Getting your driver’s licence is one of life’s milestones – freedom to drive yourself to work, head to the beach with friends or take a road trip without having to stick to someone else’s itinerary.
But along with that new-found independence comes fresh responsibilities and expenses – one of which can be car insurance.
If you’ve already started shopping around, you might have noticed that premiums for drivers under the age of 25 tend to be higher than those for older drivers,1 so you could be wondering if it’s possible to find cheap car insurance for young drivers.
This practical guide explains why car insurance can be more expensive for drivers under 25, why having car insurance matters for younger drivers, and what you can do to help reduce the cost of getting covered.
Why does car insurance cost more for young drivers?
Young drivers under the age of 25 are generally viewed as riskier to insure due to their lack of driving experience. When you’re deemed a higher risk, you’re more likely to be in an accident and file a claim,2 which is why car insurance typically costs more for young drivers.
Statistics demonstrate a link between driver age and accident risk. For example, in their first year of driving, young Victorians aged 18-25 are almost four times more likely than experienced drivers to be involved in a serious car accident.3
And, while the Government of South Australia says that new drivers almost halve their crash rate after 12 months of driving,4 young drivers aged below 24 are still 60% more likely to be involved in a serious crash than more mature drivers.5
This link between age and accident risk might help explain why one in three Gen Z drivers in Australia have already made a car insurance claim – from Youi’s 2025 Under the Hood Report – despite having far fewer driving years under their belts than other generations. There isn’t just one reason why young drivers have more accidents, but research has revealed the most common contributing cause is inexperience.6
How are premiums for young drivers calculated?
In addition to your age, insurers typically take a number of other factors into consideration when calculating your car insurance premium. These include:7
- Your driving and claims history
- How often you drive
- Where you live and usually park your car
- The type of car you’re insuring.7
If you’d like to get an indication of how much insurance for your car might cost at Youi, you can use our car insurance calculator.
How can young drivers reduce their car insurance costs?
While premiums are generally higher – as we’ve seen – for younger, less experienced drivers, there are some steps you could consider taking that might result in finding car insurance that’s potentially more affordable for an under 25-year-old drivers.
Think about the type of car you buy
The type of car you’re insuring, namely its make, model and age, can impact your premiums. Expensive cars that cost more to fix or replace are typically pricier to insure than older, more common cars where parts are generally easier to source.7
Modifications to the car, such as alloy wheels or a custom paint finish, can also make a car more expensive to insure.7 High-performance cars usually cost more to insure as well.8
So, what are some of the best cars to insure for young drivers?
Our car insurance by make and model calculator shows some of the cheaper cars to insure might include:9
- Kia Picanto – annual insurance premium may range from $640 to $1,402
- Toyota Yaris – annual insurance premium may range from $643 to $1,375
- Honda Jazz – annual insurance premium may range from $644 to $1,369
- Hyundai i20 – annual insurance premium may range from $650 to $1,463
- Suburu XV – annual insurance premium may range from $655 to $1,260.9
For more suggestions on which models might be among the cheapest cars to insure, check out our full list.
Choose the right level of cover for you
For many young drivers weighing up costs, the question isn’t only about the price of insurance, but also what level of cover makes most sense while you’re still building experience behind the wheel. Learning the differences between each type of insurance can help you understand what you’re paying for and why.
Compulsory Third Party (CTP) insurance is mandatory for any driver registering a vehicle in Australia, and protects you from being held financially responsible if you injure someone in a car accident.10 However, there are optional types of car insurance which cover damage to cars and property too. These include:
- Third Party Property Only car insurance. This covers damage to other people’s cars and property caused by your car.11
- Third Party Fire & Theft car insurance. This includes the same cover as Third Party Property Only insurance, as well as cover for your car if it is damaged by fire or gets stolen.11
- Comprehensive car insurance. This is the most extensive – and generally the most expensive – type of cover.8 It covers damage to your car and other people’s, even if you caused the accident. It also covers your car if it’s stolen or damaged by fire or weather events.11
Choose Third Party insurance - for now
If you’re under 25 and driving your own car, consumer advocacy group CHOICE suggests you may only want a third party car insurance policy until you have more driving experience and qualify for cheaper premiums.8
However, when it comes to insuring young drivers, cheaper car insurance may not always be the best option.11 Our 2024 Car Care & Costs Report shows that 59% of younger drivers have chosen to go with Comprehensive car insurance.
There are a number of questions to consider when you’re trying to establish which level of cover is right for you. For example, could you afford to be without your car if it’s stolen or written off, and could you afford to repair or replace your car without insurance?11
Increase your basic excess
Choosing a higher basic excess, which is the amount you have to pay when you make a claim,11 will usually result in lower premiums.7 Remember, though, that having a higher basic excess means that if you need to make a claim, your out-of-pocket costs are likely to be higher too.7
Plus, many insurers also apply an additional excess for young drivers, in addition to the policy’s basic excess.8
Maintain a safe driving record
Driver behaviour is a major contributing factor to serious injuries and deaths on Australian roads.13 The primary reason to be a responsible driver is to help make our roads safer; however, over time, it could also lead to lower car insurance premiums.7
“At Youi, we assess each new policy application or policy renewal on a case-by-case basis, including taking a person’s driving history into account,” says Marni Jackson, Youi’s Head of Product – Vehicle and Lifestyle.
