Under 21 and looking for affordable car insurance? Compare policies from Australian brands.
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Getting your first car is a rite of passage for many Australians. You finally have the freedom to go where you want, when you want. But owning a car also brings with it a lot of responsibility and one of the first things you need to do before hitting the road is take out a car insurance policy.
However, choosing the right policy can be tricky. Not only is there a huge variety of choice available, but as a young driver, it can be difficult to find affordable cover. Let’s take a closer look at how to find the right car insurance for your needs.
Why do I need under-21 car insurance?
Unfortunately, from a statistical point of view, young drivers are much more likely to be involved in an accident than other road users. Figures from the Australian Transport Safety Bureau and Victoria’s Transport Accident Commission reveal that people in their first year behind the wheel have a four times greater risk of being involved in a serious or fatal accident.
But car insurance provides cover for much more than just accidental damage. If your car catches fire, is stolen or vandalised, or is damaged by storm, hail, explosion or even earthquake, your policy can help cover the cost of repairs to get you back on the road. Additionally, if using your vehicle results in property or vehicle damage to a third party, your policy can offer legal liability cover to provide the protection you need.
What types of cover are available?
The main form of car insurance that every driver must take out is Compulsory Third Party (CTP) Insurance. As its name suggests, CTP is compulsory for every vehicle in Australia and it provides cover for the death or injury of other people when you are involved in an accident.
However, there are three other forms of optional car insurance available to drivers:
Comprehensive Car Insurance.Comprehensive Car Insurance policies are designed to offer a high level of protection for you and your vehicle against an extensive range of risks. It provides cover for loss of or damage to your vehicle caused by collision, vandalism, theft or attempted theft, fire, hail, storm, flood, explosion and earthquake. This type of policy ensures that your vehicle is repaired or replaced following an insured event. It also includes legal liability cover for if you are ever responsible for damaging someone else’s vehicle or property in an accident.
Third Party Fire and Theft Insurance. This type of policy offers mid-level cover, combining a number of benefits at a lower cost. It includes third-party liability cover when you damage someone else’s vehicle or property in an accident, plus it also covers loss or damage as a result of fire, theft or attempted theft.
Third Party Property Insurance. The most basic form of car insurance available, Third Party Property Insurance provides third-party liability cover when you damage someone else’s vehicle or property in an accident. Most policies will also include limited cover for when your vehicle is damaged in a no-fault collision with an uninsured motorist.
How much does under-21 car insurance cost?
Car insurers set their premiums based on the likelihood of you one day making a claim. The greater the risk of you making a claim, the higher your premiums will be. This is bad news for drivers under the age of 21, as they are statistically much more likely to be involved in an accident. Car insurance costs substantially more for drivers under the age of 25 and purchasing cover can be one of the major expenses you need to contend with when you get your first car.
However, there are a number of other factors that also have an impact on the cost of under-21 car insurance, including:
Your driving experience. Generally speaking, the more driving experience you have, the less you will have to pay for cover. Your involvement in any accidents and any past fines and infringements will also be taken into account.
Your claims history. Previous car insurance claims will impact the cost of your premiums.
Your gender. Young male drivers are statistically more likely to be involved in an accident than young female drivers, which means men pay more for cover than women.
The sum insured. The higher the amount your car is covered for, the more you will have to pay for cover. For example, a late-model luxury car will obviously have higher premiums than a cheap, three-door hatch.
Where the car is kept. Cars kept locked in a secure garage overnight are less likely to be stolen and therefore cheaper to insure. They’re also less likely to sustain damage than vehicles parked on the street.
Where you live. If you live in an area with a high crime rate, this could mean you pay higher premiums than someone who lives in a “safer” area. The type of driving you do will also be a factor, such as if you drive on busy city roads in peak hour traffic, or if you only ever take short trips on quiet country roads.
How often you drive. If you cover 30,000km each year in all sorts of driving conditions, you’ll pay more for cover than someone who only drives a total of 5,000km a year to their local shops and back.
The features you select. Additional features such as roadside assistance will also drive up the cost of cover.
When you pay your premium. Some insurers will charge more for cover if you pay your premium in monthly instalments rather than in an annual lump sum.
The no-claim discount. You may be able to earn a no-claim discount for every year you do not make a claim on your policy.
Adding yourself to your parents’ policy
Considering the cost of under-21 car insurance, it’s definitely worth asking your mum and dad to add you to their policy. If this is an option for you (ie, if you share a car with your parents and they’re happy to include you in their cover) you could ask your parents to add you as a nominated driver to their car insurance policy.
While this will cause their premiums to rise, the added cost is cheaper than if you were to take out a separate policy for yourself. Even if your parents ask you to chip in to help cover premiums, you’ll still save money.
