Best Car Insurance for Under 25s in Australia

If you're under 25 and you've requested a car insurance quote, you've seen the number. It's high. It's often double what a 35-year-old pays for the same car, same suburb, same coverage.

Australian insurers charge young drivers more because drivers aged 17 to 24 cause a disproportionate share of accidents. The Insurance Council of Australia reports that drivers under 25 represent 13% of licensed drivers but account for 26% of at-fault crashes. That claim history feeds straight into premiums.

You can't change your age. But you can choose the right insurer, the right car, and the right policy structure, and the gap between what you're quoted and what you end up paying can shrink by 30% to 40%.

Insurers set premiums based on statistical risk. Three factors push young driver premiums up. First, inexperience. A driver with two years behind the wheel has fewer hazard-recognition reflexes than someone with fifteen. Second, age-related risk behaviour. Australian Institute of Health and Welfare data shows that 17-to-24-year-olds have the highest rate of speeding offences and the second-highest rate of drink-driving charges. Third, the time of day. Young drivers log more kilometres at night and on weekends, when crash rates are higher.

Gender no longer plays an official role. Since 2014, Australian insurers stopped using gender as a rating factor for car insurance after regulatory changes. A 19-year-old man and a 19-year-old woman driving the same car in the same suburb pay the same base premium. Driving history, car type, and address now carry the weight that gender once did.

Your premium also includes a young driver excess on top of the standard excess. Most insurers charge an additional $500 to $900 for drivers under 25. AAMI charges $800. Budget Direct charges $500. NRMA charges $600 to $900 depending on your age bracket. This excess applies every time an under-25 driver is behind the wheel during a claim, even if they weren't at fault.

Not all insurers price young drivers the same way. Some specialise in younger demographics and offer lower base premiums. Others load premiums so high that they're signalling they don't want the business. The table below compares comprehensive cover for a 21-year-old driving a 2019 Toyota Corolla in suburban Sydney, with no at-fault claims.

Budget Direct and Bingle sit at the affordable end for under-25 drivers. Budget Direct keeps costs down with a $500 young driver excess, the lowest among major players. Bingle operates as an online-only brand (owned by Suncorp, same parent as AAMI), which strips out call-centre costs and passes savings to policyholders.

NRMA and RACV charge more upfront but include broader benefits: lifetime repair guarantee, hire car after theft, and new-for-old replacement within two years. If you want maximum coverage, those extras might justify the higher premium. If you want the lowest price, Bingle and Budget Direct win. You can also read about your rights to choose your own repairer when making a claim.

Choose a low-risk car. Insurers group cars into rating categories based on theft rates, repair costs, and crash frequency. A 2018 Toyota Corolla sits in a low rating group. A 2018 Volkswagen Golf GTI sits in a high one. The difference in annual premium between those two cars, for the same 21-year-old driver, can exceed $1,500.

The ANCAP safety rating of your car affects your premium too. Cars with a 5-star ANCAP rating cost less to insure because they protect occupants better and reduce claim severity. A car with autonomous emergency braking (AEB) and lane-keep assist generates fewer claims, and insurers reflect that in pricing.

Restricting your policy to named drivers makes a measurable difference. An "any driver" policy lets anyone drive your car, and insurers price that as higher risk. Listing yourself and one parent as the only drivers removes the statistical risk of unknown drivers and lowers the premium.

Increasing your standard excess from $500 to $1,000 lowers your annual premium by 10% to 20%. For a $2,500 policy, that saves $250 to $500 per year. The trade-off: if you make a claim, you pay $1,000 out of pocket (plus the young driver excess) before the insurer contributes. Set your excess at a level you could cover from savings without borrowing.

Three levels of car insurance exist in Australia. Compulsory Third Party (CTP) is included in your rego and covers injury to other people. Third Party Property covers damage you cause to other people's cars and property, but not your own car. Comprehensive covers your car plus other people's property.

