- Young drivers under the age of 25 typically pay more for car insurance.
- Your parent’s car insurance can cover you if you use their car sometimes, but they must remain the main driver.
- If you take out your own car insurance policy, there are some ways you may be able to lower your premium.
Key takeaways
Am I covered by my parent’s car insurance or should I buy my own policy?
It depends on your situation and the insurer. For example, with new Allianz Car Insurance policies1, you’re covered by your parent’s car insurance as long as they're the main driver. The main driver is the person who uses the car the most.
We cover anyone who drives the car as long as they have the main driver’s permission. You only need to list the main driver on the policy. Driver and usage exclusions apply2.
This situation won’t apply to everyone. If you have your own car you'll need to consider what type of car insurance policy suits you best.
What type of insurance do I need as a young driver?
Mandatory - Compulsory Third Party Insurance (CTP)
CTP insurance in Australia is mandatory for all registered vehicles. If you’re driving your parent’s car, you typically won’t need to take out CTP Insurance yourself. This should already be in place. However, the registered owner will need to contact the CTP insurer to add you to the policy if you are the youngest person that will drive the car. This may affect the CTP premium charged.
CTP cover can vary from state to state, but as a general guide, it covers you as a driver for your liability for injuries you might cause to others in a vehicle accident. It doesn’t cover damage to your or other vehicles. For vehicle coverage, you’ll need car insurance.
In some states, CTP is provided by the Government and is included in your vehicle registration fee. In NSW, QLD, ACT or SA, however, CTP insurance is provided by private insurers and is charged separately.
Optional - Third Party Property Damage
Third Party Property Damage Car Insurance (TPPD) helps cover the costs if you accidentally damage someone else's car or property.
It typically costs less than Comprehensive Car Insurance because it doesn’t cover damage to your own car.
Optional - Comprehensive Car Insurance
Comprehensive Car Insurance can be more expensive than TPPD because it covers damage to your car as well as damage to other people’s vehicles. It can also cover accidental damage including from fires, floods, theft and storms.
Some policies, such as Allianz Comprehensive Car Insurance, come with other included benefits. This includes a new car replacement if yours is a total loss within two years of manufacture3.
Why does car insurance cost more for young drivers?
As a young driver, it can be frustrating paying more for your car insurance. With time and a good driving record though, costs do typically come down.
Some of the main reasons it can be more expensive include:
- Higher accident rates. Young drivers aged under 26 years old make up about 14% of all licence holders. However, they’re involved in almost 25% of road fatalities every year, according to Transport NSW.
- Lack of experience. Even if you’re no longer a P licence holder, you’re still considered an inexperienced driver by insurers. Mistakes on the road can happen. This is one of the reasons younger drivers tend to be in more road accidents.
- Risky behaviour. Data from the UNSW shows young drivers with their own car are at a greater risk of crashing compared to those who borrow the family car. This is partly due to risky driving, such as speeding, not wearing seat belts or driving under the influence of alcohol or drugs.
- Vehicle choice. If you drive a performance car as a young driver, it's likely that your insurance premium will be higher.
Good to know: Let us know if you plan to modify your car in a way that changes its value or performance. It may affect your policy.
How can young drivers reduce their car insurance costs?
Sharing the car with your parent is typically the cheapest way to get covered by car insurance. You can do this with an Allianz Car Insurance policy if your parent is the main driver and you have permission to use the car.
It’s important to remember that you’re only covered by your parent’s car insurance policy if you use the car less than them. An age-based excess may apply.
CTP insurance will cover you no matter how often you use the car but you must be listed on the policy if you are the youngest person that will drive it.
If you’re taking out car insurance yourself, there are other ways you may be able to reduce your costs:
1. Increase the basic excess
The excess is a specified amount you need to pay when you make a claim. By increasing your Allianz basic excess, you may be able to lower your premium. All drivers, regardless of age, can potentially lower their costs by doing this.
Generally, excesses are not payable for CTP claims so this is not an option for reducing the cost of CTP insurance.
2. Drive less
When you get a quote with Allianz, we ask you how many kilometres you generally drive in a year. The cost of car insurance is typically lower the less you drive.
Good to know: If you haven’t bought a car yet, cheaper vehicles with a good safety rating typically cost less to insure. To see how much your premium might cost, it’s worth getting a car insurance quote for the make and model you’re considering buying.
Frequently asked questions
For car insurance, we only need details of the person who drives the car most of the time. We call this the main driver. If your parent is the main driver of the vehicle, you don’t need to list yourself. Allianz Car Insurance comes with any driver coverage.
For CTP insurance, however, you will have to be listed on the policy if you are the youngest person that will drive the car.
The under 25 driver excess is in addition to the basic excess. It applies if the driver of the car is under 25 at the time an incident occurs.
A higher under 25 driver excess applies when there are no drivers aged under 25 listed in your policy details document.
You can reduce this amount by listing the youngest under 25 driver who uses your car in your policy details document. If you do this though, it’s likely to increase your premium.
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Disclaimer
This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 ("Allianz"). It is a summary of key concepts and not meant to represent the complete picture on any given matter. It is not meant to be legal advice. The information should be read in conjunction with the relevant legislation and regulations. In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.
Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.
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*Conditions apply
This applies to customers who purchased a new policy on or after 9 September 2021. For customers who purchased a new policy before this date, view the relevant Product Disclosure Statement (PDS).
Driver exclusions apply if the driver is unlicensed, is not following the conditions of their license, refuses a drug or alcohol test, is under the influence of drugs or exceeds the legally allowed alcohol limit. Refer to the Comprehensive Car Insurance or Third Party Property Damage Car Insurance PDS for full driver, usage and other policy exclusions as set out in the "What's not covered" section. An additional excess applies to drivers under 25.
If your new car is stolen or written off, you can choose for us to pay you the agreed value or to have your new car replaced with one of the same make and model where available in Australia.
Allianz acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of the lands on which we live and work across Australia. We pay our respect to First Nations Elders past and present.
Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits, and exclusions apply. Before making a decision about this insurance, consider the relevant Product Disclosure Statement (PDS)/Policy Wording and Supplementary PDS (if applicable). Where applicable, the PDS/Policy Wording, Supplementary PDS and Target Market Determination (TMD) for this insurance are available on this website. We do not provide any form of advice if you call us to enquire about or purchase a product.
Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No. 234708 is the insurer of any general insurance products offered, and Allianz Australia Life Insurance Limited ABN 27 076 033 782 AFS Licence No. 296559 is the insurer of any life insurance products offered. Each entity is responsible for any statements and representations made about its products, on this website.