Getting your first car is exciting. But for first-time drivers in Australia, one big responsibility comes with it — car insurance.
Car insurance is not only a legal requirement in most situations, but also protects you financially if you have an accident, injure someone, or damage property.
But here’s the challenge: For young or first-time drivers in Australia, insurance can be expensive and confusing.
In this comprehensive guide, we explain everything you need to know about car insurance for first-time drivers in Australia — how it works, what it costs, the best companies, how to save money, and mistakes to avoid.
Whether you’re 18 and just got your licence, or you’re a new immigrant driving for the first time in Australia, this guide is written in clear, simple English to help you make the right decision.
Why Car Insurance Costs More for First-Time Drivers in Australia
First-time drivers in Australia usually young and inexperienced are statistically more likely to have accidents.
This higher risk means insurers charge higher premiums to cover themselves. Some factors include:
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Lack of driving history.
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Higher likelihood of speeding or misjudging conditions.
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More claims made by young or new drivers.
On average, a first-time driver in Australia can expect to pay $1,500–$3,000 per year, depending on the type of cover and location.
Types of Car Insurance in Australia for First-Time Drivers
There are several types of car insurance available. As a first-time driver, it’s important to understand the options.
1. Compulsory Third Party (CTP)
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Also called Green Slip in NSW.
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Mandatory by law to register your car.
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Covers injuries to others in an accident.
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Does not cover damage to cars or property.
2. Third Party Property
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Covers damage to someone else’s car or property.
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Does not cover your own car.
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Affordable and better than no insurance.
3. Third Party, Fire & Theft
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Covers damage to others.
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Adds cover if your car is stolen or damaged by fire.
4. Comprehensive Insurance
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Covers damage to others and your own car.
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Includes theft, fire, weather damage, and collision.
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Most expensive, but gives the best protection.
What Does Car Insurance Cover for First-Time Drivers in Australia?
| Coverage Type | What’s Included? | Who Needs It? |
|---|---|---|
| CTP | Injuries to others | Everyone (mandatory) |
| Third Party Property | Damage to others’ property | Budget-conscious drivers |
| Third Party, Fire & Theft | Damage to others + theft/fire of your car | Mid-level option |
| Comprehensive | Damage to both cars + extras | Best for new or expensive cars |
How Much Does Car Insurance Cost for First-Time Drivers in Australia?
Several factors affect your premium:
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Age: Under 25 pays more.
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Location: Urban areas cost more.
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Car type: Sports cars cost more than small sedans.
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Driving history: No history means higher premiums.
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Gender: Young males often pay more.
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Excess: Choosing a higher excess can lower premiums.
Average yearly premiums for first-time drivers:
| Type of Cover | Estimated Annual Premium (AUD) |
|---|---|
| CTP | $400–$700 |
| Third Party Property | $600–$1,200 |
| Third Party, Fire & Theft | $800–$1,500 |
| Comprehensive | $1,500–$3,000 |
Best Car Insurance Companies for First-Time Drivers in Australia (2025)
Here are some of the best insurers known for good rates and service for young drivers:
| Insurance Company | Why They’re Good for First-Time Drivers |
|---|---|
| AAMI | Flexible excess options, rewards for safe driving |
| NRMA | Good customer service, roadside assistance included |
| Budget Direct | Affordable premiums, quick online quotes |
| Youi | Personalized quotes based on your driving habits |
| Allianz | Discounts for safe drivers, multi-policy discounts |
| Bingle | Simple online policies, affordable rates |
Tips to Get Cheaper Car Insurance as a First-Time Driver
1. Compare Quotes
Don’t accept the first offer. Use online comparison sites and get quotes from at least 3–5 insurers.
2. Choose a Car That’s Cheap to Insure
Small, reliable cars like a Toyota Corolla or Hyundai i20 are cheaper to insure than a sports car.
3. Increase Your Excess
Agreeing to pay a higher excess if you make a claim can lower your premium.
4. Drive Safely
Many insurers offer discounts after a year or more of claim-free driving.
5. Consider Telematics
Some insurers offer a device or app to track your driving. Safe drivers can earn discounts.
6. Bundle Policies
If your family already has home or contents insurance with a company, you may get a discount for bundling.
Common Mistakes to Avoid
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Not reading the policy details: Understand what is and isn’t covered.
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Choosing the cheapest policy without checking if it meets your needs.
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Forgetting to disclose past incidents, which could void your claim.
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Letting your policy lapse.
Summary Table: Car Insurance for First-Time Drivers in Australia
| Aspect | Details |
|---|---|
| Best type of insurance | Comprehensive (if you can afford it) |
| Cheapest option | Third Party Property |
| Best insurers | AAMI, NRMA, Budget Direct, Youi |
| Average cost | $1,500–$3,000/year |
| How to save | Compare quotes, higher excess, telematics |
| Mandatory cover | CTP (Compulsory Third Party) |
| Key tip | Pick a cheap, safe car and drive carefully |
Real-World Example: How Sarah Saved $1,000
Sarah, a 19-year-old in Melbourne, bought her first car — a used Mazda 2.
Her first quote for comprehensive insurance was $2,800/year.
By:
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Choosing a higher excess.
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Adding herself to her parents’ policy.
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Comparing five different insurers.
She reduced her premium to $1,800/year, saving $1,000.
Frequently Asked Questions (FAQ)
Do first-time drivers have to get car insurance in Australia?
Yes. At minimum, you must have Compulsory Third Party (CTP) insurance to register and drive your car.
Why is car insurance so expensive for young drivers?
Insurers consider young and inexperienced drivers higher risk because they’re statistically more likely to have accidents.
Which type of insurance should first-time drivers choose?
If budget allows, comprehensive insurance offers the best protection. If not, at least third party property is recommended.
Can I drive without insurance if the car is registered?
No. Even if CTP covers injuries, you’re financially responsible for property damage without additional cover.
Can I be added to my parents’ car insurance?
Yes. Being listed as an additional driver on a parent’s policy can sometimes save money.
What happens if I lie about my driving experience?
If discovered, it can void your policy and lead to denied claims.
Do all insurers accept first-time drivers?
Most do, but some may refuse or charge higher premiums. Always check before applying.
Are there special discounts for students or apprentices?
Some insurers offer discounts for students with good grades or apprentices — ask when getting a quote.
How can telematics help me save?
Telematics monitors your driving habits and rewards safe drivers with lower premiums.
Should I pay monthly or annually?
Paying annually is usually cheaper, but some prefer monthly for budget reasons.
Conclusion: Protect Yourself and Save Money
Car insurance is an important part of driving responsibly in Australia — especially for first-time drivers.
While it can seem expensive and complicated, you can reduce costs by:
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Comparing quotes.
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Choosing the right cover.
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Driving safely.
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Being smart about your car choice and excess.
Don’t just focus on the cheapest policy. Choose a policy that protects you properly while fitting your budget.