Published in July 28, 2021

Car insurance rates for new drivers

Car insurance rates for new drivers
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New drivers or young adults pay more for their car insurance policy. Here are some tips to get cheaper car insurance rates for new drivers.

When purchasing a vehicle, you must always purchase a car insurance policy along with it. In Australia, you’re legally required to have a certain amount of coverage to drive your vehicle. Car accidents can be extremely costly depending on the damage, and that’s when car insurance can be helpful and important for your financial protection. 

However, for new drivers or drivers under the age of 25, premiums can be insanely costly. Car insurance companies calculate premiums based on how much of a risk that driver is. Therefore, new drivers are perceived as high risk with a likelihood of getting in an accident, which as a result increases the car insurance rates. For parents, adding another driver to your policy that’s under 25 can also increase your premium. 

That’s why it’s important to compare insurance companies and their rates before making your final decision! Read more on Learner drivers and car insurance

Why is insurance expensive for new drivers?

As mentioned previously, insurance companies calculate their premiums based on how much of a risk you are to insure. Therefore, new drivers or drivers under the age of 25 have much higher premiums because of their calculated likelihood of getting in an accident.

Other factors that contribute to your premium include: 

  • Your age 
  • Driving history 
  • Credit Score 
  • Make and model of your car 
  • Your address 
  • How often the car will be driven 

Moneysmart can help you with choosing the right car insurance. Read more!

How can new drivers lower their premium?

For new drivers or drivers on their learner’s license, finding a cheap car insurance rate can be difficult and a bit of a challenge. However, there are some steps to take to lower your premium if you’re a new driver. 

Add a young driver to your existing policy

One of the most affordable options to take when insuring your teenager is adding them to your existing policy! This may raise your premium slightly, however, it’s tremendously cheaper than having them on a separate policy. 

Adding new drivers to your policy is a simple process. As long as you both live in the same residential address, all you’ll have to do is call or email your provider, and it should take effect on the same day!

However, that means your teen can only drive your car as that’s the only one they’re insured on. If they move out or get a new car, they will need to have a separate policy. 

Maintain a clean driving record 

Maintaining a clean driving record is the best step to take to get low offers on multiple things, insurance rates included. If you get into an accident, your premium can increase tremendously, so it’s best to stay safe and avoid major costs!

Drive an affordable car

Having young adults driving expensive cars is essentially a recipe for high insurance premiums. Driving an affordable car with effective safety features can lower your premium, especially for a new driver. 

If your car is luxurious and you want your teen to drive it, your best and most affordable option is to add them to your policy. That would be cheaper than having a separate one as discussed previously. 

When does car insurance go down?

As discussed, young or new drivers under the age of 25 pay much higher rates. Essentially, the younger the driver is the more they’re perceived as a risk to insure. 

In saying that, your premium will decrease after you turn 25! However, make sure you have a clean driving record as accidents and claims increase your rate regardless of your age. 

Read more on how your insurance goes up after a claim.

While we at Tippla will always do our best to provide you with the information you need to financially thrive, it’s important to note that we’re not debt counsellors, nor do we provide financial advice. Be sure to speak to your financial services professional before making any decisions.

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