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Car Insurance For Young Drivers

Buying your first car is exciting, and you’ve no doubt thought a lot about which car to buy and at what price. But that’s not the only important decision you need to consider.
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Before taking your new car out on the road, you should decide on which type of insurance policy is right for you. Otherwise, you might unexpectedly find yourself right back at square one: without a car, and with no money to buy another. The right insurance can provide that security, but more importantly, it can provide the much needed peace of mind.

Types of insurance for young drivers

The choice of car insurance policies can be overwhelming, especially when you just want to get your pride and joy on the road. We’ve made it easy to see the differences between different insurance types in the table below. This way you can get a clear view of what policy may be suited to you, and then you can start comparing policies side by side today.

The four types of car insurance are1:

  • Comprehensive
  • Third party fire and theft
  • Third party property
  • Compulsory third party (CTP)
Comprehensive Third Party Fire and Theft Third Party Property CTP
Voluntary Voluntary Voluntary Compulsory
Covers damage to other people’s property (eg other cars) Covers damage to others’ cars Covers damage to others’ cars Covers death and injury to people
Covers your car for most types of damage Covers your car for fire and theft Does not cover damage to your own car Does not cover property damage. Depending on the state is usually paid for through your car registration.
Policies have varying inclusions Policies have varying inclusions Policies have varying inclusions Rules vary by state and territory
Is usually the most expensive Is a mid-range policy that gives you some cover Is usually the cheapest insurance At-fault person is not always covered

Insurance considerations for young driversEveryone must have CTP insurance2, but you’re free to choose which additional insurance you want to buy, if any. Some third party property insurers offer an uninsured motorist extension. This covers your car when you’re not at fault and the at-fault driver is uninsured.

Insurers calculate your premium by how risky it is to insure you1. Young drivers usually cost more to insure because they are statistically more likely to be in a road accident1. For example, if you’re under 25, you’re five times more likely to be in a serious road accident3, and insurers know this. You may also face extra costs and age restrictions.

Extra costs

You may have extras to pay as an insured under 25-year-old1. For example:

  • You might need to pay an extra age excess when you put in a claim
  • If you use your parents’ car, they may need to pay an additional premium to insure you

car insurance quotes for younger drivers

Car modifications

Rules and regulations exist to govern vehicle modifications and keep cars safe. If you’re planning to buy a modified car or modify it later, it pays to find out what is and isn’t covered on your insurance4:

  • Basic modifications, like adding a roof rack, are usually covered
  • Legal but complex modifications such as a modified exhaust may not be covered - so it’s best to check with your insurer beforehand
  • Illegal or dangerous modifications may void your insurance policy completely.

High-performance car restrictions

If you’re under 25 and on a provisional licence, you’ll face fines and loss of demerit points if caught driving a high-powered car. Exemptions to this apply, and are based on need for work and study. Naturally, insurers won’t insure you for a car that you’re not legally allowed to drive.

Definitions of a high-powered/high-performance car can differ slightly from state to state. However, 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
    Power to Weight ratio

Insurance for high-performance cars

If you’re legally allowed to drive a high-performance car, you should carefully consider your insurance options. A comprehensive insurance policy may be the right option to give you peace of mind that your car is covered in an at-fault accident. But be sure to check what each policy offers. Some key inclusions may include:

  • Salvage rights after total loss
  • Agreed value
  • Cover for legal modifications

An insurance policy that provides cover for a modified or high-performance car may be more expensive5, so comparing policies first is a good idea.

Honesty is the best policy

It may seem unfair that young drivers need to pay more for insurance, especially as they may not be earning as much as more mature drivers. Even so, it’s important to provide accurate information about you and your car to your chosen insurer.

Your premium is based on the information you give, so you could be paying the wrong premium if the information you’ve given is incorrect. This could mean your insurer won’t cover you if you have an accident.

You should make sure all information you provide is accurate. The following are examples of what you may be asked1:

  1. The condition of your car (e.g., any modifications)
  2. Your personal details
  3. Your address
  4. Whether additional drivers drive your car
  5. Whether you use your car for work

Finding the right insurance for young drivers

To find the cheapest insurance policy, you first need to decide on which type of insurance best suits you. Rather than going with the same insurer your parents use, shop around as you may find a cheaper policy elsewhere1.

If your car is old and was relatively inexpensive to buy, you might decide on third party property insurance. But if your car was expensive, is essential to your daily life, or you can’t afford to replace it, you might find that comprehensive insurance is the better option.

Whatever you decide, at iSelect we can help you compare the cost of similar policies the easy way. Compare online, or call us today on 13 19 20.

1. https://www.moneysmart.gov.au/insurance/car-insurance
2. https://www.sa.gov.au/topics/driving-and-transport/vehicles-and-registration/vehicle-insurance
3. https://www.sira.nsw.gov.au/fraud-and-regulation/research/young-drivers-telematics-trial
4. https://www.tmr.qld.gov.au/Safety/School-road-safety/Student-driver-education/Buying-your-first-car
5. https://www.consumer.vic.gov.au/cars/buying-a-new-car/before-you-buy-a-new-car/insurance