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Why Do Young People Pay More on Car Insurance?
March 25, 2021●
5 minute read●
If you are a driver under 25, you will likely pay more for car insurance. Apart from your age, there are also other factors that may influence how much you pay, including your gender and whether you have had an accident and claimed in the past. So, why do young people pay more on car insurance?
What are the types of car insurance?
It is firstly important to clarify the different levels of car insurance. All drivers have Compulsory Third Party (CTP) Insurance, as it is paid for in their car registration. This level of insurance protects you and any other people if they are injured or killed in an accident; this insurance does not cover any damage done to the person’s vehicle or other personal items.
There are three main types of optional car insurance: Third Party Property Insurance, Third Party Fire and Theft and Comprehensive car insurance.
Third-Party Property Insurance covers damage only to the other person’s car. If you were in an accident that was your fault, only the cost to fix the other person’s car will be covered by your insurance company. Similarly, if you are in an accident and the other person does not have insurance, you may be required to cover the costs of repairing your own car.
Third-Party Fire and Theft covers the damage to the other driver’s car or property as well as your own car if it is stolen or suffers fire damage.
Most commonly, there is Comprehensive car insurance. This level of insurance covers your car for a much wider range of circumstances, including accidents, fire, floods, storms, hail damage, and theft.
How much does car insurance cost if you are under 25?
Generally speaking, the younger you are, the more you will pay for car insurance. This is because young drivers are statistically more likely to be involved in a car accident than older drivers. According to the Queensland Government, young drivers and riders between 16 to 24 years old are 60% more likely to be involved in a serious car accident than drivers and riders between 25 to 59 years old.
Additionally, young male drivers are at an even higher risk of getting into an accident than female drivers. Approximately 80% of young drivers involved in fatal crashes are male, according to the Queensland Government. It is for this reason that if you are male, you are likely to pay even more on car insurance than a female.
Other than your age and gender, there are some other factors that may affect how much you pay for car insurance, including:
- Your level of cover, nominated excess and any additional extras
- Your claims history (i.e. if you have had an accident and had to claim on your insurance before)
- The type of car you drive
- How your car is used (e.g. private or business purposes)
- Where you live and where your car is permanently parked
- How many kilometres you drive your car per year
The average cost you can expect to pay for car insurance if you are under 25 years old
The average cost of car insurance for under 25s ranges from state to state; however, it is still going to be considerably expensive. It will vary based on your gender and whether you have a new or used car.
If you are a female with a new car, the cost of Comprehensive car insurance is likely to range from approximately $1,200 to $1,600; if you are a male with a new car, the cost is likely to be from $1,400 to $1,800.
If you are a female with a used car, your car insurance will likely range from $1,300 to $1,900; if you are a male with a used car, this will range from $1,400 to $2,100.
How to save money on car insurance
If you are trying to cut down on the cost of car insurance, there are some ways you may wish to consider reducing your premiums:
- Increase your excess
- Park your car in a secured location, like a garage, rather than on the street
- Install anti-theft devices such as car alarms or tracking devices
- Avoid modifying your car
- Pay your premiums annually
If it was an option for you, a cheaper alternative to taking out car insurance as an under 25 driver is to be insured under your parents’ policy (if your parent owns the car you will be driving). This will add a cost to their policy, and an under-25 driver excess if you were to claim for an incident. If you were to pay the additional cost of the insurance or even just half of their regular insurance, this is likely to still work out cheaper than taking out your own policy.
Car insurance loans with Jacaranda Finance
If you want to purchase Comprehensive insurance but it is just out of your budget, consider a personal loan with Jacaranda Finance. We offer quick loans from $300 to $10,000; instead of sourcing what may be thousands of dollars, you can repay your loan in manageable instalments. We are an online lender; this means that we can be more lenient in our credit requirements and may be able to provide you with a bad credit loan. We are small loan specialists; we also offer quick loans for other expenses such as car registration, urgent car repairs and much more!
Are you considering purchasing a car and looking into your insurance options? We also offer car loans from $5,000 to $35,000 for both new and used cars. If it is your first time applying for a car loan, here are our tips for your first car loan application.
Written by Jacaranda Team