Compare Young Driver Car Insurance - AMI vs AA vs State vs Tower vs Trade Me

Young Driver Car Insurance is expensive as the risks of an accident are high - our guide outlines what you need to know to pick the right policy for your needs.

Updated 15 October 2021
Summary:
  • Young drivers are a risk for insurers - they statistically have more claims than adult drivers, and this is why annual costs are higher than standard car insurance. 
  • Please note, drivers under 25 must pay an additional excess, which brings the total excess cost to between $850 and $1,150 in the event of a claim. The amount varies between insurers and must be considered along with the total policy cost.
  • ​Driving can be expensive for any young person. The average price for comprehensive car insurance varies between cities, but you'll always pay more if you're a male (as insurers see males as a higher risk compared to females).
  • Comparing before you buy any policy is a great way for young drivers to save a significant amount of money. Whether you’re 18, 20, or even 24, insurers charge vastly different amounts for similar cover. This guide discusses all young driver options - comprehensive, third-party and third-party fire and theft cover, but we have focused our sample quotes on comprehensive policies.
  • Some insurers won't insure young drivers - our research below presents the options available to young drivers in key locations around New Zealand. We strongly encourage readers to compare quotes between as many insurers as possible as the differences are likely to be significant.
  • Annual car insurance is between 10% and 15% cheaper than monthly or fortnightly - if you can prepay it all at once, you're likely to save around $1,00 to $200 a year.
  • Know This: You may get a great offer in year one, but an accident will likely spike the price when you renew, so an annual comparison is essential. Also, there is a misconception that insurers assess claims based on "loyalty" - this is not true. All claims are assessed on the facts, not how long you have been with the insurer.

To help you find the right young driver car insurance, our guide covers:
Important:
  1. If you’re over 25, this guide is not for you. Please refer to our comprehensive car insurance guide.
  2. Are you looking for the best third-party policy? Our dedicated third-party car insurance guide has you covered.
  3. If you're a parent looking to add young driver(s) to your existing car insurance policy, we suggest obtaining quotes from at least three other car insurers to avoid overpaying. This guide outlines what you need to know by way of young driver excesses, so please read on. It's likely the quote range will make comparing a worthwhile exercise.

Don't Overpay for Young Driver Car Insurance - MoneyHub Founder Christopher Walsh shares his experience:

Peace of mind is important when you have car insurance, which is why I have always bought comprehensive car insurance and not third party car insurance policies, even though I drive second-hand cars. Third party policies cost a lot less, but they won't pay out repairs or for write-offs if you're at fault.

Third party or comprehensive - what's best for me?
It's all about risk, but here's an example to help you decide. Imagine this - you save up $7,000 and buy a car, but decide to save $1,000 on insurance by buying a third party policy instead of comprehensive coverage. Then, disaster strikes and your car is written off.

If you need a replacement, you may have to finance a new car, which you pay off at around 15% p.a. for three years. This means the total cost is $7,000 for the new car and around $3,000 in financing costs - a total of $10,000 in real cash. For this reason, I firmly believe that an extra $20 a week is arguably a strong option compared to throwing $10,000+ away in a second, which could happen days after you buy a car. What is best for you is unique and something to consider carefully.
What to do next?
Our research results suggest obtaining quotes from AMI, Trade Me Insurance and Tower. Doing so will give you an idea of the range of what you can expect to pay for young driver insurance. If you're not satisfied, then you can go further and easily generate quotes from AA Insurance and State Insurance. There are other players in the market - your bank may offer a competitive policy, for example, so do not restrict yourself to the "big five" insurers listed on MoneyHub.

​Know this first: Why is car insurance for young drivers so expensive?

The answer is simple – it’s all about risk. Car insurers know that young drivers are statistically likely to be involved in more accidents than experienced drivers. This means the cost of policies is higher to balance out the higher risk. Overseas research has suggested that 1 in 10 new drivers have an accident within one year of passing their test. Young drivers are also more likely, as an age group, to speed, violate the conditions of their licence, and commit traffic offences.

​How can I get cost-effective car insurance as a young driver?

