Car insurance buying guide: What young drivers need to know


Getting your first car is an exciting milestone for many young adults, but it can be tricky to wrap your head around what type of insurance you need.   

This guide can help you choose the best option for you — and it may even save you a few bucks.    

What type of car insurance should I get?

Figuring out what type of car insurance you need isn’t too hard, once you get the gist of it. Most insurers, including AAMI, offer a few levels of cover to choose from. You may need to buy more than one level, depending on what you need.

Compulsory Third Party (CTP) Insurance and Motor Accident Injury (MAI) Insurance

You need to get Compulsory Third Party (CTP) Insurance — known as Green Slip in NSW — before you can register your vehicle. CTP insurance covers injury-related costs for which you might be liable following a car accident, such as personal injury claims and payments for lost income. In other words, it’s insurance for injuries, not for your car or someone else’s vehicle or property.

If you’re in New South Wales or Queensland, you need to buy CTP Insurance separately before registering your car. In South Australia, you nominate your preferred CTP insurer as part of the rego process.

In the Australian Capital Territory, you need to arrange Motor Accident Injuries (MAI) Insurance. It’s similar to CTP, but covers everyone injured in an accident, regardless of who’s at fault.

Some states will not cover injuries of at fault drivers. You can find out more through your local traffic authority:

Comprehensive Car Insurance

This is usually the most expensive option, but it’s also the most popular. It covers you for damage to your car as well as damage to other people’s vehicles and property.

Even if you own a secondhand car, Comprehensive Car Insurance can still be worthwhile, because — if you’re at fault in a collision — it can save you from footing the bill for both your vehicle and any other vehicles involved.   

Comprehensive Car Insurance even covers the use of a hire car while yours is damaged and can’t be safely driven, as long as the accident wasn’t your fault. You can add hire car for at-fault incidents as an Optional Cover.

More about Comprehensive Car Insurance

Third Party Property Damage Car Insurance

Third Party Property Damage covers your liability if you damage someone else’s vehicle or property — but not the cost of repairing your own vehicle. It’s worth considering if you drive a car that would be relatively inexpensive to replace, and want to keep your regular premium payments down (FYI, your premium is the amount you have to pay for your insurance on a monthly or yearly basis).

You can also take out Fire, Theft & Third Party Property Damage cover, which covers you if your car's stolen, and covers damage caused to your car by fire or attempted theft for up to the amount you cover your car for (up to $10,000)​.

Most people would struggle to pay the hefty bill if they crashed into a luxury car, so it’s really beneficial to have some form of cover when you’re out and about on the road.

You can easily compare the different types of car insurance. Always remember to read the details of the policy (which you can find in AAMI’s policy documents, so you know what you’re covered for. If you want to know how much each would cost you, just get a quote for each. It’s quick and easy, and comes with no obligation to purchase.

Compare AAMI Car Insurance

Should I stay on my parents’ car insurance policy?

For young drivers listed on their parent’s policy, the price will generally be higher because the young driver’s date of birth is factored into the premiums. Young drivers may choose to make their parents’ policy more affordable if they’re not listed on their parents’ policy. However, if the young driver has an accident, then the policy holder may have to pay the higher age excess if applicable.

To check what is and isn’t covered on your policy, it’s worth reading our Product Disclosure Statement (PDS) and the Additional Information Guide, which contain info about the product, such as its risks and benefits.

How can I reduce my premium?

If you drive safely and maintain a claim free driving record, you may become eligible for AAMI Safe Driver Rewards®, which can save you money by offering credit against your premiums*.

Other ways you can potentially save on your car insurance include:

  • choosing an inexpensive car
  • installing a car alarm, and
  • avoiding performance enhancing modifications, which can impact your premiums by increasing how much your car would cost to replace.

With AAMI, you can choose to vary your excess to save on your premium. The AAMI Flexi-Premiums® page spells it all out, including how you can choose to vary your excess to save money now or later.

Find out more about AAMI Flexi-Premiums®

Complete the AAMI Skilled Driver course

Another way to reduce your premium is to take a safe driver course. AAMI offers a Skilled Drivers Course that’s available to Comprehensive Car Insurance policy holders under 25 years old, at your own cost.

If you complete the course, you could get a up to a 10% discount on your policy! Check out the terms and conditions for more details.

Become an AAMI Skilled Driver

Other things to keep in mind

It can be a good idea to check your policy before the end of each renewal period. When shopping around be sure to ask about Optional Covers, like coverage for windscreen damage, and explore savings like the AAMI Safe Driver Rewards®.

It can be handy to know the different types of car excess ­— an excess is the amount you pay towards the cost of your claim for each incident covered by your policy. For example, young adult drivers under 25 may have to pay an inexperienced driver excess for drivers not listed on the policy. This is on top of any standard excess you may have to pay, so check the PDS or Additional Information Guide.

You may find that over time, your circumstances change, so you might want to update your cover. If you’re an AAMI customer then you can use our AAMI online services or use the AAMI App to update or renew your policy, 24/7. Alternatively, you can get in touch to speak to our friendly customer service team.

Read more:

*Safe Driver Rewards credit/discount is a percentage of the Comprehensive Car Insurance rated premium paid the previous year and is applied as a credit to next year’s rated premium.

Insurance is issued by AAI Limited ABN 48 005 297 807 trading as AAMI. Read the Product Disclosure Statement before buying this insurance. The Target Market Determination is also available. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it.

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.