Car insurance for young drivers and under 25s
Young and new drivers can get the same car insurance as anyone else: comprehensive, third party fire and theft, or third party property damage. What changes is the price and the excess. Insurers charge drivers under 25 more and add age-based and inexperienced-driver excesses, because young drivers are involved in more crashes.
The numbers behind that are stark. People aged 17 to 25 accounted for 219 of the 1,314 road deaths in Australia in 2025, about one in six. The good news is that the premium falls as you get older and build a claim-free record, and there are legitimate ways to pay less now.
By Better Rate Mate Editorial Team ยท Last reviewed
Why car insurance costs more under 25
Insurers price on claims data, and drivers in their first years on the road have more crashes. BITRE's figures show 219 road deaths among 17 to 25 year olds in 2025, down from 240 in 2024 but still a large share of the total for an age group that covers only nine years.
Pricing generally falls through the early twenties as a driver builds experience and a claim-free history. It does not drop overnight at 25: insurers look at years licensed and claims record as well as age, and an inexperienced-driver excess can still apply after 25 if you have not held a full licence for long.
The excesses young drivers face
Excesses are where young drivers get caught out, because they stack on top of the basic excess. The names differ between insurers, but these are the common ones.
| Excess | When it usually applies | Stacks on top of the basic excess? |
|---|---|---|
| Basic excess | Most claims, whoever is driving | It is the base |
| Age or young driver excess | The driver is under a set age, often 21 or 25 | Yes |
| Inexperienced driver excess | The driver has held a full licence for less than a set period, often two years, regardless of age | Yes |
| Unlisted or undeclared driver excess | The driver is not named on the policy | Yes |
| High-performance vehicle excess | Some powerful cars carry a fixed extra excess | Yes |
| Voluntary excess | You chose a higher basic excess to lower the premium | It replaces the standard basic excess |
What the extra excesses cost at three insurers
The amounts differ a lot between insurers, which is why the combined excess belongs in any comparison. These are the figures three insurers publish for their car policies. None of the three uses a separate under-21 band: each has one age excess for drivers under 25.
| Insurer | Driver under 25, listed on the policy | Driver under 25, not listed | Inexperienced driver aged 25 or over | Document |
|---|---|---|---|---|
| AAMI | $400 | $1,400 | $400 if listed, $1,400 if not | Additional Information Guides, policies from 30 June 2025 |
| RACQ | $600 | $1,200 | $400 | Additional Information Guide, from 1 May 2026 |
| Apia | $1,500, whether or not listed | $1,500, whether or not listed | None listed in this guide | Car Advantage Additional Information Guide, from 1 August 2026 |
New drivers over 25
Experience counts as well as age, so a new driver can pay more at any age. RACQ, for example, applies an inexperienced driver excess when the driver is 25 or older but has not held a full or open Australian licence for the preceding two consecutive years. That can catch people who learned to drive later in life, and people who have recently swapped an overseas licence for an Australian one.
Declare your licence history accurately when you get a quote, and compare the total excess you would pay on a claim, not just the premium. Learner drivers are usually treated differently: RACQ says an additional excess generally does not apply to them (see car insurance for learner drivers).
Your own policy or a parent's?
If you mostly drive a family car, being listed as a driver on your parent's policy is legitimate and usually the cheapest option. If you have your own car, you can be the policyholder and main driver on your own policy. Moneysmart notes some insurers offer a family discount to under-25s whose parents are insured with them, so ask.
The line you must not cross is fronting: naming a parent as the main driver of a car you drive most of the time. It is a misrepresentation. Insurers check who really drives a car when there is a claim, and the result can be a refused claim and a cancelled policy that you have to disclose to every future insurer.
The cheapest cars to insure for young drivers
The car can matter as much as the driver. Insurers price on repair costs, theft rates, power and safety. A young driver will usually pay less to insure a common, modestly powered small car or hatchback with a strong ANCAP safety rating and cheap, easily available parts than a performance car, a prestige brand or a model that is popular with thieves. If you are a P plater, check your state's prohibited vehicle rules too; in NSW that excludes cars with a power-to-tare-mass ratio above 130 kW per tonne (see car insurance for P platers). Get an insurance quote before you buy the car, not after.
Comprehensive or third party for a first car?
For a cheap first car, third party property damage is a reasonable choice if you could afford to lose the car. It still protects you from the biggest risk, which is being liable for someone else's car. Third party fire and theft adds cover if your car is stolen or burns.
If the car is financed, or you could not replace it from savings, price comprehensive first. It is the only level that covers your own car when you cause a crash, hit an animal, or it is damaged by hail or flood.
How young drivers can pay less
These steps reduce the price without leaving you exposed:
- Compare several insurers on identical cover, excess and drivers. Young driver pricing varies widely between insurers.
- Be listed honestly on a parent's policy if you drive the family car, and ask about family discounts.
- Choose a higher voluntary excess only if you could pay it tomorrow.
- Keep annual kilometres accurate and park off the street where you can.
- Ask whether restricting the policy to listed drivers lowers the price, and check what it would cost if someone else ever had to drive the car.
- Pay annually rather than monthly; Moneysmart reports instalments can cost 10% to 20% more.
- Protect your record. Paying for a minor repair yourself can be cheaper than an at-fault claim that costs you your no claim bonus.
What to watch for
- The age, inexperienced and unlisted-driver excesses stack. Know the total before you choose a policy.
- An inexperienced driver excess can apply after 25 if you have held a full Australian licence for less than about two years.
- Fronting is misrepresentation. A refused claim costs far more than the premium saved.
- Get a quote before you buy the car. The model can change the price more than anything else you control.
- P platers must not drive prohibited high-performance vehicles, whatever the policy says.
Common questions
What is the cheapest car insurance for young drivers?
There is no single cheapest insurer for young drivers; pricing varies widely. Compare several quotes with the same cover, excess and drivers, and consider being listed on a parent's policy if you drive the family car.
Why is car insurance so expensive for under 25s?
Young drivers are involved in more crashes, and insurers price on claims data. People aged 17 to 25 accounted for 219 of Australia's 1,314 road deaths in 2025. Premiums generally fall with age, experience and a claim-free record.
At what age is car insurance most expensive?
It is generally highest for the youngest, least experienced drivers and falls through the early twenties as experience and a claim-free record build up. Each insurer sets its own age bands.
Does car insurance go down at 25?
Often, because many insurers' age excesses and loadings stop around 25. But experience matters too: an inexperienced-driver excess can still apply after 25 if you have not held a full licence for long, typically two years.
Why is car insurance so expensive for new drivers?
Because insurers price on claims data and on experience as well as age. A driver with a short licence history usually pays a higher premium and can face an inexperienced driver excess on a claim; RACQ applies one to drivers 25 or older who have not held a full or open Australian licence for the preceding two years. The price falls as you build a claim-free record.
Can I be on my parents' car insurance?
Yes, as a listed driver of their car. What you cannot do is have a parent named as the main driver of a car that you mostly drive. That is fronting and can lead to a refused claim.
What is the cheapest way to insure my 17-year-old?
List them honestly on your policy if they drive the family car, check whether your insurer offers a family discount, and if they are buying their own car, get quotes on a few modest, well-rated models before they choose.