What you’ll pay depends on a few things:
  1. Your age. The lower the driver's age, the higher the price of insurance. Our research indicated that 17-year-olds pay more than 21-year-olds, all other things being equal.
  2. How long you’ve had your licence. The more experience you have driving, the cheaper the policy.
  3. Whether you select comprehensive (i.e. full) or third party cover. Third-party is always cheaper, but your car won’t be replaced or repaired if you cause an accident. We have priced comprehensive in this review.
  4. Your car model and its value. Generally, hatchbacks with small engines are cheaper to insure than high-spec luxury cars.
  5. Where you live (i.e. your postcode), and how the car is parked – on the street, in the driveway or in a locked garage. The more secure, the lower risk and the cheaper your insurance.
  6. Whether or not your car has modifications. New stereos, spoilers and other after-market additions make your vehicle more attractive to thieves, which can increase insurance costs.
  7. Your annual mileage (i.e. how many kilometres you drive). The more time on the road, the bigger the risk and the more you’ll pay for insurance.
  8. How you pay – annually or monthly. Monthly is always more expensive, as insurers discount policies between 10% and 20% to those who pay a year in advance. We disagree with this pricing model as it's unfair, but right now, it’s the nature of the insurance industry.
  9. What excess you choose. This is the amount you’ll pay to make a claim should you have an accident. Most young driver policies have a $750 or $900 minimum excess. The higher the excess, the lower the insurance cost.
  10. The drivers named on the policy. If you have someone older who will genuinely share the car with you, this can bring down the insurance cost as an older driver is less risky to an insurer. However, it’s insurance fraud to name someone as an additional driver if they won’t drive the vehicle, and you may invalidate your policy.
 
Important: We believe the best way to save on car insurance is to compare. We noticed a significant range in policy costs. Comparing and choosing insurance that best suits your needs (be that comprehensive or third party), is the only way to save in the short and in the long-term.

Young Driver Car Insurance - Quote Comparison

To help explain the costs of young drivers car insurance, we have used a Toyota Corolla and generated quotes from the five main car insurers - AMI, AA Insurance, State Insurance, Trade Me Insurance and Tower Insurance. Our sample drivers were a 17-year-old male and a 17-year-old female. We selected this age group and car model to show the range of policy costs between insurers.

Results: While some insurers are competitive (AMI and Trade Me Insurance), others seem to quote well above average (for example, AA Insurance and State) for stand-alone policies for a 17-year-old driving a $9,000 car. Our quotes reflect one young driver (with no additional drivers added). However, we realise this is not standard and present the quotes to highlight the range of options.

Our View: Re-quote and save
  • Your needs and circumstances are unique and the best approach is to compare quotes.
  • If you're an adult, we suggest re-quoting your insurance and adding a young driver. The total policy quote will be lower than a stand-alone young driver policy because the risk is spread between you, a young driver and any other driver(s) that use the car.
  • As a background, as with any car insurance policy, you must list all drivers who will use the vehicle at least once a month, as well as drivers who will use the vehicle regularly for a specific time. i.e. children who come home for university holidays or visiting family members.

Our Research Example:
Vehicle: 2010 Toyota Corolla, no car alarm, parked off-street but not in a garage
Cover: Fully comprehensive
Car insurance quotes for a 17-year-old male and 17-year-old female driver, no accident history and holding a restricted licence since 2021
  • Drives approx 2,000 KM/year
  • Private use
  • Comprehensive insurance quoted
  • $9,000 insured value
Location
AMI
AA Insurance
State Insurance
Trade Me Insurance
Tower Insurance
Takapuna, Auckland
$1,225.80 (Male)
$1,190.23 (Female)
$2,050.47 (Male)
$1,622.96 (Female)
$2,516.73 (Male)
$2,297.56 (Female)
$1,609.30 (Male)
$1,421.15 (Female)
$1,880.63 (Male)
$1,647.63 (Female)
Henderson, Auckland
$1,275.05 (Male)
$1,225.80 (Female)
$1,878.43 (Male)
$1,486.96 (Female)
$2,647.03 (Male)
$2,416.89 (Female)
$1,794.98 (Male)
$1,584.98 (Female)
$2,110.56 (Male)
$1,850.51 (Female)
Mangere, Auckland
$1,250.18 (Male)
$1,213.89 (Female)
$1,749.10 (Male)
$1,384.73 (Female)
$2,784.61 (Male)
$2,542.31 (Female)
$1,980.63 (Male)
$1,748.81 (Female)
$2,340.48 (Male)
$2,053.39 (Female)
Hamilton
$1,057.72 (Male)
$1,016.96 (Female)
$1,724.63 (Male)
$1,365.38 (Female)
$2,206.24 (Male)
$2,013.86 (Female)
$1,237.98 (Male)
$1,093.50 (Female)
$1,420.78 (Male)
$1,241.86 (Female)
Wellington
$1,089.28 (Male)
 $1,047.27 (Female)
$1,664.04 (Male)
$1,317.49 (Female)
$2,118.56 (Male)
$1,933.49 (Female)
$1,652.15 (Male)
$1,458.97 (Female)
$1,933.69 (Male)
$1,694.46 (Female)
Christchurch
$1,166.93 (Male)
$1,121.89 (Female)
$1,635.63 (Male)
$1,295.03 (Female)
$2,320.69 (Male)
$2,118.57 (Female)
$1,523.61 (Male)
$1,345.53 (Female)
$1,774.51 (Male)
$1,554.00 (Female)
Dunedin
$1,047.27 (Male)
$1,006.91 (Female)
$1,587.29 (Male)
$1,256.81 (Female)
$2,184.32 (Male)
$1,993.16 (Female)
$1,280.82 (Male)
$1,131.31 (Female)
$1,473.84 (Male)
$1,288.69 (Female)
Standard Excess
N/A (See Below)
$400
$400
$400
​$400
Young Driver Excess
(paid on top of the Standard Excess if a young driver makes a claim)
$1,150
(under 25 years of age)
$550
(under 25 years of age)
$700
(under 21 years of age)
$450
(driver is between 21 and 24 inclusive)
$750
(under 21 years of age)
$750
(under 21 years of age)
$500
(driver is between 21 and 24 inclusive)
Total Excess per Claim
(for a Young Driver making a claim)
$1,150
$950
$850 to $1,1,00
$1,150
$900 to $1,1,50

