What types of car insurance are available to under 25s in Australia?
There are two main categories of optional car insurance in Australia:
Third party car insurance
Third party property damage insurance covers damage to other people’s vehicles or property. It does not cover damage to your own vehicle. It’s the most basic and generally cheapest form of optional cover.
Third party fire and theft covers damage to another driver’s car or property, as well as providing cover for your own vehicle if it’s damaged by fire or stolen.
Comprehensive insurance
Comprehensive car insurance provides the highest level of optional coverage and covers your vehicle in a wider range of situations like accidents, fires, floods, hail and storm damage, and theft. It also provides protection for damage to other drivers' cars and property. It’s generally the most expensive form of optional cover.
What is Compulsory Third Party (CTP) insurance?
CTP insurance covers the cost of compensation claims if you harm or fatally injure someone in an accident. You’re legally required to have CTP insurance, regardless of which state or territory you live in. It’s generally included in the cost of, or paid alongside, your car registration, except in New South Wales where you have to purchase it separately. CTP is also referred to as Green Slip insurance in NSW and Motor Accident Injuries (MAI) insurance in the ACT.
What is the best car insurance for under 25s?
There isn't a single car insurance policy that's best for every young driver. The right option will depend on factors such as your age, driving history, vehicle type, budget, and the level of cover you need. For example, you may find that comprehensive cover is what you need for a brand-new car, especially if you’re an inexperienced driver still building confidence on the road. If your car is a bit older, not worth a whole lot, or you could afford to replace it, you may instead opt for a third party policy.Â
One way to narrow your options is to look for policies recognised through independent research. Canstar's Car Insurance Star Ratings and Awards identify policies that have demonstrated outstanding value based on a combination of price and features.
Canstar’s 2026 Outstanding Value Car Insurance Award winners
- AAMI: National Outstanding Value Car Insurance Award
- Bingle: National Outstanding Value Car Insurance Award
- ROLLiN': National Outstanding Value Car Insurance Award, with Canstar's research highlighting its value-for-money proposition for younger drivers. It currently doesn’t charge an additional excess for a listed driver who’s under the age of 25.
To find the best car insurance for your needs, think about:
- The premiums you’re quoted
- The level of cover you want
- Whether the risks most relevant to you are covered (e.g., if your area is prone to flooding you may want a policy that covers this)
- The level of service the insurer offers (e.g., its claims process)
- Whether the provider allows you to pay monthly at no extra cost, if you prefer instalments over an annual payment
- Any deals or discounts offered by the provider
- The features on offer like roadside assistance, windscreen excess cover, and rental car insurance cover.
Why is car insurance more expensive for under 25s?
The younger you are, the more expensive your car insurance will generally be. This is because insurers price their policies based on perceived risk. Insurers usually expect younger, less experienced drivers to be more likely to make a claim than older, experienced drivers. They’ll generally reflect this in the premiums they offer you.
For example, data from Canstar Research shows that men aged under 25 generally pay $1,707 more than drivers aged 50 and over for their annual premiums on average. Young men also typically pay more than young women, with Canstar’s data showing they pay $325 more per year on average than women in the same age range.
How is the cost of car insurance for young drivers calculated?
There are several factors that insurers take into account when determining the cost of car insurance for young drivers:
- Your age and gender
- Your address (including the state or territory you live in)
- Where you park your vehicle during the day and at night
- How far, how often, and during which times of the day you drive your car
- The make, model, age, and condition of your car (including its market value)
- Whether your car has any modifications
- The level of cover you choose
- Your driving and claims history
- Whether you use your car for business like being a rideshare or food delivery driver
- The optional extras you choose to add to your policy
How much does family car insurance cost?
Canstar Research found a family policy (one that covers one adult driver between 35 and 60 and another aged under 25) costs $3,133 per year on average. Canstar Research also suggests it’s generally cheaper to get a comprehensive family policy with cover for a driver under 25 than for a parent and an under-25 year old to buy their own individual policies.
The exact amount you would be charged on a family or standalone under 25s policy will vary based on the provider and policy you choose, as well as your personal circumstances. Check with your provider to see whether any conditions apply and how they could impact the cost or cover of your parents’ policy.
Another option for a family looking for a potentially cost-effective and convenient way to insure more than one vehicle is through a multi-car policy or multi-policy discount.
How to save on the cost of car insurance for under 25s
If you’re looking to cut down on your premium, you may be able to reduce it by:
- Comparing your options with Canstar using the comparison table above
- Buying your policy online, as some providers offer discounts when doing so
- Paying your premiums annually rather than in monthly instalments
- Checking for discounts like no-claim bonuses or safe driver discounts, which reward you for not making claims
- Thinking about how far you drive each year, as you may be eligible for a discounted low kilometre or pay as you drive policy
- Bundling multiple insurance policies with one provider for a multi-policy discount
- Parking your car in a secure location like a garage during the day and at night, rather than on the street
- Increasing your car insurance excess (keep in mind that you'll have to pay this higher excess amount if you make a claim)
- Insuring your vehicle for its market value rather than an agreed value
- Choosing your optional extras carefully, as you might want to look at how much it would cost to buy the add-on coverage separately rather than as part of your policy
- Avoiding modifications, particularly those that change the look or performance of your vehicle