How to compare under-21 car insurance policies
If you’re looking for an under-21 car insurance policy, it’s vital to compare your options to find the policy that’s right for you. Factors to consider when weighing up your options include:
The cost. Cost is obviously going to be an important factor for anyone purchasing a policy, so get quotes from a number of different insurers to see which is cheapest. However, remember to look beyond the dollar figure to the benefits and limits of each policy to ensure you’re getting value for money.
What’s covered. Read the PDS to find out exactly when you are covered and what you are covered for. Does the policy offer new-for-old replacement if your vehicle is a total loss? What about cover for emergency repairs, transport and accommodation? Can you choose your own repairer and is there a lifetime guarantee on repairs? Can you cover your car to the agreed value, its market value or either option?
What’s not covered. Next, check the limits that apply to the policy to see if one policy offers a higher level of protection than the competition. Also check the list of general exclusions so you know when and why the insurer will refuse a claim.
The excess. How much will you need to pay in the form of an excess when claiming? As well as a basic excess, will an additional excess be charged because you are a young driver? It’s also worth checking to see whether you can adjust your excess in exchange for a higher or lower premium.
Additional options. Check to see what additional options you can include in your cover. For example, can you add extra cover for windscreens or roadside assistance?
Claims process. Remember to investigate the claims-handling process of each insurer. Check out what you need to do to lodge a claim, how and during which hours you can contact the claims team and how quickly claims are processed.
How to save on under-21 car insurance
Buying car insurance when you’re under 21 can be expensive, as insurers will take your young age and lack of driving history into account when calculating your premium. However, there are several things you can do to reduce the cost of your premium, including:
Complete an advanced driving course. Some insurers will offer discounted premiums to young drivers who complete a course in advanced driving skills and road safety. For example, AAMI runs a Skilled Drivers Course that is free for drivers under the age of 25 who have an AAMI Comprehensive Car Insurance policy.
Choose a lower level of cover. The premiums of a comprehensive policy will always be more than those of a third party property or third party fire and theft policy. Minimising the amount of extra features you add to your policy will also keep costs down.
Choose a higher excess. Most insurers should allow you to choose the excess amount that you must pay when you make a claim. A higher excess will result in cheaper premiums.
Protect your car. Vehicles fitted with safety features like traction control and anti-theft devices are usually cheaper to insure than cars that don’t have these features. Cars kept in locked garages are also cheaper to cover than those parked on the street.
Maintain a clean driving record. Because insurers consider your driving history when calculating your premiums, being a “good” driver and avoiding speeding fines and other infringements will help keep the cost of cover down.
Pay annually. Some insurers charge higher premiums if you pay for cover monthly rather than annually.
Buy online. Many insurers offer premium discounts if you purchase your policy online rather than over the phone.
Take advantage of discounts. You may be able to take advantage of discounts offered by your insurer, for example, if you insure more than one vehicle or if you have other types of insurance with the same company.
Compare policies. This is the easiest way to save money on under-21 car insurance. By comparing the benefits, features and limits of a range of different policies, you could save yourself hundreds of dollars. Start comparing insurers and policies at finder.com.au today.
Traps to avoid with under-21 car insurance
There are a few issues to be aware of when purchasing under-21 car insurance. Common traps include:
Not comparing your options. It’s vital to compare multiple under-21 car insurance policies before you purchase cover. Not only will this help you find affordable cover, but it will also help you choose a policy that matches your needs.
Paying monthly. Many insurers will charge you extra if you decide to pay your premium in monthly instalments. If this is the case, either pay annually or find an insurer that doesn’t charge extra for paying monthly.
Ignoring the excess. If a car insurance quote seems too good to be true, it most likely is. A cheap policy may save you money on premiums but then hit you with a huge excess when you make a claim.
Fronting. To avoid the high premiums imposed on young drivers, some people will falsely list a parent or other older person as the main driver. This is called “fronting”. It’s illegal and could lead to your claim being refused.
Not reviewing your policy. While it’s easy to simply renew your cover with the same insurer when the time comes each year, shopping around can save you a whole lot of money. Car insurers often don’t reward their customers for loyalty, so regularly review the cover offered by your current insurer and obtain quotes to see if you might be able to find a better deal elsewhere.
While finding car insurance as a young driver can be difficult, it’s still possible to find an affordable policy that meets all your cover needs. Compare under-21 car insurance policies at finder.com.au to find the perfect cover for your set of wheels.
The cheapest car insurance for a P-Plate drivers depends on your specific situation and risks, and varies by insurer, but providers like Budget Direct and Bingle are known for offering competitive rates for young drivers.
Drivers aged under 25, particularly those aged 17 to 21, usually face the highest car insurance premiums due to their low amount of driving experience and therefore, the perceived higher risk of accidents.
Car insurance generally becomes cheaper after age 25, as insurers view older drivers as less risky. The premiums continue to decrease with age, assuming a good driving record.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors. See full bio
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