Car insurance for students

Do students pay more for car insurance?

Being a student doesn’t directly affect your car insurance premiums. However, as many students are under the age of 25, it’s likely that most will pay higher premiums. This is because providers generally consider a driver’s age when setting the price of a car insurance policy, and those under 25 are often more likely to be involved in motor vehicle road accidents.

Car insurance options for drivers under 25

There are four main levels of car insurance cover:

• Compulsory Third Party (CTP) car insurance is mandatory for any registered vehicle in Australia. It covers your legal liability if your car causes injury or death of another person or people in a motor vehicle accident.
• Third party property damage car insurance isn’t compulsory. It covers damage you cause to someone else’s vehicle. However, it doesn’t cover the cost of any repairs or replacements for your own vehicle.
• Third party fire and theft car insurance provides the same cover as third party property damage insurance, but also covers repairs or replacements needed to fix your car if it’s damaged or lost due to fire or theft.
• Comprehensive car insurance is the most expensive type of car insurance, because it provides all the above levels of cover plus accidental damage to your car, regardless of who’s at fault. However, it may not cover you if someone else was driving your car, unless they were specifically listed as an additional driver under your policy.

Some insurers offer special student car insurance policies with discounts that may apply to those currently studying. However, these policies may not be specifically labelled as “student car insurance” and may have more general titles such as “young driver” or “under 25 year old”, with their discounts applying to younger drivers in general.

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What factors influence the price of car insurance?

There are several factors that can influence the cost of your car insurance, including:

• your age,
• your gender,
• where you live,
• your car (model, age and safety features) and if you’ve made any modifications to it,
• your level of driving experience, such as whether you are a P-plater,
• your claims history,
• the level of cover you take out,
• how far you drive your car each year, and
• where you park your car.

How can age affect car insurance costs for students?

Most students are likely to incur higher insurance costs than older drivers because students are typically in a younger age bracket. If you’re under 25 years old, insurers will likely consider you a young driver, and statistically more likely to be involved in road accidents.

How can gender affect car insurance costs for students?

When it comes to gender, statistically young men have more accidents than young women. As a result, providers tend to consider them a greater risk and typically charge young men higher car insurance premiums.

How can the excess you choose affect car insurance costs for students?

An excess is the amount you’re required to pay yourself after having a car insurance claim approved, with the insurer covering amounts in ‘excess’ of this figure. For example, if your car insurance policy has a $1000 excess, and the repair bill after an accident comes to $2000, you’ll pay $1000 out of your own pocket and the lender will cover the remaining $1000.

If you opt for a higher excess on your policy, you may receive a discounted premium. However, it’s important to consider whether you’d be able to afford to pay the higher excess following an accident.

An ‘age excess’ will typically be applied on top of a basic excess if a driver is under 25, which many students are. This is also common for drivers holding learner licences. This amount can vary and depends on the policy you have.

If you’re over 25, an ‘inexperienced driver excess’ may apply instead if you have not held an Australian driver licence for more than two years.

Can where you live affect car insurance costs?

Which state, territory, region and street you live in can affect your car insurance premiums, including your CTP.

Cities have denser populations and more traffic, meaning there is generally a higher likelihood of claims being made there than in less-populated rural areas. This may mean that city drivers tend to attract higher premiums than their rural counterparts. However, rural and remote areas often have more road fatalities per capita than cities, so this may not always be the case.

If your cover includes theft, insurers typically look at your neighbourhood crime rate when working out your insurance costs. In some cases, you may be able to save some money on insurance by parking your car overnight in a locked garage and installing extra security systems, like alarms and cameras.

How does the car you drive affect car insurance costs for students?

Insuring an older model car can often be more affordable on average than insuring a newer model. This is because older cars generally cost less for insurers to repair or replace, while new cars tend to have more electronics and expensive parts. However, it may also be worth comparing the cost of comprehensive car insurance premiums to the value of your car to get a better idea of whether it’s worth insuring.

The type of car you have also matters. For example, it will likely cost you more to insure a sports car than the average sedan, because a sports car is considered relatively risky to insure. Modified cars that have enhanced performance or appearance features can also be more expensive to insure.

Should you stay on your parents’ policy?

If you’re the only driver of your car, you may want to consider taking out your own personal car insurance policy. But if you only drive your parents/family’s vehicle, you may be able to be listed on their policy as a named driver.

There are also specific ‘family with young driver’ policies that may also apply. These options may be a cheaper alternative to having two separate insurance policies. Keep in mind that you may be charged an ‘age excess’ if you happen to be involved in a road accident.

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How to save money on car insurance as a student

You may be able to save money on car insurance by:

• Buying a policy online
• Choosing a higher excess
• Paying annually instead of monthly
• Shopping around
• Keeping your car secure
• Driving safely
• Driving less
• Bundling your policy with a multi-policy discount
• Listing the drivers of your vehicle on your policy
• Insuring your car for its market value
• Choosing your extras carefully

Canstar research suggests that if you consider a 5-Star-Policy for car insurance, you could save hundreds of dollars (or even more, depending on where you live) on your car insurance costs each year. It was found that drivers taking out a new policy could potentially enjoy an average saving of $692 by switching from an average priced premium to a Canstar top-rated one. Males under 25 could potentially save even more, with an average saving of up to $1000.

Some tips to consider to help you get a great deal on your car insurance policy as a student include:

• Providers sometimes offer deals and discounts when quoting and buying your car insurance policy online, rather than over the phone or in person.
• Providers will often charge you less for car insurance if you park your vehicle in a secure garage or carport instead of on the street.
• You can often reduce your premium by raising the amount of excess you pay when a claim is made.
• Avoid making small claims for minor dings and scratches. This can often keep your premiums down. Traditionally, the more claims you make the greater your insurance policy is likely to cost.
• Before buying your car it could be a good idea to shop around for car insurance and get premium quotes based on the make, model and age of the vehicle.
• Before proceeding with any performance or appearance enhancements, it could be worth contacting your insurance provider to check whether they will still cover you, and if so, whether any additional costs may apply.
• Some providers may offer you a discount on your premiums if you purchase more than one type of insurance at once from them (e.g. multi-policy discounts).
• Drive responsibly and safely. Motorists with a safe driving history can generally negotiate down their insurance costs.
• If you don’t drive frequently, let your provider know as this may help reduce your premium through ‘Pay as You Drive’ discounts.
• Having a car alarm or immobiliser can sometimes lower your car insurance costs.
• Many providers let you choose to pay your premiums by the month rather than as an upfront annual fee.
• Comparing car insurance may be helpful if you want to get the best deal. You can compare car insurance with Canstar.

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