Car insurance for students

Sub Editor · 14 September 2021
Interested in taking out car insurance as a student in Australia, but not sure where to begin? We explain how insurers work out what you pay, plus how you can save money.

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

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 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.

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 (such as 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 (e.g. whether this is in a street or a secure garage)

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, with your insurer paying the remainder. Additional excesses may apply for student drivers because of their age. An ‘age excess’ will typically be applied on top of a basic excess if a driver is under 25. 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.

How can where you live affect car insurance costs for students?

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. Where you live could also have an impact on your premiums. For instance, 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 car model is more affordable on average than insuring a new model, because older cars generally cost less for insurers to repair or replace, while new cars tend to have more electronics and more 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 (if this is practical for you), insuring your car for its market value and 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 2021 was a massive $540, compared to the policies that didn’t receive a top rating. As one example, males under 25 in NSW could make an average saving of $1,238 by switching to a 5-Star-Rated car insurance policy.

Here are some general factors to consider with getting 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. On-street parking is considered to increase the chances of your car being stolen, vandalised or damaged.
  • You can often reduce your premium by raising the amount of excess you pay when a claim is made.
  • 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 you plan to buy.
  • 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. This is commonly known as ‘bundling.’ However, while bundling can be convenient for many people, it won’t necessarily save you money overall, so it could be a good idea to do your own research on which policies are right for you before committing one way or the other.
  • 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. While paying by the month won’t necessarily save you money, and in some cases may be slightly more expensive than paying annually, it can help spread your insurance costs out to make them more manageable for some drivers.

Comparing car insurance may be helpful if you want to get the best deal. You can compare car insurance with Canstar.

Learn more about car insurance

If you would like to learn more about car insurance, here are some other articles that may be of interest:

Main image source: Flamingo Images/

Additional reporting by Petrina Berry.

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