Best Car Insurance For Under-25s

As with more mature drivers, there are four types of car insurance for under 25s:

CPT

This form of cover is mandatory for all Australian drivers, covering third-party compensation claims in the event you or someone else driving your car, causes someone injury, or death. While drivers in Western Australia, Tasmania, Victoria and the Northern Territory are insured for CTP directly through the relevant state government, drivers who live in NSW, Queensland, South Australia and the ACT have a choice between a number of private insurers, which means they can compare their offerings and policy prices. You can find out more about how CTP insurance works in our guide to the best CTP car insurance for Australians.

In addition to CTP, you can also take out one of these optional forms of cover:

Third-party property damage

The most basic form of cover, and typically the cheapest, it pays out for damage you’ve caused to someone else’s vehicle or property, if you’re liable for it. Drivers with an inexpensive set of wheels, who are most worried about the bill from damaging someone else’s car, rather than their own, may find this type of policy most suitable.

Third party fire and theft

A level up from third party property damage cover, this type of policy provides the same cover, plus damage to your own car, caused by fire or theft. It may be worth considering if you live in, or frequent areas, with a high crime rate.

Comprehensive

This type of policy covers the broadest range of scenarios to protect your car, and other drivers’ vehicles and property. For this reason it is typically the most expensive form of car insurance. Among many benefits, it can include roadside assistance. It can also cover car hire while your vehicle is being repaired, or a replacement for your car, if it’s written off following an incident. As with all insurance policies, the exact details of what a policy includes and excludes can be found in the product disclosure statement, accessible on the insurer’s website. You can read more in our pick of the best comprehensive car insurance providers in Australia.

The policy you choose should meet your personal requirements, suit your type of car and the way you use it. Heading online to provider websites and comparing what’s on offer and at what cost, can help you find what you need for a reasonable price.

You’ll want to compare:

Market value vs agreed value

You can choose to have your car covered at its ‘market value’, which would be its retail price if it were to be sold at the time of an accident, or the ‘agreed value’, which is a specific amount you set with the insurer. This sum will be the maximum amount the insurer will pay out for loss or damage to your car, caused by an incident covered by your policy. Insuring a car at agreed value can provide peace of mind that you’re guaranteed a set payout, regardless of how much it is worth at the time you claim.

Benefits and discounts

Comprehensive policies tend to offer the most benefits and features, often providing a wide selection as standard, and additional benefits that you can bolt on to your policy if you wish. They can often cover: accidental and intentional damage, 24/7 roadside assistance, locks and keys, contents inside the car, a taxi ride home after a breakdown, emergency accommodation, transport and repairs, legal liability, towing costs and more. Often drivers who haven’t previously claimed can receive a no-claims bonus reward as a discount on their new car insurance policy, while new drivers may be charged less if they’ve completed a safe driving course. Certain insurers may also charge less for driving less.

Excess

As well as price, you’ll want to consider the policy excess. This is the set amount you will have to pay towards each claim, unless it’s a no-fault claim. Certain policies allow you to adjust this amount, which can have a direct effect on the policy premium (the amount you must pay for the policy). Pay more in excess, and this could reduce how much you pay for the policy, and vice versa. Whichever, excess level you decide should suit your personal preferences. While you won’t have to pay for an excess directly out of pocket, you will need to account for an insurer deducting the amount from each claim. Note that there’s usually an added ‘age excess’ to pay for under-25s.

If you live with your parents, you may have discussed driving their car. Doing so could save you money in insurance, but is not always the best option for both parties, so requires careful consideration. Typically, the insurer will request an additional premium and a relatively high ‘under-25s driver’ excess may be applied.

Ensure you don’t do something called ‘fronting’ to get cheaper insurance. This is when a more experienced driver insures a car in their name and states that they are the primary driver, when in actuality it will be used by a younger driver. Fronting is illegal, and if the insurer finds out they can reject claims, leaving you with hefty bills to cover.

Insurers consider a range of factors, including your age when calculating the cost of your policy. These include:

Payment choice: Often an insurer will offer a discount on a policy if you decide to pay annually rather than monthly.

Driving history: If you’ve driven a car before, an insurer is likely to reward you for driving safely and having a good driving record. It will also likely provide a no-claims bonus if you have not previously claimed on your insurance or for completing a safe driving course.

How you use your car: An insurer will likely ask you to state how many kilometres you intend to drive in your car annually. The higher the distance, the more you will likely have to pay for your policy. Also, using your car for commuting or business purposes can raise the cost of insurance, compared to if you’re solely using your vehicle for recreational purposes.

Location: Certain areas experience a higher number of road accidents, or vehicle thefts, than others raising the risk of you being involved in one. Also, cars that are parked in a garage or drive are deemed safer than those parked on the street.

Policy type: Comprehensive cover tends to be more expensive than third party, fire and theft, while the cheapest insurance type is third party property damage. Choosing a basic form of cover can prove a false economy, if you’re involved in an incident that’s not covered by your policy, as you’ll have to foot the cost out of pocket. It’s important to consider whether a more expensive policy offers what you may need in the long run.

The price of insurance can vary greatly even from one young driver to another due to factors such as the policy type you choose, how you choose to pay, your location, and your age. However, to give you an idea of how much it can cost we ran quotes on the websites of the insurers we rated top five in our ‘Pick Of The Best Comprehensive Car Insurance Providers’.

Each insurer asks its own set of questions to build a profile on a driver and their car. We used the profile of a 22-year-old male living in the ACT suburbs, insuring a Mazda 3, 5-door hatchback NEO BNMY17 2.0L. When asked we also provided additional information. For instance, we assumed he drives the car for recreational purposes, and parks it outside at home, but on the property. He is a first-time car owner, with no claims history, and an administration job.

You can find how much each insurer charges for a comprehensive policy annually, and monthly, below.