Last updated: 16 October 2026 · Reading time: 7 minutes
Car insurance for under 25s, and for young drivers, P platers and 18 year olds in particular, is usually explained on insurer sales pages. This guide uses Moneysmart and ASIC instead. It explains how a premium is worked out, what a young driver excess is, whether a young driver can be added to a parent's policy, which discounts under 25s can ask about, how a no claim bonus builds and what to check before buying a first car insurance policy. It gives no prices, averages or percentages, because they differ by insurer, car and driver.
This guide is general information only and does not consider your personal circumstances. Always read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for any policy.
Why is car insurance more expensive for under 25s?
Moneysmart says an insurer works out a premium using, among other things, who will be driving and how often and how far. ASIC found the insurers it reviewed did not explain key factors, and these pages give no single reason for age. Moneysmart notes some insurers may offer a family discount to under 25s whose parents use the same insurer.
ASIC reviewed car insurers' quote and renewal documents and found that none explained the key factors affecting how premiums were calculated. ASIC encourages consumers to check renewal notices carefully, shop around and compare, and contact their insurer to ask questions.
If you want to see how premiums differ by age, our cost guide sets out dated average premiums by age group, with their source and date.
Sources: Moneysmart, Choosing car insurance (last updated 10 August 2026) and How to save money on car insurance (last updated 10 August 2026); ASIC, media release 26-189MR (2026), all checked 16 October 2026.
How do insurers price a young driver?
Moneysmart says the insurer takes into account the type and value of the car, who will be driving it, how often and how far, where you live and where the car is kept. It also depends on the type of insurance and the excess. A young driver's details feed into the "who will be driving" factor.
| Factor | What Moneysmart says |
|---|---|
| The car | The type and value of the car you are insuring |
| The driver | Who will be driving it |
| Use | How often and how far you are driving it |
| Location | Where you live and where you keep the car, for example a garage or the street |
| Cover | The type of insurance you choose |
| Excess | The amount you pay when you make a claim |
Source: Moneysmart, Choosing car insurance (last updated 10 August 2026), checked 16 October 2026. ASIC, media release 26-189MR (2026), says insurers should explain how factors such as excess, cover options and payment method affect price.
What is a young driver excess?
An excess is the amount you pay when you make a claim, according to Moneysmart. Whether a policy sets a different excess depending on who is driving may be set out in its PDS and in the Premium, Excess and Discounts Guide that Moneysmart says comes with a renewal. Read both before a young driver is added or listed.
People search for a "young driver excess" or an "age excess" on car insurance. The Moneysmart and ASIC pages used for this guide do not describe an age based excess, so this guide does not say that one applies. Policies differ, and the documents show what a particular policy does.
- What it is: the amount you pay when you make a claim.
- Not at fault: Moneysmart says to check whether the insurer always charges an excess, even if an accident is not your fault.
- Affordability: Moneysmart says to decide what excess you can afford, weighing a higher premium and lower excess against the opposite.
- Raising it: Moneysmart says increasing your excess reduces your premium, but you need to be able to pay it if you claim.
- Who is driving: check the PDS and the Premium, Excess and Discounts Guide for any excess that depends on the driver.
Source: Moneysmart, Choosing car insurance and How to save money on car insurance (both last updated 10 August 2026), checked 16 October 2026.
Does insurance cost more for P platers?
The Moneysmart pages used here do not set out a separate premium for P platers. They say the premium reflects who will be driving and how often and how far. Whether a P plate changes a quote can be checked in the insurer's quote and PDS.
Compulsory third party (CTP) is a separate matter that comes with registration, so a P plater who registers a car needs it whatever optional cover they choose. Our guide to what each level covers and how CTP works with registration sets out the levels and the state bodies.
Source: Moneysmart, Choosing car insurance (last updated 10 August 2026), checked 16 October 2026. Check your state or territory road authority for the conditions of your licence stage.
What car insurance does a first car need?
Only CTP is compulsory, and it comes with registration. Third party property damage, third party fire and theft and comprehensive are optional. Moneysmart suggests asking yourself what you could afford if the car is damaged, stolen or written off, or if you damage someone else's car. That applies to an 18 year old's first car insurance.
Moneysmart's questions to ask yourself when choosing a type of cover include:
- Can I afford to be without my car if it is damaged, stolen or written off?
- Can I afford to repair or replace my car without insurance?
- Can I afford to pay for other cars or property that I accidentally damage?
- Is my car parked on the street, or at higher risk of theft or vandalism?
- Do I have a car loan on this car, and could I repay it if I also had to pay for another car?
- If my car is financed, is there a minimum level of insurance the lender requires?
Source: Moneysmart, Choosing car insurance (last updated 10 August 2026), checked 16 October 2026. Moneysmart also warns that add on products sold by car dealers can be hard to claim on.
Can a young driver be added to a parent's policy?