Don't Overpay for Young Driver Car Insurance - Compare Insurers in Minutes:

Our research results suggest obtaining quotes from AMI, Trade Me Insurance and Tower. Doing so will give you an idea of the range of what you can expect to pay for young driver insurance. If you're not satisfied, then you can go further and easily generate quotes from AA Insurance and State Insurance. There are other players in the market - your bank may offer a competitive policy, for example, so do not restrict yourself to the "big five" insurers listed on MoneyHub.

The Best Car Insurance for Drivers Under 25

Know This First: Add a young driver to your existing policy if you plan to share the car: If you're insuring your child or children to drive a family car, re-quoting your current policy is the best place to start. Be aware, adding a young driver to your existing policy will increase the annual price and the total may not be competitive with other insurers. To avoid overpaying, we suggest re-quoting your insurance among at least two or three other insurers and adding a young driver. The total annual cost and excess will differ per insurer, as will the additional young person excess, so do keep these two costs in mind.

If you're a young adult looking for a stand-alone policy for a car, we suggest following these steps:
1. Start comparing: If you're looking for a dedicated young driver policy, the best place to start is by comparing quotes. We suggest obtaining quotes from AMI, Trade Me Insurance and Tower will give you an idea of the range in what you can expect to pay. If you're not satisfied, then we suggest generating quotes from AA Insurance and State Insurance.

2. Select the policy type that suits your risk: Most car insurance companies offer three types of policies that will cover young drivers:
  • Third-party insurance – this is the most basic and covers you for damage to other cars and property that you cause. Your car is not covered for repairs or replacement. This means if you need repairs for any reason, you'll need to pay for them yourself. If your car is damaged and you're at fault, you'll need to pay to fix it.
  • Third-party fire and theft insurance – this is the same as the above policy but covers your car for replacement or repairs if it’s stolen or damaged by fire. Again, if there is an accident and you're at fault, your car repairs won't be covered.
  • Comprehensive insurance – this covers third parties (i.e. any car or property you damage) as well as your car should you have an accident, or if it gets stolen or damaged by fire. This is a "no risk" policy, but the annual costs are significantly higher than any third party policy. If you can't afford repairs, comprehensive insurance is arguably a more cost-effective option in the long run.

3. Understand the excess that applies: Car insurers charge young drivers a higher excess, which can total anywhere between $850 and $1,150. This is the amount you'll need to pay if and when you claim when a young driver gets into an accident.

Young Driver Car Insurance - ​Frequently Asked Questions

Young driver car insurance is expensive and the claim costs are high given the increased excess. With so much to consider, our section below anticipates what's important and answers common queries.

Does car insurance include breakdown cover?

No – but you can add it as an optional extra. As a background, insurers usually charge anywhere from $30 to $60 per year to cover the vehicle. We believe this can be better value than the alternative (AA Membership, which insures the person not the car).

Should I get breakdown cover?