“So, while accumulating demerit points from repeated high-risk offences such as running a red light or engaging in dangerous driving could push your insurance premium higher, on the other hand, maintaining a safe driving record may help to lower it.”
How to reduce your crash risk as a young driver
Here are some practical steps you can take when you’re behind the wheel to help keep yourself and others safe.
Slow down
One in three young Victorian drivers routinely speed 5km/h or more over the limit.14 “Speeding, even at a low level, is dangerous,” says Tracey Slatter, Chief Executive Officer of the Transport Accident Commission. “It increases the likelihood of crashing and the severity of the crash outcome.”
Allowing plenty of driving time, setting cruise control and staying alert to changing speed zones can help you stick within the speed limit for your category of driver’s licence.14
Avoid distractions
Distractions such as mobile phones are one of the leading causes of accidents among young drivers. Keep your phone out of reach, set your GPS before you leave and stay focused on the road.15
Resist peer pressure
The risk of being involved in a fatal crash is five times higher for young drivers with two or more passengers.3 Whether it’s speeding or taking unnecessary risks, peer pressure can be intense.15 The Australian Road Safety Foundation recommends being confident about your decision to drive safely and putting your wellbeing over impressing others.15
Break up long trips
Fatigue is a major risk factor for young drivers on long trips. Plan your journey so you are well rested before driving and don’t drive for more than two hours without taking a break.15
Be mindful of night driving
First-year drivers are seven times more likely to be involved in a fatal or serious injury crash between the hours of 10pm and 6am than fully licensed drivers.6 Avoid driving when you’d usually be sleeping and stick to short trips if you do need to drive at night.6
Should you buy your own policy or get listed on your parents’ policy?
If you have your own car and you’re the person who drives it most often, the most important thing is that the insurance policy lists you as the primary driver – regardless of whether you actually own the car or not.16
If you drive your parents’ car, but they’re still the primary driver, it’s best not to assume you’re automatically covered by their insurance. Instead, you might like to contact the company who insures the car to ask about getting listed on the policy.8
Having a listed driver who’s under the age of 25 could increase your parents’ premiums, and you’ll likely have to pay an additional excess if you need to make a claim. However, if you’re not listed and you need to make a claim, this additional excess could be significantly higher.8, 16
Will your car insurance premiums reduce as you get older?
Older, more experienced drivers can usually expect to have lower premiums than younger drivers.2
For example, the average yearly cost of comprehensive car insurance in Australia is highest for drivers under 25 and lowest for those aged over 50:1
- Drivers aged under 25: $2,550 for females and $2,858 for males
- Drivers aged 25-29: $2,056
- Drivers aged 30-49: $1,529
- Drivers aged 50 and over: $1,1831
When you’re a young driver, car insurance might seem expensive but as this guide shows, from choosing the right car to finding the level of cover that suits both your budget and your wheels, there are steps you can take to help manage costs.
If you’re a younger driver looking for the right car insurance to suit your needs and experience, Youi is here to help. Start a quote online or call us on 13 9684 to find car insurance that’s a bit more you-shaped.
Note: Information in this article is relevant as of December 2025 and by its nature will change over time. Check relevant Government websites for updates if this information is important to you.
1 Source: Canstar – How much does car insurance cost?, March 2025
2 Source: Canstar – Car insurance for high-risk drivers: What to consider, April 2025
3 Source: Victoria Police – Young drivers, January 2025
4 Source: SA Government – Reducing crash risks
5 Source: Qld – Young drivers – the facts
6 Source: Transport Accident Commission – Risks for young drivers
7 Source: Canstar – How is car insurance calculated in 2025?, January 2025
8 Source: CHOICE – Best car insurance for drivers under 25, September 2025
9 Please note these displayed premiums are estimates only and will vary according to personal circumstances and different insurers’ rating and underwriting. The information is based on Youi internal data for Comprehensive car insurance policies sold for the make and model between 30 Oct 2024 and 30 Apr 2025. 80% of applicable Comprehensive car premiums purchased by our customers fell within or below the indicative premium range shown. Average comparisons are calculated on models where Youi data is available on at least 10 sold Comprehensive policies for that model.
10 Source: Motor Accident Insurance Commission – About CTP insurance, November 2024
11 Source: Moneysmart – Choosing car insurance
12 Special conditions and restrictions may apply and will be stated on your policy schedule (for example, for some cars, we may restrict cover to the listed and regular drivers only, or apply a special condition of ‘no cover for drivers under 30 years of age’. The driver-specific excess dollar amounts listed are current as of January 2026. For full details, see the PDS.
13 Source: Australian Government – Road safety is everyone’s responsibility
14 Source: Transport Accident Commission – Alarming research shows young drivers most likely to speed, May 2025
15 Source: Australian Road Safety Foundation – Tips on Road Safety for New and Young Drivers
16 Source: CHOICE – How to find the best car insurance policy
