Need to know
- Many car insurers don't require you to make changes to your car insurance if a learner driver practises in your car, but some do, so be sure to check
- Talk to your insurer before handing over your car keys to your kid to be aware of any conditions and premium changes
- Young drivers are often charged high premiums and additional excesses
Due to their relative inexperience, young drivers are considered a high risk customer by car insurers. And for good reason: young drivers under the age of 25 are 60% more likely to be involved in a serious accident than fully licensed drivers aged 25–59, according to the Queensland government.
And sadly, despite making up only about 15% of all licence holders, the crashes that involve younger drivers account for almost a quarter of annual road fatalities, according to the NSW Centre for Road Safety.
This is why you can expect your car insurance premium to go up substantially once you list a young driver on your policy.
On this page:
- How expensive is car insurance for young drivers?
- Insurers with the highest and lowest premiums for young drivers
- Can your child drive your car?
- How to save on car insurance for young drivers
- What type of car insurance should young drivers get?
How expensive is car insurance for young drivers?
Generally, the younger you are and the less driving experience you have, the more expensive your car insurance premium will be and the higher your excess is if you have to make a claim.
On average, young drivers aged 21–24 pay an annual premium of about $1750 for comprehensive car insurance. This compares to an average annual premium of:
- $890 for an adult driver aged 45–65
- $1140 for an adult driver aged 45–65 with a listed young driver aged 21–24.
Average premiums for young drivers aged 21–24 vary depending on which state you live in:
- $2200 in ACT and NSW
- $1680 in NT
- $1450 in Qld
- $1640 in SA
- $1490 in Tas
- $2390 in Vic
- $1570 in WA.
Insurers with the highest and lowest premiums for young drivers
There can be large differences between the premiums charged for young drivers. Across Australia the cheapest premiums, on average, for young drivers* aged 21–24 are through:
- AAMI
- Bingle
- Coles
- Rollin
- Suncorp (Extra).
Across Australia the most expensive premiums, on average, for young drivers* aged 21–24 are through:
- ANZ
- CGU
- Comminsure
- Illawarra Credit Union
- Vero.
While these are average premiums they may not be reflective of your situation, so make sure you get at least five quotes, starting with your regular insurer. Also look at policy inclusions and features and excesses.
*Note: Figures are for 21–24-year-old male or female drivers across Australia, driving a car valued between $5000 and $50,000 and up to 15 years old, for private use, with no finance, with no claims in the last five years, up to 22,000km per year, with no second listed driver.
Can your child drive your car?
Even if your child only occasionally drives your car and you don't need to list them on your policy, check with your insurer first that they'll be covered before you hand over the keys. Some policies restrict cover to drivers over a certain age.
If your child is in an accident, you can count on having to pay a hefty excess, as nearly all policies charge an extra excess for young drivers up to age 24.
This can add up to $1500 on top of your standard excess depending on whether they're listed on your policy and what type of licence they're driving on.
Learner drivers
It's important to talk to your car insurer first before starting to teach your learner driver in your car to make sure you're still insured.
Some car insurers such as Budget Direct require you to add a learner driver to your policy while others, like NRMA, AAMI and GIO, don't require any changes to your car insurance if you want to supervise a learner driver in your car.
But if the learner driver is the registered owner of the car, the car insurance policy always needs to be in their name.
P-plate drivers
If your P-plater only drives your car occasionally, check with your car insurer if they'll be covered or whether you need to list them on your policy.
If your P-plater has their own car or is the main driver of your car, then the car needs to be insured in their name. If you insure it in your name instead to save money, this can technically be seen as insurance fraud, meaning your car insurance policy could be invalid and your claims might be knocked back.
Expensive excess for young drivers
If your learner or young adult driver has an accident, a large additional excess can apply. There are up to four types of excess:
- standard excess
- young driver excess – can apply for drivers up to 24 years of age and may be more expensive for drivers under the age of 21
- inexperienced driver excess – usually for drivers with less than two years of driving experience on a full licence (time as a learner driver or P-plate driver doesn't count)
- unlisted driver excess.
This can add up, as more than one excess might apply. For example, if your 20-year-old son has an accident, is not listed on your policy and is still on his Ps, you could pay an excess of up to $2600, which might include:
- $900 standard excess
- $600 young driver excess
- $500 inexperienced driver excess
- $600 unlisted driver excess.
How to save on car insurance for young drivers
- Shop around – premiums for listed young drivers and young drivers driving their own car vary widely.
- Buy your car insurance online to make use of online discounts.
- Don't buy a high performance car as it'll be more expensive to insure.
- Pay your full annual premium – some insurers charge you more if you pay monthly.
- Don't modify your car.
- Sometimes you can save by installing an anti-theft device such as an alarm or immobiliser.
- Some insurers, like AAMI, will give you a discount if you do their skilled driver training course.
- Increase your excess – but be aware of any extra young driver excesses that may apply.
- Depending on the value of your car, it may be worth only taking out third party cover instead of comprehensive car insurance (we explain the different types of car insurance below).
What type of car insurance should young drivers get?
Depending on the value of the car, young drivers can opt for third party insurance instead of comprehensive car insurance to save money.
This might make sense in the first few years until young drivers have more driving experience and can get less expensive car insurance premiums.
There are four types of car insurance.
- CTP/greenslip is compulsory and provides essential cover against claims for compensation if you injure or kill someone in a car accident. Read more about CTP car insurance.
- Third party property insurance covers damage to the other person's car if you're at fault in an accident.
- Third party property insurance, fire and theft also covers your car if it's stolen or burnt.
- Comprehensive car insurance is the best cover option but also the most expensive. It includes the cost of crash repairs or replacing your car, even if you're at fault.
Need some help making sense of your options? We've put together a car insurance buying guide filled with tips and advice, including ways you can get discounts.
Stock images: Getty, unless otherwise stated.