It depends, but the benefits can, in many cases, exceed the cost. Tower, for example, offers annual breakdown cover for an extra $45 per policy. Given the AA charges $195 for one-off breakdown assistance, protection linked to your insurer can be cost-effective.

Popular roadside assistance options offered as insurance add-ons include:

Am I covered if I lose the keys?

You won’t be covered with third party policies, but some comprehensive policies will cover you. If this is something you want to be covered for, check the policy’s benefits before buying a policy. Our AMI vs AA Insurance vs Cove vs State vs Tower vs Trade Me Insurance has more details.

What is a no claims bonus, and how do I get one?

A no claims bonus is a percentage saving on your policy renewal if you don’t make a claim. Our guide to no claims bonuses has more details.

Am I covered for windscreen damage?

No – this is usually an optional extra offered by car insurers. When getting quotes, make sure you request this cover if it’s something you need. A chipped windscreen that must be replaced isn’t cheap – prices start at around $800.

Will a defensive driving course help reduce the cost of insurance?

It depends – you’ll learn skills that limit your chances of causing an accident, making your policies cheaper if thanks to your new skills you don't cause car accidents and become eligible for a no claim bonus. However, no insurer discounts their insurance policies for someone who has completed a driving course.

What excess amount should I choose?

Young drivers always have an additional excess applied and it's normal to be charged around $1,000 per claim. You can choose a higher excess, such as $1,200 or even $1,500, to lower your annual policy cost. However, you need to be able to pay the excess immediately if you have an accident and are at fault. If $1,200 isn’t an amount of money you are likely to have on hand, sticking with the lowest excess available is likely to be a good idea.

As a young driver, can I negotiate the price of my car insurance?

You may be able to. The best starting point is to get quotes and then ask your preferred insurer if they will price match if they happen to be more expensive. An insurer cannot discount excess amounts, but policies have price flexibility in some cases. If you’re renewing, we suggest obtaining quotes – your current insurer may no longer be the cheapest and thousands of New Zealanders switch insurers each year to save money.

If my car isn’t being driven for a long time, do I need to insure it?

This depends on your budget and risk. If your car is safely secured, i.e. in a locked garage, it’s arguable that it has low risk and may not need insurance (but this isn’t a recommendation). However, if your car is at risk of theft or damage, it may be a good idea to insure it. Young driver car insurance is expensive, so while it may be tempting not to insure it, a theft or write-off are always possible.

​What are the most popular cars insured for young drivers?

In this 2016 New Zealand Herald article, AA Insurance data outlines the ten most common queried cars and their cost to insure (low, average or high) relative to all cars quoted. It's a good indication of what you can expect to pay.
  • Toyota Corolla – Low
  • Suzuki Swift - Low
  • Honda Civic - Low
  • Nissan Pulsar - Low
  • Mazda Axela - Average
  • Honda Accord - Average
  • Volkswagen Golf - Average
  • Nissan Primera - Average
  • Subaru Legacy - High
  • Subaru Impreza -High

When does car insurance get cheaper for younger drivers?

Data from insurers we compared suggested car insurance gets cheaper once a driver turns 21, and much cheaper after turning 25. Per our above quotes, the excess costs decrease when a driver turns 21 or 25, and policy costs decrease as well (all other factors being equal).

Where can I compare young driver car insurance quotes, and which insurer is best?

Our young driver car insurance comparison tables are updated regularly. We also shortlist insurers we believe stand out, based on price, policy benefits and add-on features. We suggest obtaining quotes from at least three insurers to get a policy and excess level that is affordable and competitive.

What details do I need to get a car insurance quote?

Online quotes take between two and five minutes, depending on the company. You’ll need to enter the following details:
  1. Your age, address, your licence type and how long you’ve had your licence,
  2. Your car registration number
  3. Whether or not you want comprehensive, third party or third party fire and theft cover.
  4. How you plan to use your car (will it be for work, i.e. Uber driver or deliveries, or for leisure/commuting)
  5. Your driving history, i.e. any accidents, convictions or licence suspensions

Don't Overpay for Young Driver Car Insurance - Compare Insurers in Minutes:

Our research results suggest obtaining quotes from AMI, Trade Me Insurance and Tower. Doing so will give you an idea of the range of what you can expect to pay for young driver insurance. If you're not satisfied, then you can go further and easily generate quotes from AA Insurance and State Insurance. There are other players in the market - your bank may offer a competitive policy, for example, so do not restrict yourself to the "big five" insurers listed on MoneyHub.
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