Car insurance for students

Having a car while you’re studying can bring freedom and flexibility, but it can also be pricey. If you’re weighing up the costs of student car insurance and wondering how you might save money on premiums, then this article has tips that you might find helpful.

Do students pay more for car insurance?

Being a student doesn’t directly impact 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) insurance (also known as Green Slip insurance in New South Wales), third party property damage car insurance, third party fire and theft car insurance, and comprehensive car insurance.

• 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 operates alongside CTP, covering you for damage caused by you to someone else’s vehicle. However, it doesn’t cover the cost of any repairs or replacements your vehicle may need.

• Third party fire and theft car insurance provides the same cover as third party property damage, 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 and comprehensive 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 does not cover you if someone else was driving your car, unless they were specifically listed as an additional driver under your policy.

Some providers offer special student car insurance policies with discounts that may apply for those currently studying. These policies, however, are usually not specifically labelled as “student car insurance” and may come under more general titles such as “young driver” or “under 25 year old”. The discounts they provide may also apply 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 price of car insurance premiums. The cost of your car insurance will be based on a range of factors, 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, you are considered by providers to be a young driver and are 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/is removed from an insurance payout after having a car insurance claim approved. The provider pays the remainder. 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 common for drivers holding learner licences also. 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.

More generally, if you opt for a higher excess on your policy, you may receive a discounted premium. That being said, it’s important to consider whether you’d be able to afford to pay the higher excess in the event of accidental damages to your/someone else’s vehicle.

Can where you live affect car insurance costs?

Which state, territory, region and street you live in can affect your car insurance premiums. This includes the cost of CTP, which typically varies based on the state or territory you live in. Cities have denser populations and more traffic, and 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, providers typically factor in your neighbourhood crime rate to work out insurance costs.

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

The cost of insuring an older model car is 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. The type of car you have also matters. For example, it will 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 should consider having your own personal car insurance policy. If you only drive your parents/family’s vehicle, however, 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 can save money on car insurance by considering:

• 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 driver’s 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. Across all products rated by Canstar, the average saving offered by 5-Star Rated policies in 2024 was just under 40%, compared to the market average. One example, males under 25 could make an average saving of $1,138 by switching to a 5-Star-Rated car insurance policy.

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

• 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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