Should I buy my own policy or get added to my parent’s?
If you’re under 25 years of age and new to car insurance, you might be wondering whether to get yourself added to your parent’s car insurance policy or to buy your own.
Your decision will depend on the circumstances, including where you live, the car’s owner, and its regular driver (the person who drives it the most).
Use the following table to help you weigh up your options:
|If you're…||You may wish to…|
|Living with parents and driving their car less than them||Get listed as an additional driver on your parent’s policy|
|Living with parents and driving their car more than them||Get listed as the ‘regular driver’ on your parent’s policy; or buy your own policy|
|Living with parents and driving your own car||Buy your own policy|
|Living independently and driving your own car||Buy your own policy|
|Living independently and driving your parent’s car more than them||Buy your own policy; or get listed as the ‘regular driver’ on your parent’s policy|
(Getting added to your parent’s policy and paying the difference is generally your cheapest option, but only if you’re not the regular driver of the car.)
Can my parents take out a policy on my behalf?
Even if you own the car you drive, your parents are free to pay for some or all of your car insurance, if they wish — that’s what parents do!
However, don’t be tempted to get your parents to insure your car in their name so you can save money on your premium.
That’s called ‘fronting’, whereby an older, more experienced driver fraudulently insures a car in their name — listing themselves as the primary driver — even though it’ll be driven most of the time by a younger, riskier driver.
While this may result in the younger driver getting a cheaper premium, if they make a claim and the insurer finds out mum or dad fibbed when they took out the policy, the claim could be rejected, leaving the family to foot a potentially hefty damage bill; or else the insurer may reduce the amount they pay.
What are the different types of car insurance?
The following table shows the four types of car insurance provided by Budget Direct and what they essentially cover:
|Included benefits||Comprehensive||Third Party Property, Fire and Theft||Third Party Property Only||Compulsory Third Party|
|Damage to your car||Yes||Fire, theft, and at-fault uninsured driver only||At-fault uninsured driver only||No|
|Damage to other people's property||Yes||Yes||Yes||No|
|Theft of your car||Yes||Yes||No||No|
|Injuries or death to other people||No||No||No||Yes|
|Quote Now||Quote Now||Quote Now||Quote Now|
Which type of car insurance do I need?
If you drive a new and/or expensive car, you may decide to take out comprehensive car insurance, which covers theft and damage to your car and your liability for the damage it causes to other people’s vehicles.
(If you’re buying your car on finance, the finance company will usually require the car to be comprehensively insured.)
If you drive a car with a low market value, you may conclude that cheaper third-party property damage insurance is all you need, covering your liability for damage to other people’s vehicles — but not damage to your car.
Compulsory third party (CTP) insurance is the only type of car insurance in Australia that’s mandatory; in some states it’s included with your car registration fees, in others you have to buy CTP separately before your car can be registered.
Note that CTP is a form of personal injury insurance — it doesn’t cover damage to your car or your liability for the damage it causes to other people’s vehicles. Is CTP insurance enough cover?
What’s not covered?
There are some things Budget Direct car insurance does not cover (called ‘exclusions’). For example, we do not cover loss, damage or liability arising out of the use of the car:
Furthermore, we do not cover loss, damage or liability arising from:
How much does car insurance cost?
There are lots of factors that can influence the cost of car insurance — your premium — including your age, driving record, car’s performance, and level of cover.
Moreover, insurers assess and price risk differently: The premiums they charge the same person can vary by hundreds, sometimes thousands, of dollars.
The most accurate way to price car insurance is to get some quotes.
Car insurance excesses
A car insurance excess is the fixed amount you pay towards each claim — unless you have a no-fault accident.
Budget Direct policyholders pay a Basic Excess and any other additional excesses that apply.
You can reduce your premium by choosing a higher Basic Excess (and vice-versa); the additional excesses cannot be changed.
Award-winning car insurance
After comparing the cost and features of 47 comprehensive policies offered by 37 insurers, Canstar awarded us one of only two national awards for Outstanding Value Car Insurance in 2019 — a record 13th year in a row we’ve won the award.
Before reaching its verdict, Canstar assessed and rated the policies across six consumer types within six states (a total of 36 profiles). The policies were then awarded a star rating in each profile, ranging from one star up to — for “outstanding value” — five stars.
The following table shows the consistently high star ratings Budget Direct received for all the profiles relating to young drivers:
Canstar Car Insurance Star Ratings 2019
|Profile||TODO: stars icon|
|Under 25 year old male||NSW, Qld, SA, Tas, Vic, WA|
|Under 25 year old female||NSW, Qld, SA, Tas, Vic, WA|
|Family with young driver||NSW, Qld, SA, Tas, Vic, WA|
We also won Money magazine’s Best of the Best 2019 title for Cheapest Car Insurance; and a Mozo Experts Choice 2018 award for Exceptional Value Car Insurance.
Why do young drivers pay more for insurance?
Car insurance premiums are partly based on the probability of a driver having an accident and making a claim: The higher the probability, the larger the premium.
According to Teresa Senserrick, an associate professor who conducts transport and road safety research at the University of New South Wales, “Youth aged 17–25 comprise 13% of the Australian population, but 22% of the annual road toll.”1
Because they are statistically more likely to be involved in road accidents, younger, inexperienced drivers invariably pay higher car insurance premiums than older, experienced drivers do.
On the plus side, for each year you drive without making a claim, we’ll give you a discount on your premium — until you earn the maximum discount (known as Rating 1).
What do I need to tell my car insurer?
Budget Direct’s willingness to insure a person’s car, the terms under which we agree to insure it, and the premium we charge are based on the information they give us about their car and its drivers.
It’s therefore critical we’re supplied, at all times, with true and complete information about any insured driver, the car, and any accidents any of the drivers have had.
Otherwise, in the event of a claim, we may reduce the amount we pay, refuse to pay the claim, or cancel the policy. (See the table below, which outlines your duty of disclosure.)
If the policyholder’s details change, the premium may also change; in a worst-case scenario (e.g. if a policyholder is convicted of drink-driving), we may no longer be able to insure them.
|When this happens…||You'll need to…|
|You buy car insurance||Answer a series of questions about you (and any other drivers) and your car (e.g. how the car will be used, where it will be parked at night, the insured drivers’ driving record and claims history).|
|Your circumstances change||Let us know about the changes (e.g. you’ve moved house, added a driver to your policy, started using the car in your business, or sold it). (Before making any modifications to your car, you must obtain our written agreement.)|
|You become aware of incorrect policy details||Tell us what the errors are so we can amend your policy and, if necessary, your premium.|
|You receive our policy renewal offer||Check all the information in the renewal offer and tell us if any details — about you, any other drivers, your car — need to be changed or added. This includes adjustments to anything you’ve previously told us (e.g. regarding past claims and driving offences).|
Buying extra insurance from a car dealer
If you buy a new or used car from a dealer, they may offer you add-on insurance related to the car (to cover things like breakdown or damage to tyres and rims) or to your loan (to cover any inability to pay it back).
According to the Australian Securities and Investments Commission (ASIC), “Some of the insurance car dealers sell is not very good value and you may already have some of this cover.”
1. Teresa Senserrick, 2015, The Conversation, <https://theconversation.com/young-driver-crashes-the-myths-and-facts-49877>, viewed 30 May 2019.