Car insurance for under 25s

We get that young drivers need cheaper car insurance. Find cover that won't break the bank.

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Being under 25 isn’t great for car insurance cost. Fortunately, there are ways to pay less for cover.

Using online research and car insurance comparison, along with a good dose of common sense, you can reduce your premiums considerably and find the right insurance for your needs, whether it’s heavily discounted comprehensive insurance for your extensively modified car, or a less expensive bare-bones third-party liability package for your rusty Holden.

This guide explains how to make it happen and what kind of car insurance options are available.Young person driving car

Young drivers need cheaper car insurance

We totally get that when under 25s are searching for car insurance, one of their leading priorities is cost.

Being strapped for cash is a problem young drivers know all too well. It’s understandable that when you have a little extra cash, you don’t want to spend it on things like insurance.

Unfortunately, car insurance costs more for drivers under 25, as statistically you’re a lot more likely to be involved in an incident.

Don’t fret too much, as there are a few simple hacks you can use to save money on your policy.

What affects the cost of under 25s car insurance?

How much you fork out for insurance depends entirely on your circumstances. There are four main things that affect your premium: Your gender; where you live; the type of car you drive, and…yep, you guessed it, your age.

According to Auckland Transport’s website, road crashes are the main cause of death in drivers aged 16 to 24 years. In Auckland alone, between 2013 and 2017, crashes caused the death or serious injury of 336 drivers in this age group. Statistics show that young male drivers tend to die more often in vehicle crashes than females. In 2016, of the 44 fatal crashes that involved a driver aged 20 to 24 years, 37 were male and 7 female, which means if you’re a young bloke, your insurance is naturally slightly more expensive.

Other factors that affect the cost of your car insurance include:

  • Where you park your car. Keep it in a secure garage and you will usually have a cheaper premium than if you park it on the street.
  • What suburb you live in. If you live in an area with a higher crime rate, you will find your premium is more expensive on average.
  • Your driving record. If you have a history of bad driving, expect to pay more. However, if you’re a good driver, many companies will reward this.
  • How you pay your premium. Some companies charge extra if you choose to pay the premium monthly, as opposed to annually.
  • Your chosen excess. If you opt for a higher excess, you may benefit from a cheaper premium. However, make sure you can afford it, if you do need to claim!

8 hacks to help you pay less for your policy

While insurance for under 25s may be more expensive than for older drivers, there are ways you can reduce the cost of your premium. These include:

  1. If you have the choice, buy a smaller, cheaper car, rather than a sports model or highly modified vehicle. If finding the cheapest car insurance is your number one priority, then this is a huge contributing factor.
  2. Resist the urge to make a claim, just because you can. It might save you money in the short-term, but will wipe out any no claims bonus you may have and mark you as a risky driver, which will increase your premium.
  3. Package your insurance with one provider to receive a multi-policy discount.
  4. Consider increasing your excess to reduce your premium, but make sure it is not higher than you can afford if you have to make a claim.
  5. Park in a garage, not on the street, and add security features such as an alarm, tracking device or engine immobiliser for a lower premium.
  6. Take a safe or defensive driving course. Insurers may be willing to extend a discount to those who complete them.
  7. If you don’t plan to drive a lot, look for a pay as you drive insurance policy.
  8. Buy your insurance online, as most insurers will give you a discount.

So, what kind of cover can I get?

No matter how old you are, there are three types of car insurance available.

If you need insurance cover, you can consider the following options:

Type Injuries or death to other people Damage to other people’s property (like their car) Damage to your car as the result of theft or fire Damage to your car as the result of an accident
Third Party property
  • No
  • Yes
  • No
  • No
Third party property, fire and theft
  • No
  • Yes
  • Yes
  • No
  • No
  • Yes
  • Yes
  • Yes

What should I look for in a policy?

Now you know what you’re looking for, you need to know how to find a policy that’s best for you. Here are the essential things to look for and what they mean.

  • Coverage. This refers to what is covered by a particular insurance policy, or, in other words, what the insurance policy will provide financial compensation for. For example, a third-party policy only provides you with financial compensation if you have to pay for the repairs of someone else’s property, while a comprehensive policy will do this and pay out in the event of damage to your car.
  • Limit. A limit is the maximum amount something is covered for. For example, you might get car insurance that covers you for up to $5,000 worth of accidental damage. This means the insurance company will pay up to $5,000 for repairs.
  • Exclusion. These are the conditions under which the insurance company won’t pay out. For example, you might be covered for car theft, but with an exclusion for unlocked vehicles. This means you can make a claim if your car is stolen, but if it was unlocked at the time of the theft the insurance company won’t pay out.
  • Excess. This is the flat fee you must pay when making a claim. There are three types of excess. The first is a basic excess, and you can choose a higher amount for a lower premium, or a lower amount for a higher premium. The second is an age excess, which is a fee for young drivers under 25. The third is a special excess, which is an amount specific to you based on your claims history, driving record etc. The excess you must pay when making a claim is the combined total of all three.
  • Premium. This is the cost of your car insurance policy. The premium is the regular, ongoing amount you pay for an active policy. It can usually be paid monthly or yearly.
  • Fees. These are additional costs you have to pay on top of your premium. Your policy may require you to pay administration fees; cancellation fees; support fees and of course an excess.
  • Discounts. There are discounts available for most car insurance policies. Some of the most commonplace are:
    • “Pay as you drive”, which cuts the price if you don’t use your car often.
    • Multi-policy discount, which is usually about 10-15% off the premium, if you take out multiple insurance policies with the same provider.
    • A discount of up to 20% if you buy car insurance online.
    • Green tea
    • No claims discounts, which gradually reduces your premium for each year you go without making a claim.

