Car insurance for students

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

Do students pay more for car insurance?

Being a student doesn’t impact your car insurance premiums, but as many students are under the age of 25, it’s likely that most will pay higher car insurance premiums. This is because insurers generally consider age in setting the price of a car insurance policy.

Car insurance options for drivers under 25

There are four main levels of car insurance cover: Compulsory Third Party (CTP) insurance, third party property 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 you for claims made against you if a motor vehicle accident results in the injury or death of another person or people.
• Third party property 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 cover for repairs or replacements needed to fix damage to your car. It also covers your car if it is 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.

Compare car insurance for under-25s

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)
• 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
• where you park your car.

How can age affect car insurance costs for students?

Most students will incur higher insurance costs because they are typically younger drivers. If you are under 25 years old, you are considered by insurers to be a young driver. Statistically, young drivers have higher rates of 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, insurers 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 are required to pay after having a car insurance claim approved. The insurer 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 permits also. This amount can vary and depends on the policy you have signed up for. 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 can affect car insurance costs?

Which state, territory, region and street you live in can affect your car insurance premiums. This includes the cost of compulsory third party insurance (CTP), which typically varies based on the state or territory you live in. Cities have denser populations, more traffic and generally a higher likelihood of claims being made than less-populated rural areas, meaning that city drivers tend to attract higher premiums than their rural counterparts. If your cover includes theft, insurers 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 new 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.

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
• considering bundling 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 2023 was a massive 32%, compared to the market average. As one example, males under 25 could make an average saving of $971 by switching to a 5-Star-Rated car insurance policy.

Some tips to consider to get the best deal on your car insurance policy as a student:

• Insurers will often charge you less for car insurance if you park your vehicle in a 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.
• Avoiding making small claims for minor dings and scratches, 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 insurer to check whether they will still cover you, and if so, whether any additional costs may apply.
• Some insurers may offer you a discount on your premiums if you purchase more than one type of insurance at once from them.
• 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 insurer know as this may help reduce your premium.
• Having a car alarm or immobiliser can sometimes lower your car insurance costs.
• Many insurers 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.

Compare car insurance for under-25s

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