Does car insurance cost less for first time drivers over 25?

Woman sitting in the back of a car, thinking about car insurance.

Numerous studies show that more young people are putting off learning to drive. For instance, in a 2019 report, Charting Transport revealed that licence ownership for 20 to 24-year-olds had declined considerably in Victoria and New South Wales.

Research from Monash University also released last year confirms this, showing that millennials are learning to drive at later ages and relying more on public transport.

Lead researcher at the university, Dr Alexa Delbosc says, “At this rate, only half of 18 to 23-year-olds in Melbourne will get a licence by 2025.”

Why are millennials taking longer to get behind the wheel?

In a 2015 report, the Royal Automobile Club of Victoria identified a number of reasons why young people might not be learning to drive. These included:

  • being too busy to take lessons
  • not being able to afford and maintain a vehicle
  • the ability to rideshare with others
  • preferring to walk or cycle
  • preferring to use public transport
  • concerns for the environment

Twenty-eight-year-old costume maker Catriona is a prime example of this. Catriona has only just started to learn to drive this year and she names not having enough time, the cost of driving lessons and being able to use public transport as her main reasons for putting it off until now.

Getting insurance as a first time driver over 25

With countless studies done on the subject, we take it for granted these days that younger drivers will pay more in insurance. 

Allianz Australia’s general manager for automotive and mobility Keith Forster says, “Young drivers are a high risk due to both their inexperience and their risk taking behaviour. Insurers will take both of these into account when setting premiums.”

But what about first time drivers who are a little older?

Forster says that first-time drivers, regardless of age, are considered a higher risk by insurers. This is simply due to a lack of experience that may make them more likely to have an accident.

That said, despite the initial lack of experience, there is a likelihood that older drivers might be able to benefit from lower premiums faster.

“Older first time drivers, whilst inexperienced, are less likely to exhibit risk taking behaviour and therefore will not claim at the same rate as younger inexperienced drivers,” says Forster. “So an older, inexperienced driver might be expected to be rewarded for a good driving history more quickly in their first few years of driving.”

Of course, age and experience aren’t the only factors that will affect your car insurance premium.

Tips to help keep your premium down

As Forster says, purchasing certain cars such as high performance vehicles can also up the cost of your insurance premium.

“A new driver may be able to reduce their premium by purchasing a less expensive car, selecting a higher excess, or choosing a basic level of cover without including optional covers such as Rental Car,” says Forster.

Graphic showing ways to lower your car insurance premium.
  • Driving safely. Lowering your premium costs isn’t the main reason to drive safely. However, it is an added perk to being a responsible driver. Most insurers have a no claims bonus or discount that is specifically designed to reward safe driving.
  • Nominating drivers. Restricting the number of drivers is another way to save on your premium. The fewer, the better.
  • Only nominating drivers over 25. As mentioned, drivers under 25 are generally seen as a higher risk. So, only nominating drivers over 25 could also help keep your premium down.
  • Considering pay-as-you-drive car insurance. If you don’t intend to drive your car all the time, then you could consider pay-as-you-drive car insurance to reduce the overall costs.
  • Shop around. Finally, compare car insurance policies from different insurers to make sure you’re getting the most bang for your buck.

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