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Car Insurance for Young Drivers and Under 25s
Written by
Kervin Mathew
Edited by
Ellie Garran
Reviewed by
Toby HagonWe compare many well-known car insurers
iSelect does not compare all providers in the market or all policies offered by our partners in your area. Not all policies or special offers are available to all customers. Learn more.
Choosing car insurance as a young driver
If you’re relatively new to the driving scene, you might find the whole insurance question a bit daunting. Never fear! It basically comes down to what kind of protection you want and what you want to pay for it. And when it comes to comparing policies, iSelect can help.
How is car insurance different for young people?
Let’s start with the big one: based on age alone, younger drivers usually pay more for car insurance than older, more experienced drivers. This is because, unfortunately, younger drivers as a group are statistically more likely to have serious car accidents than other road users.
Types of car insurance available for young drivers and under 25s
Comprehensive
Provides the highest level of cover and is generally the most expensive. It will help cover the costs of most repairs if your or another person’s car is damaged in an accident. It’ll also provide a pay out if your car is written-off, to help cover the replacement costs.
Compulsory third party (CTP)
Helps cover your liability for people injured or killed in an accident. Each state and territory also has its own rules around CTP insurance, so it’s worth reading up on how it works where you live.
Third party property only
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!)
Third party fire and theft
Covers the same things as third party property insurance, with additional protection for fire damage or if someone steals your car.
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Helpful tip
Insurance should be high on your shopping list when you’re shopping for your first car. Sportier cars may be tempting but they can be very expensive for novice drivers to insure. By researching how much you’ll be up for you’ll minimise the surprises when you come to buying insurance.
Toby Hagon
Motoring Journalist
How to buy with iSelect
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Tell us about your car (we won’t judge!) and what you’re looking for, and we’ll get to work.
Explore your options
Daunting as it might seem, we’ll help you compare policies side by side. We’ll even help you understand the insurance lingo you’re not familiar with.
Pick your favourite
You’re in control. Let us know which policy you want to buy, and we’ll set you up then and there.
Say goodbye to your old policy
If this isn’t your first car insurance policy, all that’s left to do is let your previous insurer know that it’s over between you and them.
How much is car insurance for younger drivers?
Want to know how you compare? Check out this graph of the average car insurance premiums for iSelect customers under the age of 25 from July 2024 to June 2025.
What affects the cost of car insurance for young drivers and under 25s?
As well as your age, factors that can affect your insurance premium include but aren’t limited to:
- your driving experience
- the type of car (e.g. a modified hot rod or a very powerful car will generally attract a higher premium)
- what you use the car for (e.g. if you use it for business or are a ride-share driver)
- where you live (some areas have a higher crime rate or rate of extreme weather events)
- your driving record (e.g. if you have any driving offences)
- your claims history
- how securely your car is parked overnight.
Will my premiums go down after I turn 25?
As a general rule, yes.
Road statistics show that older drivers are less likely to have an accident and therefore less likely to make an insurance claim. Because of this, insurers may offer older drivers lower premiums.
Keep in mind that age isn’t the only factor that affects price. Insurers also look at a range of other factors including the kind of car you drive and how many claims you’ve made in the past. If you’re a safe driver, this will usually be reflected in a lower premium too.
Do young drivers pay more for car insurance?
The short answer is generally yes. 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. For example, in Victoria, drivers in their first year behind the wheel are nearly four times more likely to find themselves in a fatal accident or one that causes serious injury.1For more information, see Victoria Police – Young drivers
According to Victoria’s Transport Accident Commission, the most common cause of accidents by younger drivers is due to a lack of skill.
The TAC also says younger drivers are at greater risk due to:
- night driving
- use of alcohol and drugs
- speeding
- driving older and/or less safe cars
- distractions
- long drives.
These are sobering findings, but these statistics help explain why younger drivers generally pay more for their car insurance.
So, by driving safely you’ll not only be protecting yourself and others, but you could also reduce the cost of your car insurance premiums down the track. That’s because by not making a car insurance claim, you get bragging rights to a clean claims history, which in turn can be a green flag to insurers!
How to reduce the cost of car insurance for younger drivers and under 25s
There are a few things that could help you save some money on your premium.
Increase your excess
If you opt for a higher excess, your premium will be lower. But this also means you’ll have to cough up more if you’re at fault in an accident.
