When you’re a teenager, there’s nothing more exciting than slapping on some P-plates to the back of your car. And now that you’ve started to get the hang of driving, you may be thinking it’s time you got yourself a car insurance policy. Since you’re a newbie to the world of car insurance, we thought you might need a little help, so we’ve answered some of the questions you might have about taking out a car insurance policy as a P-plater.
Do I need my own car insurance policy when I get my P-plates?
Not necessarily. Even once you move onto your provisional licence (P-plate licence), you can remain under your parent’s car insurance policy as long as you are under the age of 25. However, if you do choose to take out your own policy for your own car, you may find it to be more expensive than your parents’ policy.
Why is P-plater car insurance more expensive?
P-plater car insurance, if you’re under 25, is typically more expensive because car insurance providers take into account the amount of driving experience you’ve had when determining the cost of your premium. Statistically, younger drivers are more likely to have accidents and so this is factored into pricing.
What other factors determine the cost of your car insurance policy?
Aside from your age and driving experience, there are a number of factors that determine the cost of your car insurance policy, they include:
- Your gender - Male drivers statistically have more accidents than female drivers, so they may pay higher premiums.
- Where you live - If your suburb has a high rate of car theft.
- Where you keep your car - Either locked in the garage or on the street.
- How often you drive your car - Some insurance policies are based on how much you drive, whether you drive during peak hours or use your car for business.
- Your driving habits - P1 drivers (red Ps) can receive up to four demerit points, while P2 drivers (green Ps) have a limit of 7s even. If your licence is ever suspended, it may impact the price of your premium.
- The type of car you own - While a more expensive car will obviously be more expensive to insure, the cost of repairs and replacements, its age, size and weight will also be a factor.
What are my cover options for P-plater car insurance?
When you do begin searching for car insurance, there are three terms you’ll notice for the types of cover you can get, they are:
Compulsory Third Party Cover (CTP)
Also known as a ‘greenslip’ in New South Wales, CTP is compulsory insurance that must be purchased once you register your car. This is the minimum amount of insurance that you must have to legally drive in Australia.
This type of insurance only provides cover for physical injuries to a person, it does not provide cover for damage done to your or anyone else's car. What kind of compensation you receive for physical injuries will vary depending on whether or not you are involved in an at-fault accident and what state or territory you live in. Read our guide on how CTP insurance differs in each state and territory for more information.
Once you purchase CTP cover, you will then have the choice between purchasing either:
Third Party Property
This insurance covers the cost to repair the damage of the other car involved in the accident, but is limited in terms of the amount you will receive. So if you were in an accident that caused $8,000 worth of damage to another car and your policy will only cover up to $5,000, you would have to pay for the rest of the damage.
Comprehensive car insurance covers your car if you’re at fault in an accident, but also the other driver. Although this type of insurance is on the pricier side, you’ll be covered for a range of situations. Mozo compares some of the latest comprehensive car insurance deals on the market, so if you’re thinking about getting a broader range of cover, use our comprehensive car insurance comparison tool.
What should I look for in a comprehensive car insurance policy?
If you are thinking of taking out comprehensive car insurance, there are a number of terms you'll need to become familiar with and keep in mind when choosing a policy, like:
- Sum insured -This is the total amount you are covered for and can be determined two ways: agreed value or market value. Agreed value refers to the amount you would be paid if your car was stolen or deemed a ‘write off’ and is agreed on with your provider. Market value is the amount your car would fetch on an open market.
- Excess - This is the amount you would pay if you ever need to make a claim, so you’ll need to ask yourself your quoted excess amount is something you can afford, particularly as many young driver excess amounts can be in the thousands. It also might be worth picking a policy that allows you to adjust your excess to help lower your premium.
- Extra features -This could include things like emergency repairs, cover for personal items in the car, or towing costs.
- Cost of cover - When it comes to insurance, you don’t have to take the first policy you see. Shop around and obtain at least three quotes to help decide which insurance companies offer the best value.
What type of policy exclusions will I have as a P-plater?
You should already know that driving under the influence of drugs or alcohol is forbidden for P-platers, while fully licensed drivers can have a blood alcohol level under 0.05%. P-platers also have to abide by specific road rules until they receive their full license, so if you have an accident, your claim may be rejected if you were caught doing the following:
- Exceeding the permitted speed limit
- Misleading your provider about the type of car you drive (P-platers are not allowed to drive high-powered cars)
- Using your mobile while driving, including hands-free
- Carrying passengers under 21 during restricted times, which for a P1 driver is between 11pm and 5am.
- Supervising a learner driver
How can I pay for car insurance?
One of the great things about car insurance is that you can pay your policy on a schedule that suits your budget best! An even better fact is that some insurance companies will offer a discount if you choose to pay your policy for the year in one lump sum. But if you prefer to pay your policy in instalments, many will give you the option to pay your policy on a monthly or quarterly basis.
Can I put my parents name on the policy even if I own the car?
It can be tempting to save on your car insurance by putting your parents name on the policy instead of your own - this is called ‘fronting’. If you choose to do this, you do run the risk of having any claim rejected or voided so be warned that you might be up for a full damage bill.
What about policy discounts?
Once you start your search for the perfect car insurance policy, you’ll notice a range of available discounts. And while some of these discounts may not kick in until the future, they’re still worth knowing about.
- Online discounts - Some providers will offer discounts of up to 20%, just for signing up online!
- Loyalty discounts - This means receiving a discount for being a loyal customer with your company. These usually start within 3-4 years of having a car insurance policy.
- Bundled policy discount - If you’ve moved out of home, you are often able to bundle your home and contents insurance with your car insurance to receive a discount.
- No-claims bonus - To score this discount, you’ll need to keep a clean driving record and have no claims on your policy.
Are there any car insurance traps to avoid?
As a P-plater you’ll also need to watch out for potential car insurance traps, like:
- Under or over-insuring your car - If you’re planning to drive a second-hand car, it probably doesn’t need to be insured for the same amount as a brand new one. But you don’t want to scrimp on insurance for an expensive car, either, especially if you’ve taken out a car loan. You don’t want to be in a situation of paying for a car you can’t drive because you can’t afford to get it fixed or worse, no longer have it.
- Picking car dealer insurance -Try to avoid picking up car insurance at the dealership until you’ve had time to shop around on policies, as their offer might not be the most competitive on the market and could come with higher fees.
- Not listing all drivers - Planning on sharing your car with a sibling? Remember to list them in your policy, as you may have to pay a hefty undeclared driver excess or not receive cover at all for an accident they caused.
- Unapproved car modifications - Before you upgrade your wheels, it’ll need to be approved by your insurance provider. Otherwise, any claim you make in the future could be rejected
How do I make a car insurance claim?
While we hope you never have to make a car insurance claim, you still should know what to do in the event of an accident. If no immediate medical attention is required, both and you and the other driver will need to exchange some details, including:
- License details
- Registration numbers
- The make and model of cars involved in the accident
It’s a good idea to also take photos of the damage to the cars and notes on the traffic and weather conditions as it might have contributed to the accident.
If you were at fault in the accident, you will have to pay the excess when you make a claim. You can make your car insurance claim online through your provider’s site. But before you sit down to make your claim, have all your personal details as well as the other driver’s prepared beforehand.
How long does a car insurance claim take to settle?
Although it may not take long to file a car insurance claim online, there is no way to predict the time it will take to settle - it could take weeks to months. This is because you are relying on another party to be available to communicate with their insurance company about the accident. Both companies will want inspect the cars and asses any other relevant documentation, like police reports or medical examinations.