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Car Insurance for Under 25s

If you buy your own car insurance policy (rather than being added to your parent’s policy), get a quote from Budget Direct and compare our price with the competition’s.

Should I buy my own policy or get added to my parent’s?

If you’re under 25 years of age and new to car insurance, you might be wondering whether to get yourself added to your parent’s car insurance policy or to buy your own.

Your decision will depend on the circumstances, including where you live, the car’s owner, and its regular driver (the person who drives it the most). 

Use the following table to help you weigh up your options:

(Getting added to your parent’s policy and paying the difference is generally your cheapest option, but only if you’re not the regular driver of the car.)

Can my parents take out a policy on my behalf?

Even if you own the car you drive, your parents are free to pay for some or all of your car insurance, if they wish — that’s what parents do!

However, don’t be tempted to get your parents to insure your car in their name so you can save money on your premium.

That’s called ‘fronting’, whereby an older, more experienced driver fraudulently insures a car in their name — listing themselves as the primary driver — even though it’ll be driven most of the time by a younger, riskier driver.

While this may result in the younger driver getting a cheaper premium, if they make a claim and the insurer finds out mum or dad fibbed when they took out the policy, the claim could be rejected, leaving the family to foot a potentially hefty damage bill; or else the insurer may reduce the amount they pay. 

What are the different types of car insurance?

The following table shows the four types of car insurance provided by Budget Direct and what they essentially cover:

Read more about the different types of car insurance

Which type of car insurance do I need?

If you drive a new and/or expensive car, you may decide to take out comprehensive car insurance, which covers theft and damage to your car and your liability for the damage it causes to other people’s vehicles.

(If you’re buying your car on finance, the finance company will usually require the car to be comprehensively insured.)

If you drive a car with a low market value, you may conclude that cheaper third-party property damage insurance is all you need, covering your liability for damage to other people’s vehicles — but not damage to your car.

Compulsory third party (CTP) insurance is the only type of car insurance in Australia that’s mandatory; in some states it’s included with your car registration fees, in others you have to buy CTP separately before your car can be registered.

Note that CTP is a form of personal injury insurance — it doesn’t cover damage to your car or your liability for the damage it causes to other people’s vehicles. Is CTP insurance enough cover?

What’s not covered?

There are some things Budget Direct car insurance does not cover (called ‘exclusions’). For example, we do not cover loss, damage or liability arising out of the use of the car:

Furthermore, we do not cover loss, damage or liability arising from:

For the full list of exclusions, please read the Product Disclosure Statement.

How much does car insurance cost?

There are lots of factors that can influence the cost of car insurance — your premium — including your age, driving record, car’s performance, and level of cover. 

Moreover, insurers assess and price risk differently: The premiums they charge the same person can vary by hundreds, sometimes thousands, of dollars.

The most accurate way to price car insurance is to get some quotes. 

Read more about the cost of car insurance

Car insurance excesses

A car insurance excess is the fixed amount you pay towards each claim — unless you have a no-fault accident. 

Budget Direct policyholders pay a Basic Excess and any other additional excesses that apply. 

You can reduce your premium by choosing a higher Basic Excess (and vice-versa); the additional excesses cannot be changed.

Award-winning car insurance

After comparing the cost and features of 53 comprehensive policies offered by 42 insurers, Canstar awarded us one of only two national awards for Outstanding Value Car Insurance in 2020 — a record 14th year in a row we’ve won the award.

Before reaching its verdict, Canstar assessed and rated the policies across six consumer types within six states (a total of 36 profiles). The policies were then awarded a star rating in each profile, ranging from one star up to — for “outstanding value” — five stars.

The following table shows the consistently high star ratings Budget Direct received for all the profiles relating to young drivers:

Canstar Car Insurance Star Ratings 2020

The ACT and NT were not included in Canstar’s evaluation. See all the results by state and consumer type; and read more about Canstar’s ratings methodology.

We also won Money magazine’s Best of the Best 2020 title for Cheapest Car Insurance; and a Mozo Experts Choice 2019 award for Exceptional Value Car Insurance.

Why do young drivers pay more for insurance?

Car insurance premiums are partly based on the probability of a driver having an accident and making a claim: The higher the probability, the larger the premium.

According to Teresa Senserrick, an associate professor who conducts transport and road safety research at the University of New South Wales, “Youth aged 17–25 comprise 13% of the Australian population, but 22% of the annual road toll.”1

Because they are statistically more likely to be involved in road accidents, younger, inexperienced drivers invariably pay higher car insurance premiums than older, experienced drivers do. 

On the plus side, for each year you drive without making a claim, we’ll give you a discount on your premium — until you earn the maximum discount (known as Rating 1).

What do I need to tell my car insurer?

Budget Direct’s willingness to insure a person’s car, the terms under which we agree to insure it, and the premium we charge are based on the information they give us about their car and its drivers.

It’s therefore critical we’re supplied, at all times, with true and complete information regarding the car, drivers, use of the car, ownership, the place where the car is normally kept, and any incidents which may lead to claims under this policy.

If the policyholder’s details change, the premium may also change; in a worst-case scenario (e.g. if a policyholder is convicted of drink-driving), we may no longer be able to insure them.

Buying extra insurance from a car dealer

If you buy a new or used car from a dealer, they may offer you add-on insurance to cover things like a mechanical breakdown or damage to tyres and rims or to cover any car finance you’re getting (in case you’re unable to repay the loan).

According to the Australian Securities and Investments Commission (ASIC), this add-on insurance is “usually poor value for money”.

Read more about what ASIC has to say about add-on insurance sold by car dealers

1. Teresa Senserrick, 2015, The Conversation, <https://theconversation.com/young-driver-crashes-the-myths-and-facts-49877>, viewed 30 May 2019.

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Insurance (excluding Pet Insurance) is arranged by Auto & General Services, ABN 61 003 617 909, AFSL 241411. Registered Office: 13/9 Sherwood Road, Toowong 4066 on behalf of the insurer, Auto & General Insurance Company Limited ABN 42 111 586 353.

Budget Direct Pet Insurance is administered by Pet Health Insurance Services Pty Ltd ABN 59 638 910 675 as Authorised Representative 1282153 of Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL 285571, Registered Office: 13/9 Sherwood Road, Toowong 4066 on behalf of the insurer AGIC and is promoted by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411.

Because we don’t know your financial needs, we can’t advise if this insurance will suit you. Please consider your needs, the Financial Services Guide, the Product Disclosure Statement, and the Target Market Determination when deciding to buy insurance. Subject to meeting underwriting criteria. Any discounts on both new and renewing policies only apply to the extent that any minimum premium isn't reached.

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†Price Comparison Figures

Figures represent average savings based on data provided by customers who reported they switched online to Budget Direct's, Comprehensive Car Insurance or Combined Home & Contents Insurance or Buildings Only Insurance or Contents Only Insurance from comparable policies, between 1 April 2023 - 30 September 2023. Individual circumstances and policy terms may vary. Please compare for yourself.

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Based on a survey of Budget Direct Car and Home Insurance customers conducted between 10 February 2015 and 31 March 2024. Visit www.budgetdirectreviews.com.au for more details.