump up for the higher excess if you need to claim.
Pay annually instead of monthly
Paying your premium monthly may be easier on your pocket, but annual payments can help you save more in the long-run.
Choose a lower-risk car
Do a bit of research and get yourself a car with a higher safety rating as they can cost less to insure.
Look for discounts
Insurers may offer rewards and discounts for good driving records, if you sign up online or if you’re a student.
Helpful tip:
As a cash-strapped student, it can be tempting to simply rely on compulsory third party (CTP) insurance only. But given most students are also relatively inexperienced drivers and therefore statistically more likely to end up involved in a prang, a higher level of car insurance may be well worth the higher premiums. While your budget may not stretch to comprehensive cover, it could be well worth paying a bit extra for third-party property or third-party fire and theft. Both options will have you covered in the unfortunate event you cause damage another vehicle, but only a comprehensive policy will cover damage to your own vehicle even if you’re at fault.
Adrian Bennett
General Manager for General Insurance
Should I stay on my parents’ car insurance policy or get my own?
Being a tag along on your parents’ car insurance policy can save you money (or bread as some may put it). Here’s how both scenarios stack up.
Staying on your parents’ policy
- works out cheaper than you taking out your own policy (but will likely cost your parents more)
- provides the same level of cover as the main driver.
Getting your own policy
- means you will have to pay for it but you’re free to choose the insurer and policy best suited to you and not your folks
- is required if you own a car
- allows you to build your no claim discount, which can lead to lower premiums over time
Frequently asked questions
Do young drivers have to pay an additional excess?
On top of your basic excess, many insurers require young drivers to pay an additional age-based excess if they’re the at-fault driver in an accident. This additional excess usually applies to any driver under 25 years of age, regardless of whether or not they’re listed on the insurance policy as a driver.
While this may seem unfair, it’s to protect insurers against the higher risk that comes with insuring younger drivers.
What if I have a high-powered or modified car?
It varies between states, but generally if you’re under 25 and/or on your P plates, there are likely restrictions on your ability to drive a high-powered car.
Common features of high-performance cars include:
- an engine that has been modified to increase the vehicle’s performance
- the number of cylinders in the engine
- the power-to-weight ratio.
It may seem obvious, but an insurer will not insure a car you are not legally allowed to drive. Before you buy a car, be sure check if it can be insured.
In the case of modified cars – you will need to let your insurer know about its modifications. Minor modifications may be covered, but complex modifications, such as performance exhausts or lift kits may not be covered. Worse still, they might be illegal and that can void your policy.
Will car insurance cover me if I drive for Uber or similar services?
Most standard insurance policies don’t cover you for ridesharing such as Uber driving. Some insurers do offer coverage for rideshare drivers, although this is usually an optional extra and will come with an additional cost.
The level of cover you’ll need as a rideshare driver can depend on the ridesharing platform and which state you’re driving in.
Find and compare car insurance
Choosing the right insurance can mean a lot of research and information overload. As a student, that’s time and energy better spent on other tasks. Why not sit back and let us do the legwork? Use the iSelect comparison tool to find and compare car insurance policies from our range of providers.
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