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

TOM LETTS
Sub Editor · 23 June 2021
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?

What types of car insurance are available in Australia?

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, where you have to purchase it separately), 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. There is also 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 for your car in a wider range of circumstances, such as accidents, fire, flood, hail and storm damage 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. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. Use Canstar’s credit cards comparison selector to view a wider range of credit cards. Canstar may earn a fee for referrals.

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.

Young male drivers are also more likely to be involved in a car accident compared to young female drivers. According to statistics from the National Road Safety Partnership Program, the road fatality rate of young men aged 17 to 25 has historically been over three times as high as that of women of the same age bracket.

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, your nominated excess and any optional extras you choose (for example, a hire car following an accident)
  • Whether you’re taking out your own policy as an under-25 driver or being added as an extra driver to your parents’ policy
  • 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.com

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, based on policies we considered as part of our Car Insurance Star Ratings and Awards.

Average annual car insurance premium for under-25 drivers with a new car

State Female Male
NSW $2,242.92 $2,494.08
Qld $1,542.77 $1,733.47
Vic $2,249.54 $2,507.00
SA $1,573.83 $1,776.04
Tas $1,442.75 $1,625.52
WA $1,418.44 $1,595.42

Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2021 Car Insurance Star Ratings and Awards. Quotes had a state-specific target excess ranging from $600 to $750.

How much does family car insurance cost?

If your parent or guardian owns the car 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 a higher 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 could 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, again based on the policies considered as part of our Star Ratings research.

Average annual car insurance premium for a family

State Average
NSW $2,283.27
Qld $1,560.03
Vic $2,078.65
SA $1,638.05
Tas $1,445.44
WA $1,474.54

Source: www.canstar.com.au. Based on quotes obtained for Canstar’s 2021 Car Insurance Star Ratings and Awards. Quotes had a state-specific target excess ranging from $600 to $750.

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

For example, if you agreed with your parents to pay half the premiums on a family car insurance policy in New South Wales, this would cost you about $1,141.64 per year. This is just over half the price you would pay for your own policy as a young female driver ($2,242.92), or less than half what you’d pay as a male ($2,494.08), based on Canstar’s average premium data. Check with your insurer to see whether any conditions apply and how they could impact the cost or cover of your parents’ policy.

Bear in mind, too, that these are estimates based on average figures. The exact amount you would be charged on a family or standalone under-25s policy will vary based on the insurer and policy you choose, as well as your personal circumstances. Additionally, it’s possible you may prefer to take out your own car insurance policy for reasons other than cost, such as if you live away from home and have your own car.

Car insurance under 25s
Source: Dragana Gordic/Shutterstock.com

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 (the amount of money you have to pay your insurer if you make a claim)
  • 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, particularly modifications that change the look or performance of your vehicle
  • Paying your premiums annually rather than in instalments
  • Buying your policy online

Read more: 10 tips to save money on your car insurance

Many insurers also offer no-claim bonuses, often in the form of premium discounts. These are designed to reward drivers who do not claim on their insurance. They typically increase each year that you don’t make a claim, up to maximum number of years. Some insurers may 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, for example, to insure cars with a higher market value or that 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.

Compare Car Insurance with Canstar

Additional reporting by Tamika Seeto.

Main image source: Ekaterina Pokrovsky/Shutterstock.com

This content was reviewed by Digital Editor Amanda Horswill as part of our fact-checking process.


Tom holds a Bachelor of Arts (French and International Relations) and a Bachelor of Laws (Honours) from The University of Queensland, and previously spent six years as a quality assurance manager at Pacific Transcription, a global transcription company.

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