Compare car insurance for drivers under 25

The best car insurance policy for any driver will depend on a wide range of factors, from their age, to their level of risk tolerance, to their financial situation. 

Because insurers often treat drivers aged under 25 differently to older drivers, it’s important to compare policies from different insurers and to consider the cost of the premiums and the excess, as well as whether the features and benefits will offer value to younger drivers.

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The four main types of car insurance are:

• Compulsory Third Party (CTP): Required to register the car. CTP only covers injuries to other drivers, passengers and pedestrians if you are in an at fault accident
• Third party property: covers damage to other vehicles and property when you’re in an accident
• Third party fire and theft: provides the same cover as third party property insurance, and also covers damage to your own car if it catches on fire or it is stolen
• Comprehensive car insurance: covers third party property, fires and theft, as well as damage to your own car, even if you’re in a not at fault accident. Other benefits may also apply.

On average, the more cover a car insurance policy offers, the more expensive its premiums may be. If you’re on a budget, you could consider taking out only the minimum level of CTP insurance, though you’ll miss out on the peace of mind offered by more thorough coverage.

Insurers in Australia often consider drivers aged under 25 to be at a higher risk of ending up in a car accident than older drivers. This is because insurers often assume younger drivers are less experienced behind the wheel than older drivers, and thus are more likely to make mistakes and/or drive recklessly.

According to Transport NSW:

“Even though young drivers aged under 26 years make up only about 14% of all licence holders, the crashes they were involved in made up almost a quarter of annual road fatalities in 2021.”

The higher risk that you could end up in a car accident as a young driver often translates into a higher average premium for your car insurance policy. Additionally, extra excesses may apply if you make acclaim as a young and/or inexperienced driver.

Some insurers have age restrictions or exclusions in their car insurance policies. This means that if a driver is under the minimum age (often 25), they won’t be covered if they make a claim. This includes when making a claim on a family policy as a younger driver.

Regardless of your age, insurers may choose to deny a claim if you have been driving recklessly or dangerously, or driving under the influence of alcohol or drugs. Your claim could also be denied if you fail to disclose correct information to your insurer, whether accidentally or intentionally.

Before you apply for car insurance, it may be worth comparing the available policies and getting quotes from different insurers. This can not only tell you how much it costs to get car insurance as a young driver. but how much value you may be able to enjoy with policies from different insurers. 

Young drivers may be able to lower the cost of their car insurance in much the same way as older drivers, such as by opting for a higher excess that can lower the premium. Of course, this puts you at risk of ending up out of pocket if you do need to make a claim.

Some insurers offer options for younger drivers to reduce the cost of their premiums by providing evidence that they are responsible and experienced drivers. For example, if you successfully complete a dangerous driving course, you may be able to demonstrate to the insurer that you’re at less risk of ending up in a car accident than other under-25s.

If you’re a young person still living at home, you could consider being added to your family’s car insurance policy. Even if you have your own car, you may still be able to add it to a multi-vehicle insurance policy. While there may still be a higher excess involved, the total extra cost of premiums may be less than taking out your own separate policy.

Other ways to save some money on car insurance can be to buy your policy online (many insurers offer online discounts, and to pay your premiums annually rather than monthly instalments (this lump-sum payment may cost less in total than smaller monthly charges).

An older car may have a lower market value or agreed value than a newer car, which could mean young drivers may get to enjoy cheaper car insurance. However, there are other factors in place, such as the car’s safety rating, as well as average repair costs. For example, it may be harder for a mechanic to track down spare parts to fix your older car, which could affect the cost of the repair quote.

If a low-value car is involved in an accident, there’s a higher chance that the cost of repairing the vehicle will cost more than the policy is worth. In these cases, the car may be written off, leaving you to buy an alternative vehicle with the insurance payout, which may not always be easy if car prices have changed since your car purchase.