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Car insurance for restricted drivers
Just got your restricted licence? Compare quotes and get the right cover for you
The day you get your restricted driver’s licence is one you’ll remember forever and hitting the road without supervision is a liberating experience. Until…you see the cost of car insurance and realise you might need to take out a loan.
Car insurance for restricted drivers may cost more than it does for fully-licensed drivers. This is part of the price you pay for being a young and inexperienced road user, but there are still things you can do to find affordable car insurance cover that offers the protection you need.
Compare car insurance options in New Zealand
How do the cover options stack up against each other?
Third party cover: The most basic policy. This provides coverage for the damage you may cause to someone else’s vehicle or property. However, it doesn’t cover the expense of repairing the damage your vehicle incurs as a result.
Best for: Restricted drivers, with cheaper cars or those on a budget.
Third party fire and theft cover: This gives you that little bit extra cover against life’s uncertainties. As the name suggests, this cover ensures you are protected if your car is stolen, as well as protecting you against fire damage. You are also covered if your car causes damage to someone else’s property.
Best for: Restricted drivers who need a bit more cover without the price tag.
Comprehensive cover: If you want top cover, this is the option to choose. It covers theft; vandalism; storms; flood; hail; fire; key replacement; emergency accommodation; a hire car; accidental damage (to name but a few!) – plus everything covered by the cheaper policies.
Best for: Restricted drivers who want peace of mind, knowing that they have the highest cover available.
Compare car insurance cover levels
|Feature||Comprehensive||Third Party Fire and Theft||Third Party Only|
|Damage to other people’s property|
|Storm or flood|
|Emergency accommodation, transport and repairs|
|Replacement of keys|
|Contents inside the car|
|New car replacement|
Why does car insurance for restricted drivers cost more?
If you’re a restricted driver under the age of 25, statistically speaking, you’re more likely to be involved in an accident. According to figures from the New Zealand Ministry of Transport, between 2014 and 2016, although drivers aged 15 to 24 only made up 13.2% of all licensed drivers in New Zealand, they were involved in 67% of crashes that caused any type of injury, with 19% of these accidents fatal. Young drivers are at greater risk on the roads for a range of reasons including:
- Lack of driving experience
- Limited ability and judgement
- Underestimation of risks
- Deliberate risk-taking behaviour
- The use of alcohol and drugs
This means drivers under the age of 25 will pay significantly more for car insurance. However, a 21-year-old driver will pay less for cover than an 18-year-old, and you might be surprised how much your premium decreases with each passing year.
What other factors impact the cost of car insurance for restricted drivers?
There are several other factors that can affect the cost of car insurance for drivers under the age of 25, including:
- Your gender. Men, especially younger ones, are considered more likely to engage in risky driving behaviour than women, so usually have to pay more for car insurance.
- Where you live. Some suburbs have a much higher rate of car theft than others.
- Where your car is kept. If your car is locked in a secure garage overnight, you will pay much less for cover than if it is parked on the street.
- How often you drive. Vehicles that are driven frequently are more likely to be involved in an accident than those only driven occasionally.
- The excess you choose. If you have the flexibility to vary your car policy excess, if you select a higher excess, you will pay a cheaper premium.
- Discounts that apply. You may be able to take advantage of discounts to lower the cost of your premium, such as saving by buying online or a discount for insuring multiple vehicles.
What should restricted drivers look for in a car insurance policy?
If you’re ready to compare car insurance for restricted drivers, remember to consider the following factors while weighing up the pros and cons of different policies:
- The sum insured. This is the total amount you’re covered for and there are two ways to calculate this: agreed value or market value. You and the insurer decide upon the “agreed value” ahead of time. The market value is the current value of your car when you make a claim, and insurers calculate it based on the retail price of your vehicle; depreciation and a number of other variables. Market value cover is the cheapest and most convenient option, but you run the risk of your car being undervalued.
- The excess. Next, look at the excess you are required to pay if you make a claim. Is this an affordable amount? The best car insurance for restricted drivers allows you to adjust the excess, so you can lower your premium.
- Policy limits. What is the maximum the insurer will pay for each specific benefit? For example, if a $500 limit applies to a windscreen claim, is this enough to cover replacement costs if your windows are smashed? If your car is stolen, how long does the policy cover the cost of a rental vehicle?
- Extra features. Apart from the basic cover, what additional benefits are included? For example, does the policy cover a hire car after theft; emergency repairs; towing costs; personal property in your car; caravans or trailers, or the cost of re-coding your locks if your keys are stolen?
- Exclusions. Read the PDS for a full list of circumstances where you are not covered. Are there situations where you expect to be covered, but no protection is available?
- The cost of cover. Finally, obtain quotes from multiple insurers to see how they compare. Check whether a premium loading applies to your policy and find the insurer that offers the best value for money.
How can I save on car insurance?
Okay, so car insurance when you’re on a restricted licence is going to be more expensive than when you have your full licence, but there’s plenty you can do to keep your premium to a minimum. Money-saving tips include:
- Secure your car. Reduce the chance of your car being stolen, by using vehicle security systems, like steering wheel immobilisers; microdotting; VIN etching etc. Some insurers reward you for taking these precautions by lowering your premium.
- Secure your garage. Cars that are kept in a locked, secure garage overnight may be substantially cheaper to insure than vehicles parked on the street.
- Take a safe-driving course. Some insurers offer discounted premiums to policyholders who successfully complete an approved safe-driving course. Check with your cover provider to see whether this is an option.
- Adjust your excess. By choosing a higher excess on your policy, you will enjoy a lower premium.
- Look for discounts. Did you know you can get as much as 25% off just for buying your policy online, or that some insurers will price-match their competitors? Keep an eye out for discounts that can help you lower your premium.
- Drive safely. Some accidents are completely unavoidable, but there’s plenty you can do to reduce the risk of damaging your car and making a claim. Stick to the speed limit, don’t tailgate and always remember to use common sense. Insurers take your driving record and claims history into account when calculating your premium, so keeping a clean rap sheet can go a long way to ensuring affordable cover.
- Shop around. Has your insurer sent you a car insurance renewal notice that seems too expensive? Don’t automatically renew your cover – shop around to see if another provider can offer better value for money.
What car insurance traps should I avoid?
Finally, be aware of these car insurance traps, which can pose big problems for restricted drivers:
- Under- or over- insuring. Make sure the level of cover you select is adequate for your vehicle. Don’t pay for comprehensive cover if your 20-year-old banger doesn’t need it and don’t skimp on cover if you’re driving a brand-new or expensive vehicle.
- Unapproved modifications. If you are going to buy a modified vehicle or planning to modifying your car, make sure you tell your insurer. If you fail to do so and need to make a claim, the claim may be refused.
- Failing to list drivers. If the driver of a car isn’t listed on the policy, then the car is not usually insured while the unlisted driver is behind the wheel. Some insurers and policies have exceptions to this rule, but you will need to remember there is typically no cover for unlisted drivers.
- Car dealer insurance. Don’t buy car insurance along with the car, until you’ve had a chance to compare the policy to other options. The first car insurance policy you see is rarely the best.
- Car finance insurance. If you’re buying a car under finance, as some restricted drivers do, it’s worth bearing in mind that financiers may require you to have comprehensive car insurance as a condition of the loan. This isn’t necessarily a downside, but don’t let yourself be pressured into an unsuitable or overpriced policy.
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