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Young drivers’ Car Insurance

It is important that as a young driver, you get the cover you want at a decent price. This article will give you an outline of the insurance options which may be available to you.
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Do I need my own insurance policy, or can I be added to my parents’ policy?

Drivers under 25 often ask this question, and the answer depends on your circumstances. If you own a car, you may be able to take out your own Car Insurance policy, even if you still live with your parents.

If you don’t have your own car, but drive your parent’s car (or cars), then you may be able to be added as an additional driver on their policy. If you drive a parent’s car very frequently, then it could be a good idea to be listed as a regular driver of that car.

What are the types of insurance available for young drivers?

It doesn’t matter how old you are, as there are four different types of insurance available to all drivers. Comprehensive, Third Party Fire & Theft, Third Party Property and Compulsory Third Party.

  • Compulsory Third Party (CTP) is a compulsory level of cover that helps cover costs for injury and death of other people in an accident. Bear in mind that CTP is treated differently in each state. For example, while CTP is included in your car registration costs in Victoria, you’d need to purchase it separately from a licensed insurer if you’re in NSW. And in NSW, it’s also known as ‘green slip’ insurance. As you can see, there are minor variations state to state, so check with your local motoring authority if you’re unsure about how to secure this level of coverage.
  • Third Party Property helps cover other people’s cars and property if you cause an accident and damage them (which can be handy if you accidentally back into someone’s Ferrari. Oh dear.)
  • Third Party Fire and Theft is the same as third party property, with the additional protection of cover to help in case of fire or theft to your car.
  • Comprehensive provides the highest level of cover and is generally the most expensive. Remember to read through your chosen policies Product Disclosure Statement before making your purchasing decision.

How much does Car Insurance for young drivers cost?

As well as age, variables that can affect your insurance premium include but are not limited to:

  • driving experience;
  • type of car (eg: a modified hot rod or a very powerful car will generally attract a higher premium);
  • what you use the car for;
  • where you live (some areas have a higher car crime rate);
  • your driving record (e.g.: endorsements or conviction for driving offenses);
  • your claims history; and
  • how securely your car is parked overnight.

Can a younger driver get insurance for a modified car?

That depends on the modifications and insurer. Before you buy a modified car, you may want to check whether or not an insurer will cover it. Consider things like: Adding minor modifications to the car such as roof racks and tow bars, may be considered non standard accessories and may need to be listedLegal but complex modifications such as a modified exhaust or legal lift kits, may not be covered and you should check with your insurer first, to see if these items can be covered by your current policy. .Illegal or dangerous modifications may completely void your insurance policy.

What if I have a high-powered car?

Restrictions do vary between states, but generally if you’re under 25 and/or on a provisional licence, there may be restriction on your ability to drive a high-powered car.

Some factors that are usually considered when determining whether a car is or is not high performance include:

  • The manufacturing date;
  • Whether the engine is turbocharged or supercharged;
  • Whether the engine has been modified to increase the vehicles performance;
  • The amount of cylinders in the engine; and
  • The power-to-weight ratio.

An insurer will obviously not insure a car you are not legally allowed to drive. You may want to consider checking if you are able to insure your new car before you finalise the purchase.

Do young drivers pay more for Car Insurance than older drivers?

The short answer is, it depends. Insurance companies work out the risks they are taking based on numbers, and young drivers are statistically much more likely to be involved in an accident.

According to the TAC, while 18 to 25 year olds make up only 10% of licence holders, they make up 18% of those killed in car crashes (2019).

A 2019 Growing up in Australia study found that younger drivers were at greater risk on the roads for a range of reasons including:

  • Limited ability and judgement;
  • Underestimation of risks;
  • Deliberate risk-taking behaviours; and
  • Use of alcohol and drugs.

These are sad findings, but these statistics show us why younger drivers may pay more for their Car Insurance.

So, drive safe. You’ll not only be protecting yourself but other drivers as as well. If you do not need to make a claim on your policyyou could also start earning your no claims discount available with various car insurance providers.

How can young drivers save on the cost of Car Insurance?

There are a few things you could do which may save on your premium.

  • Increase your excess – If you opt for a higher excess, your premium will be lower, but you also run the risk of having to pay out a hefty lump sum if you’re involved in an at-fault accident, so bear that in mind.
  • Build up your no claims discount – Over the years of not claiming, your no claims bonus could grow to be a valuable discount off your premium. Not all insurers use this system, but you may be able to save on your premiums with the ones that do.
  • Shop around and shop online – As a younger person, you’ll be no stranger to buying stuff online and saving. You can do it with Car Insurance too.

Remember, it is important that you are completely honest with your insurer about your details, your car, who will drive it, and what you use it for. Failure to tell your insurer important information, or giving them misleading information could mean you won’t be covered if there’s an accident

Finding suitable insurance as a young driver

Rather than just going with the same insurer your parents use, iSelect can help you compare from a range of policies and providers*.

So get started comparing policies the easy way with iSelect. Compare online, or call us today on 13 19 20.

Last updated: 10/05/2022

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