Pay your premium annually
Paying your premium in one lump sum typically costs less overall. Sure, you might feel the pinch a bit more. But on the bright side, you won’t have to think about paying until the next year and you’ll have saved a few extra bucks!
Shop around and shop online
As with heaps of things, you can often find a better deal by doing some research and buying it online. Car insurance is no exception.
Drive a low-risk car
Ignore the songs about fast cars and fast lanes. Life can be just as exciting when you find out you’re paying a lower premium than your mate with a souped-up Supra. That’s if your car is better known for its safety rating than its top speed.
Look for a pay as you drive policy
Some insurers offer pay as you drive or low-kilometre cover where you can pay a lower premium if you drive within a certain number of kilometres a year.
Add an experienced driver to your policy
With age comes wisdom and potentially lower insurance premiums. For example, having a parent listed on your policy could tell insurers that you’re driving under the guidance of an experienced driver.
Remember, it’s 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 your claim is denied if you are involved in an accident.
Frequently asked questions
Should I buy my own car insurance policy or get 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 will need 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.
Which car is cheapest to insure for young drivers and under 25s?
It’s near impossible to narrow things down to a make and model. To some it might be a Kia Picanto, or a Mahindra to others. Ultimately, the cheapest car to insure usually comes down to a melting pot of bits and bobs, some of which are:
- Size: A bigger vehicle, though more spacious, might have you making more room in the budget for your insurance.
- Type of fuel: LPG and diesel-powered cars tend to be the cheapest to insure. On the other hand, insurers can charge higher premiums for EVs.
- Colour: White and yellow cars are easier seen on the road. Black, grey or even green cars can be a red flag to insurers and costlier to insure.
However, a key decider could be your car’s market value, which is how much it would sell for on the open market at any given time.
A car with a lower market value might draw lower insurance premiums. This is because it would likely cost less to repair or replace the vehicle if it went crook or was stolen. A car insured for its market value is also likely to attract a lower premium than one on an agreed or set value policy.
Moreover, a car with a low market value might not be worth the cost of a comprehensive policy the same way a 2005 Corolla might not need 98 octane petrol. In this case, you could cut your costs and opt for the cheapest form of optional insurance: third-party property damage.
What additional excesses apply to young drivers?
On top of your basic excess, young drivers are also likely to have an 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, and regardless of whether they’re listed on the insurance policy as a household member.
If you’re wondering why, it’s mainly to protect insurers against the higher risk that comes with insuring younger drivers.
Can I get insurance for a modified car?
That depends on the modifications and the insurer.
Before you buy a modified car, you may want to check whether an insurer will cover it. Adding minor modifications to the car such as roof racks and tow bars, may be considered non-standard accessories, which need to be listed, but will often still be covered by insurers.
If you’re living life like Vin Diesel with legal but complex modifications such as a modified exhaust or legal lift kits, they may not be covered and you should check with your insurer first, to see if these items can be covered under your current policy.
Illegal or dangerous modifications will likely 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 your P plates, there may be restrictions on your ability to drive a high-powered car.
Some factors that are usually considered when determining whether a car is high performance can include:
- the manufacturing date
- whether the engine is turbocharged or supercharged
- whether the engine has been modified to increase the vehicle’s performance
- the number of cylinders in the engine
- the power-to-weight ratio
An insurer will obviously not insure a car you are not legally allowed to drive. Be sure to check with your potential insurer if the high-powered ride you’ve got your eye on is indeed insurable before you buy it.
If I’m a learner driver, do I need car insurance?
All drivers need to be covered by compulsory third party (CTP) or green slip insurance as a minimum. However, whether you need your own policy depends on a few factors.
For one, you might be covered by your supervising driver’s policy; but in many cases you’ll need to be listed on their policy, or their policy will need to include cover for learner drivers. This will usually depend on the terms and conditions of their specific policy, too.
Alternatively, you might be able to buy your own policy. This can be the case if you own the car and drive it more than anyone else.
Basically, you’ll need to check with your supervising driver if they have a policy that covers you. If they don’t, then you might need to take out a policy of your own. Keep in mind it’s probably going to be cheaper for you to be added to your parents’ policy than taking out your own (assuming the bank of mum and dad is happy to pay for it!)
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