For a young driver with a car worth $5,000 or less, Third Party Property makes financial sense. You're paying $600 to $900 per year instead of $2,000 to $2,800 for comprehensive. If you write off your $4,000 car, you lose $4,000. But you save $1,400 per year in premiums, and after three years, you've saved more than the car is worth.

For a car worth $15,000 or more, comprehensive cover is harder to skip. A single at-fault accident could cost you $15,000 out of pocket. Even with a $1,000 excess and $800 young driver excess, you're paying $1,800 and your insurer covers the remaining $13,200. One claim pays for years of premiums.

Third Party Fire and Theft sits in the middle. It covers your car against fire and theft (but not accident damage) plus damage to other people's property. Premiums run $800 to $1,200 for under-25s. This option works if you drive an older car in a high-theft suburb and want some protection without full comprehensive cost.

One trap catches young drivers who choose Third Party Property: if an uninsured driver hits you, Third Party Property does not cover repairs to your car. You would need to pursue the at-fault driver through a civil claim, which takes months and offers no guarantee of recovery if the other driver has no assets. Comprehensive cover eliminates this risk because your insurer repairs your car and chases the at-fault driver for reimbursement on your behalf.

If you drive your parents' car, getting listed as a named driver on their policy costs less than taking out your own policy on the same car. Your parents keep their no-claim bonus and rating-one discount. The insurer adds a young driver excess that applies when you're driving, but the base premium stays tied to the primary policyholder's age and driving record.

This approach has limits. You don't build your own insurance history. When you move out and take your own policy, you start from scratch with no claims record. Some insurers recognise years as a named driver on a parent's policy when calculating your starting premium, but not all. Ask your target insurer before relying on this.

If you own your own car, you need your own policy. You can't insure a car registered in your name on someone else's policy at most Australian insurers. The registered owner and the policyholder must match.

Some families use a workaround: the parent registers the car in their name and insures it on their policy, while the young driver operates it. This lowers the base premium because the policyholder is over 25. The young driver excess still applies whenever the under-25 driver lodges a claim. Check with your insurer that this arrangement complies with their policy terms. Misrepresenting the primary driver can void the policy. If you tell the insurer your parent is the main driver but you drive the car to work five days a week, the insurer may reject a claim for non-disclosure.

Your no-claim bonus (NCB) is the single biggest discount on your car insurance. One claim-free year earns you Rating 1 status at most insurers, worth a 10% to 15% discount. Two years gives you Rating 2 and 20% to 30% off. After five to six claim-free years, you reach maximum discount territory: 40% to 65% off your base premium. If you switch providers, our guide on how to cancel car insurance covers the process.

For a young driver paying $2,500 per year, reaching a five-year NCB could cut that to $1,200. That's a $1,300 annual saving. Protect your NCB by avoiding small claims. If the damage costs $1,500 and your excess is $1,800 (including young driver excess), paying out of pocket costs less than claiming and losing your bonus.

AAMI and NRMA offer NCB protection as an add-on. For an extra $50 to $100 per year, your NCB stays intact after your first at-fault claim. For a young driver, that small investment protects years of accumulated discount.

Start your own policy as soon as you get your licence, even if it's Third Party Property on a cheap car. Every claim-free year moves you up the NCB ladder. By the time you're 25 and the young driver loading disappears, you'll have five years of clean history and a premium that reflects it.

Your NCB transfers between insurers. If you build three years of claims-free history with AAMI and switch to Budget Direct, your new insurer recognises your Rating 3 discount. You don't start from scratch when you change providers. Ask for a certificate of insurance or NCB letter from your outgoing insurer, and present it during the new policy application.

Telematics (black box) insurance has arrived in Australia for young drivers. Some insurers, including Youi and several digital-first brands, offer devices or app-based tracking that monitor your driving behaviour: speed, braking, cornering, and time of day. Good driving scores unlock further discounts of 10% to 20% on top of your NCB. If you drive sensibly and want proof of it, telematics can accelerate your path to affordable premiums.