Moneysmart does not set out how to add a driver. It does say some insurers may offer a family discount to drivers under 25 whose parents are insured with the same insurer, and that you could be paying for things you do not need, such as younger drivers. Ask the insurer how it handles listed drivers.
- Family discount: Moneysmart says some insurers may offer one if you are under 25 and your parents are also insured with the same insurer.
- Who is listed: Moneysmart says you could be paying for things you do not need, such as younger drivers, so check who is on the policy.
- Ask the insurer: Moneysmart suggests asking whether you are getting all the discounts you are eligible for, and whether anything has changed in your profile that should lower your premium.
- Read the renewal documents: Moneysmart says the Additional Information Guide or the Premium, Excess and Discounts Guide usually explains how to reduce a premium.
Source: Moneysmart, How to save money on car insurance (last updated 10 August 2026), checked 16 October 2026. Whether a particular insurer allows a young driver on a parent's policy, and on what terms, is set by that insurer.
What discounts can under 25s ask about?
Moneysmart lists common car insurance discounts, including online, no claim bonus, multi policy, new customer, family and loyalty discounts. The family discount is the one it ties to being under 25. Its questions for your insurer include whether you are getting all the discounts you are eligible for.
| Discount | What Moneysmart says |
|---|---|
| Online | Taking out a policy online may bring a discount, usually for the first period of insurance only |
| No claim bonus | Some policies include one, which means a lower premium if you do not claim for a certain time |
| Multi policy | Some insurers discount the cost if you hold more than one policy with them, and the order you take them out in may matter |
| New customer | Some insurers offer a first year discount or complimentary extra cover |
| Family | Some insurers may offer one if you are under 25 and your parents are also insured with the same insurer |
| Loyalty | Some insurers offer one, usually after a minimum number of years with them |
Source: Moneysmart, How to save money on car insurance (last updated 10 August 2026), checked 16 October 2026. ASIC, media release 26-189MR (2026), also encourages consumers to check whether paying annually could reduce overall costs.
How does a no claim bonus build?
A no claim bonus is a discount that usually increases each year you do not claim. Moneysmart says insurers generally calculate it from how long you and any other drivers on the policy have been driving, your claims history including claims by other drivers on the policy, and your rating from your previous insurer.
- Where it applies: Moneysmart says a no claim bonus usually applies to comprehensive car insurance.
- Other drivers count: claims by other drivers on your policy are part of the claims history, so a young driver listed on a parent's policy matters here.
- Claims: Moneysmart says if you are at fault and claim, you will generally lose the bonus or have it reduced.
- Protection: some insurers offer no claim bonus protection for an extra cost. Moneysmart says to read the small print: the protection may cost more than the discount, and it does not stop a premium rising after a claim.
- Differences: Moneysmart says the bonus and the way insurers apply it can differ.
Source: Moneysmart, No claim bonus on car insurance (last updated 23 July 2026), checked 16 October 2026. Moneysmart also says not to stay with an insurer only for a no claim bonus rating.
What should young drivers check before buying?
Moneysmart's checklist says to compare what each policy covers and leaves out, ask about discounts, check whether an excess applies even when an accident is not your fault, and decide what excess you could afford. Moneysmart's pages also cover who is listed on the policy, and ASIC encourages shopping around and asking the insurer questions.
- Exclusions: compare what is not covered. Moneysmart's examples include damage caused by an unlicensed, drunk or drug affected driver, intentional damage and wear and tear.
- Inclusions: compare what is covered, such as roadside assistance, towing, car hire and personal items stolen from the car.
- Discounts: ask which ones apply, including family, no claim bonus, multi policy and new customer discounts.
- Excess: check whether it always applies, and decide what you can afford.
- Listed drivers: check who is on the policy and whether the excess or premium depends on who is driving.
- Car value: with comprehensive cover, Moneysmart says you can choose agreed value or market value, and an agreed value may reduce each year, so check it at renewal.
- Documents: read the PDS and the Premium, Excess and Discounts Guide.
Sources: Moneysmart, Choosing car insurance (last updated 10 August 2026); ASIC, media release 26-189MR (2026), both checked 16 October 2026.
Where can young drivers go from here?
Our Insurance Hub has a car section that explains the cover first and then links to a comparison. You can compare car insurance through our partner once you have the cover level, excess and driver details to hand. Quotes for the same details can differ between insurers, and the partner does not compare every brand in the market.
For a longer read on how comparison works for homeowners and movers, compare car insurance in our car insurance guide. NestPath earns a commission if you buy through our partner, at no extra cost to you, and the Insurance Hub explains how that works.
This article is general information only and does not consider your personal circumstances. It describes how car insurance for young drivers works in general terms as published by Moneysmart and ASIC on the dates shown. It contains no prices, averages or advice to buy or switch. Cover, excess, discounts and premiums depend on the specific policy and insurer, so read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you decide. NestPath is not an insurer, broker or financial adviser.
