Do younger people pay more on car insurance?

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on November 25th, 2021       

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Most teens cannot wait to get behind the steering wheel and out onto the road. Gone are the days of asking parents for lifts, or relying on friends who can drive. The freedom that comes with driving is insatiable and it is such a dampener to know that younger people often pay more on insurance, especially considering that you are just starting your life and probably not earning millions.

Insurance companies tend to view younger drivers as a greater risk on the roads due to their lack of motoring experience. This is based on the general consensus that younger drivers are more prone to accidents than older drivers and, since premiums are determined by the level of risk involved insuring you, most insurance companies will charge drivers under 25 higher premiums.

What can you do?

Insurance is essential, even if you are a great driver. If you are involved in an accident and damage another car, you could end up paying thousands in legal claims. If your vehicle is stolen, or written off, you will not receive any compensation. The good news is that there are measures one can take to save money, you just need to be aware of how premiums are affected.

  • Vehicle: the type of car you choose will influence what you pay on insurance. Certain vehicles are considered high risk because they are more commonly targeted by criminals. Additionally, the more expensive your vehicle the more you will pay on insurance premiums.
  • Where you park: The location where you keep your car parked, during the day and overnight, will also come into play when insurers calculate your insurance premiums. This ties in with how prone your vehicle is to being targeted by crime. If you park on the street in an area considered to have a higher crime rate, your premiums will be higher than if you parked it in a locked up garage in a suburban area.
  • Safety features: Additional features such as immobilisers, alarms, tracking devices etc. that all serve to deter criminals, will lower your insurance premiums.
  • Build up a good driving history: It may take more time but by building up a good record as a reliable driver that has not claimed, your rates will eventually start to decrease.

Third party insurance

This is not the same as comprehensive insurance cover and it offers very basic cover however, if you cannot afford insurance, then at the very least, third party cover is an option.

Basically, if you were involved in a collision and were at fault, third party insurance will cover you for these costs.

Insurance with your parents

It may be a cheaper option for parents to add you to their policy. It is not uncommon for families to do this as insurance for a family with a driver under 25 could still be cheaper than a young person having to pay their own insurance premiums.

It is important for parents to notify their insurers that their child is driving. This will affect their monthly premiums and there may be an age excess involved however, it is still better than no insurance.

Do your homework

When it comes to insurance, it pays to do some research and to shop around and compare quotes and options available. Always ensure you read over the terms and conditions of your policy and, before committing to anything, make sure it suites your specific needs and budget.