Young Driver Car Insurance
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Updated 16 February 2021
Summary:
Our guide covers:
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Important:
- Driving can be expensive for any young person. The average price for comprehensive car insurance for a basic Toyota stands at XXXXX per our research.
- 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 look at ALL young driver options – comprehensive, third-party and third-party.
Our guide covers:
X
X
Important:
- If you’re over 25, this guide is not for you. Please refer to our comprehensive car insurance guide.
- Are you looking for the best third-party policy? Our dedicated third-party car insurance guide has you covered.
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:
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 now and in the long-term.
- Your age. Our research indicated that 18-year-olds pay more than 20-year-olds, all other things being equal.
- How long you’ve had your licence. The more experience you have driving, the cheaper the policy.
- 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.
- Your car model and its value. Generally, hatchbacks with small engines are cheaper to insure than high-spec luxury cards.
- Where you live, 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.
- 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.
- 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.
- How you pay – annual 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.
- 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.
- 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 now and in the long-term.
Best Car Insurance for Drivers Under 25 - Our View:
Most car insurance companies offer three types:
- 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.
- 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.
- 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.
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.
- 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
Young Driver Car Insurance - Frequently Asked Questions
Does car insurance include breakdown cover?
No – but you can add it as an optional extra. Insurers usually charge anywhere from $30 to $60 per year to cover the vehicle. We believe this can be better value than AA Membership as our review explains (LINK).
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 $XX per policy. Given the AA charges XXX for one-off breakdown assistance, protection linked to your insurer can be cost-effective.
Am I covered if I lose the keys?
You won’t be for 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.
What is a no claims discount, and how do I get one?
A no claims discount is a percentage saving on your policy renewal if you don’t make a claim. For example, AMI applies a 50% No Claims Bonus when you take out an AMI Comprehensive, Third Party Fire & Theft, or Third Party car policy. However, if you claim, you’ll lose the 50% discount and end up paying double your insurance the following year. If you can avoid claiming on the policy, insurers will reward you with cheaper car insurance.
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 unless you make a claim. However, no insurer discounts their insurance policies for someone who has completed a driving course.
What excess amount should I choose?
Young drivers typically start at around $750 (Tower) or $900 (AMI) or within this range. You can choose a higher excess, such as $1,000 or even $1,200, 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 $1,000 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. If you’re renewing, we suggest obtaining quotes too – your current insurer may no longer be the cheapest.
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, it’s arguably that it doesn’t 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.
When does car insurance get cheaper for younger drivers?
Data from insurers we compared suggested car insurance gets cheaper once a driver turns 21 (CHECK THIS). Per our above quotes, the average for a 20-year-old was XXXX whereas, for a 21-year-old, the average policy price was XXXX/
Where can I compare young driver car insurance quotes, and which insurer is best?
MoneyHub’s young driver comparison tables (LINK) are updated regularly. We also shortlist insurers we believe stand out, based on price, policy benefits and add-on features.
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:
- Your age, address, your licence type and how long you’ve had your licence,
- Your car registration number
- Whether or not you want comprehensive, third party or third party fire and theft cover.
- How you plan to use your car (will it be for work, i.e. Uber driver or deliveries, or for leisure/commuting)
- Your driving history, i.e. any accidents, convictions or licence suspensions
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