I don’t have my full licence yet. What should I know?

There are usually no special conditions or restraints on insurance for learner drivers or those on a restricted licence. Learner drivers are typically driving someone else’s vehicle and do not yet have their own insurance, but increase the premium if included on someone else’s plan. Being on either a learner or restricted driver’s licence is more likely to raise your premium than lower it, but this is primarily due to age rather than driver’s licence status.

Learner drivers and restricted licence holders usually only face a significant price difference if they’re over the age of 25.

Can I just latch on to my parents’ plan?

If you drive your mum or dad’s car, one way to save some money is to be added to your parents’ car insurance policy as a listed driver. This works out cheaper overall, than if you purchase a separate policy, but there are a few potential downfalls you should be aware of when choosing this option:

  • The policyholder must own the car. You can only add yourself to your parent’s car insurance policy if your parent owns the car. In other words, if you own the car, you can’t just buy cover in your mum or dad’s name to enjoy cheaper premiums.
  • An additional excess may apply. Many insurers impose a young driver excess for claims that arise when the vehicle is driven by someone under 25 years of age. This excess can be substantial, even as high as $2,500, so paying it may well and truly outweigh the cost of buying your own policy.
  • You need to check the fine print. It’s essential that you are aware of exactly what a policy does and does not cover. Make sure you take a look at the PDS and read the terms and conditions carefully before adding yourself to a policy.

Do I really need comprehensive cover?

Comprehensive car insurance for under 25s can be pretty damn expensive, so you could be forgiven for wondering if you need such a high level of cover. The good news is, depending on your circumstances, that a lower-level policy may provide sufficient cover for your needs.

If you drive a second-hand car, that’s relatively cheap, you may be better off settling for one of the following:

  • Third party property damage cover. This is the most basic level of optional car insurance available in New Zealand. It provides financial protection when you cause damage to other people’s vehicles or property.
  • Third party fire and theft cover. A mid-range policy option, this type of insurance includes third party property damage cover and protects your vehicle against fire and theft.

Both of these options allow you to maintain a certain level of protection for your vehicle, but for a more affordable cost than comprehensive cover.

On the other hand, there are some situations when comprehensive cover is a wise investment. If your vehicle is relatively new or expensive, comprehensive insurance makes greater sense because of your potential to suffer increased financial loss if something happens. Comprehensive insurance is often a condition of car finance details, so check the fine print to discover whether this level of cover is a must-have.

Car insurance terminology

Having trouble making sense of your car insurance policy? Let’s take a closer look at the meaning of a few key terms:

  • Cooling-off period. This is the period of time that you have after purchasing a policy to cancel cover for no cost. Most standard insurance products come with a minimum 14-day cooling-off period.
  • Excess. This is the amount you must contribute towards the cost of a claim.
  • PDS. Stands for product disclosure statement. This document contains essential information about a car insurance policy, including its benefits and risks. You should always read the PDS before buying a policy.
  • PED Guide. Stands for “premiums, excesses, discounts and claims guide”. Some insurers include this information in a separate document to the PDS, and it provides full details of how much a car insurance policy costs and when and how the benefits are paid.
  • Premium. This is the total amount you pay to insure your vehicle.
  • Total loss. Your vehicle is declared a total loss when it is either damaged beyond repair, or the cost of repairing the damage exceeds the vehicle’s market value. This is commonly referred to as a write-off.

Car insurance for under 25s: Other questions you may have

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4 Responses

  1. Default Gravatar
    SharonJuly 13, 2019

    Can an under 25 age person insure a v6 Commodore?

    • Avatarfinder Customer Care
      JoshuaJuly 14, 2019Staff

      Hi Sharon,

      Thanks for getting in touch with Finder. I hope all is well with you. 😃

      The answer to your question is yes. It is possible for a person who is under 25 years old to Insure a V6 Commodore.

      To learn more about how to find the right insurer, please read our guide on this page. After reading, shop around and do your own research. Be sure to access your needs, preference, and budget to find the right policy.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


  2. Default Gravatar
    ElizabethDecember 14, 2018

    Which provider offers 3rd party insurance plus minimal repair when one’s car is damaged by an uninsured driver?

    • Avatarfinder Customer Care
      JoshuaDecember 17, 2018Staff

      Hi Elizabeth,

      Thanks for getting in touch with finder. I hope all is well with you. :)

      Typically, you can get that type of cover by simply paying extra to add an uninsured driver to your policy. It would be a good idea to directly get in touch with your insurer and they should be able to discuss with you your available options.

      I hope this helps. Should you have further questions, please don’t hesitate to reach us out again.

      Have a wonderful day!


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