Car insurance for under 25s: How much does it cost and what are your options?

If you’re a driver under the age of 25, you’ll typically pay more for car insurance compared to older drivers. So how much does car insurance cost for under 25s? And is it cheaper to be insured under your parents’ policy?

To start with, it’s worth pointing out that there are a few different types of car insurance in Australia. You are legally required to have Compulsory Third Party (CTP) Insurance, regardless of which state or territory you live in. This is included in the cost of your car registration (except in New South Wales) and covers the cost of compensation claims made by other people if you injure or kill them.

In terms of optional additional car insurance, there is Third Party Property Insurance, which covers damage to other people’s cars or other property and Third Party Fire and Theft which also covers damage to another driver’s car or property, as well as providing cover for your own car if it’s stolen or suffers fire damage.

Lastly, there is Comprehensive car insurance. This provides a higher level of cover and covers your car in a wider range of circumstances, such as accidents, fire, flood, storms and theft.

If you’re considering car insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for an under-25-year-old male seeking cover in NSW without cover for an extra driver under 25. Please note the table is sorted by Star Rating (highest to lowest) followed by provider name (alphabetical) and features links direct to the providers’ websites. Use Canstar’s car insurance comparison selector to view a wider range of policies.

How much does car insurance cost for under 25s?

Generally, the younger you are, the more expensive your car insurance will be. This is because young drivers are statistically more likely to be involved in an accident. For example, according to the Queensland Government, young drivers and riders aged 16 to 24 years old are 60% more likely to be involved in a serious crash than drivers and riders aged 25 to 59 years old. In Victoria, over 300 drivers aged between 18 and 25 years old died in the last 10 years. According to the Victorian Government, this represents 23% of drivers who were killed during this period.

Young male drivers are also more likely to be involved in a car accident compared to young female drivers. According to the Queensland Government, about 80% of young drivers involved in fatal crashes are male. Therefore, if you are a young male, your insurance is typically more expensive on average compared to if you were a young female.

In addition to your age and gender, other factors that may affect the cost of your car insurance premium include:

  • Your policy details such as your level of cover, nominated excess and any optional extras (for example, a hire car following an incident)
  • Your claims history
  • What type of car you drive
  • How you use your car (for example, whether you use it for private or business purposes)
  • Where you live and where you park your car
  • How many kilometres you drive your car each year
Car insurance 25 years old
Source: antoniodiaz (Shutterstock)

Average car insurance cost for under 25s

To give you an idea of costs, Canstar Research has calculated the average annual comprehensive car insurance premium for male and female drivers under 25. We’ve also looked at the cost for new cars and used cars.

Average annual car insurance premium for under-25 drivers with a new car
Female Male
NSW $1,568.45 $1,744.27
QLD $1,194.41 $1,343.55
VIC $1,761.12 $1,966.32
SA $1,317.26 $1,497.64
TAS $1,259.47 $1,416.96
WA $1,203.61 $1,357.81
Source:  www.canstar.com.au. Based on quotes obtained for Canstar’s 2019 Car Insurance Star Ratings. Quotes had a state-specific target excess ranging from $600 to $750

 

Average annual car insurance premium for under-25 drivers with a used car (five years old)
Female Male
NSW $1,893.80 $2,107.76
QLD $1,233.62 $1,394.98
VIC $1,888.01 $2,093.81
SA $1,420.76 $1,614.42
TAS $1,283.42 $1,438.04
WA $1,309.01 $1,476.39
Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2019 Car Insurance Star Ratings. Quotes had a state specific target excess ranging from $600 to $750.

Wondering how much car insurance costs for other drivers? We’ve also written about the average price of car insurance for drivers of different ages.

How much does family car insurance cost?

If your parent or guardian owns the car that you’ll be driving, you may be able to ask if you can be added to their car insurance policy. This will typically add an additional cost to the policy, and an under-25 year-old driver excess may apply in the event of a claim. Speak to your insurer to see if this is an option for you and to find out what you will and won’t be covered for.

To give you an idea of how costs differ, Canstar Research has crunched the numbers to find the average annual comprehensive car insurance premium on our database for a family with a young driver.

Average annual car insurance premium for a family
New Car Used Car
NSW $2,167.92 $2,189.73
QLD $1,627.03 $1,402.27
VIC $2,408.14 $2,159.88
SA $1,709.87 $1,558.01
TAS $1,598.84 $1,406.12
WA $1,614.71 $1,530.70
Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2019 Car Insurance Star Ratings. Quotes had a state specific target excess ranging from $600 to $750.

Based on these figures, if you were to contribute half of the cost of a family car insurance premium, this would work out cheaper on average than buying your own car insurance policy.

For example, if you paid half of a family car insurance policy in Queensland for a used car, this would be about $701.14. This is just over half the price you would pay for your own policy, based on Canstar’s average premium data. Specifically, the average annual premium for an under 25 male is $1,394.98 for a used car in Queensland. The average annual premium for an under 25 female is $1,233.62 in the same scenario.

Check with your insurer to see whether any conditions apply and how this would impact your parent’s policy.

Car insurance under 25s
Source: Dragana Gordic (Shutterstock)

How to save on the cost of car insurance

If you’re looking to cut down on car insurance costs, you may be able to reduce your premiums by:

  • Increasing your car insurance excess
  • Parking your car in a secure location like a garage if possible, rather than on the street
  • Installing anti-theft devices like car alarms, immobilisers or tracking devices
  • Avoiding modifying your car
  • Paying your premiums annually rather than in instalments
  • Buying your policy online

Many insurers also offer no claims bonuses. These are designed to reward drivers who do not claim on their insurance. These typically increase each year that you don’t make a claim, up to maximum number of years. Some insurers also offer premium discounts if you complete a safe driving course.

While it may not be possible for everyone, another way of reducing premiums is to change the type of car you drive. It’s typically more expensive to insure cars that are of a higher value and are more expensive to repair.

Lastly, you may be able to save on your car insurance by comparing policies to find one that suits your circumstances and budget. You can compare a range of comprehensive car insurance policies on Canstar’s database.

This article was originally published by TJ Ryan.

Main image source: Ekaterina Pokrovsky (Shutterstock)

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