It’s hard to get away without paying more for car insurance as a teenager. To reduce your premiums, focus on building a clean driving record.
Cars must have compulsory third party (CTP) insurance to be registered. This is called a Green Slip in NSW.
Like all drivers, teenagers should get adequate car insurance in Australia. It may seem expensive, but it will protect you from potentially life-ruining claims should you cause an accident. Here is a guide for teenagers about the different types of insurance and a few things to consider before purchasing a policy.
Compulsory third party insurance
Cars must have compulsory third party (CTP) insurance to be registered. This is called a Green Slip in NSW. CTP only covers personal injury to third parties. At fault driver’s (you) may also be covered, but only for specific injuries and up to specific amounts. Make sure your CTP has some at fault driver protection.
While prices are usually similar, they do change from year to year. Don’t renew your CTP without comparing other providers.
Fire, theft and third party property insurance
As the name suggest, this will cover you if your car is destroyed by fire or stolen. It also provides cover against damage you cause to other people’s property. It doesn’t cover the cost of replacing your car or property. While not compulsory, don’t underestimate the cost of repairing cars. Repainting a basic scratch and replacing a tail light will cost hundreds of dollars.
Comprehensive insurance covers the same things as fire, theft and third party property insurance, as well as personal property; that is, your car. You need to weigh up the cost and benefits of paying extra for comprehensive insurance. If you own a cheap or medium priced car, it will be most likely not worth it paying to have it comprehensively insured.
Potential ways to save
Buy a cheaper car
The cost of car insurance is driven by the make and model of the car. This is because the cost of replacement and repairs increase the higher the value of the car. So to avoid paying expensive car insurance, think about buying a cheaper car. This actually saves you even more money!
Use your parent’s name
Younger drivers are charged more for insurance. Why? Because they are more likely to be involved in an accident. Are you driving a car owned by your parents? If so, then speak to them about putting the car insurance policy in their name and making sure that you are listed as a named driver. Get some quotes for different scenarios and work out what will be the most cost effective. Just be careful here. If it is your car, then you should be listed as the main driver. Insurance companies take this very seriously when it comes to making a claim. If you aren’t sure, don’t hide anything from the insurer, have an open conversation with them upfront!
Play with the excess
You will usually be able to reduce your premium by increasing the amount of excess you will pay. If you are willing to risk having to pay for any minor damage yourself, then a higher excess will be cheaper.
Certain modifications can make your premium go up because your vehicle is deemed to be more likely to be stolen or involved in an accident. On the contrary, microchips, alarm systems and immobilisers can reduce your premium.
While you must get CTP, and third party property damage is important, you could ‘self-insure’ your vehicle. Simply get a quote for comprehensive insurance, then put that amount of money into a separate bank account each year. Depending on the value of your car you might find that this will be enough in a few years to replace or fix it should you have an accident. This method takes a lot of control and willpower not to touch that saved money. So proceed carefully here!
Ask for a discount
If you already hold a policy with a company, or are renewing one, request a discount. Even if you are rejected it’s a good habit to start young. It will save you heaps over your lifetime.
Insurance becomes cheaper as you get into your mid-twenties and maintain a clean driving record. While comprehensive insurance might seem expensive to many teenage drivers, you should strongly consider your options and if they suit your particular car and needs.
Got any thoughts on teenagers and car insurance? Let us know in the comments section.