powering smart financial decisions

Why is car insurance for under 25 drivers more expensive?

Why is car insurance for under 25 drivers more expensive?

Drivers under 25 may have noticed that car insurance costs more for you than for those older than you. Unfortunately, road accident statistics are stacked against you, especially if you’re a young man between 16 and 24 years of age, which is the most common profile of drivers causing or suffering severe accidents.

This can result in younger Australians being charged much higher car insurance premiums. However, there are ways you can lower these costs. 

How much can car insurance cost for drivers under 25?

The premium, or cost of your car insurance policy, can depend on a lot more than just your age, gender, or where you live. It is also affected by the type of car insurance policy you buy, the number of insurance claims you’ve filed previously, the make, model, and age of your car, and your driving experience. For example, a 23-year old man driving a brand new car in Sydney is likely to pay much more than a woman in her 30s living in Perth and driving a second-hand model.

You should also consider that although driving an expensive brand new car might be fun, you’ll probably need to buy a comprehensive car insurance policy that may cost you much more in car insurance premiums. In general, insurance providers need to know that you’re a reliably safe driver unlikely to get into an accident. As you get older and have more driving experience with fewer accident claims filed, your premium will likely decrease. 

  • When choosing your car insurance it may be worth shopping around for quotes. Compare policies offered by different insurers to see by how much their quotes differ, so you can try and find one that suits your budget

How can drivers under 25 lower the cost of car insurance?

If you’re living with your parents or siblings older than 25, you may find that your car insurance costs less if they are listed as the primary driver on the car insurance policy, and you as an additional driver. This works out cheaper even considering that adding drivers under 25 to a policy can mean extra costs, like an additional excess -which is the part of the claim amount paid out of pocket.

You may also be able to bring down your car insurance premium by choosing to pay a higher excess, sometimes called voluntary excess. However, you should check with your insurer if you may be liable for other kinds of excess, which will add to what you pay out of your pocket.

For drivers under 25, driving a smaller, more commonly sold car model can also help bring down the car insurance premium, as can building up a history of insurance claim-free driving. You may also be able to convince the insurance provider to charge you less for car insurance by taking a defensive driving course.

What should drivers under 25 look for when comparing car insurance quotes? 

Before you start looking for car insurance suiting your financial situation, consider looking at your driving circumstances carefully. For instance:

  • Do you drive a car that’s expensive to repair, or easy to replace?
  • Are you planning to drive a lot, or can you make do with borrowing your parent’s car a few times a week?
  • Is it likely that your car can be vandalised or otherwise damaged even where it is usually parked?

The answers to such questions can help you decide on the right car insurance policy for you, and help you avoid buying an expensive policy that may be necessary for you.

You may also need to look at the coverage limits and exclusions as well to make sure you’re not overlooking any unexpected costs. You may also want to consider not just checking car insurance quotes online, but also buying the policy online, as you might get a discount for doing so.

While you may not find an insurance policy customised for a driver under 25 like yourself, you can try to get a policy that’s at least most suitable for the kind of driver you are and the amount of driving you plan.

Did you find this helpful? Why not share this article?

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.



Related articles