Getting car insurance is a legal requirement—and a financial safety net—especially for young drivers. But navigating the world of insurance can be tricky when you're new to the road. From skipping vital coverage to underreporting mileage, many rookie mistakes can lead to costly consequences. In this article, we break down the top five car insurance mistakes young drivers make—and how to steer clear of them.
Getting a car insurance policy is mandatory for all drivers in Australia and much of the developed world. Young drivers are not exempt from this law, and in more ways than one, this demographic of drivers needs car insurance the most.
As expensive as car insurance can seem, it should not simply be viewed as an ongoing expense; it can be a saving grace in the event that you encounter any mishaps while driving on public roads.
From covering repair costs to medical costs, car insurance is something you don’t know you need until you truly need it. That said, a lot of young drivers, who often navigate the world of insurance through a fresh lens, make several common car insurance mistakes when signing up for it.
If you want to avoid this mistake as a young driver, then you’re in the right place. We’ll break down some of the most common car insurance mistakes young drivers can make and how you can avoid them.
Let’s jump right into it.
Skipping Optional Coverage Like Comprehensive Insurance
One common mistake many young drivers (and even old drivers) make is opting out of comprehensive car insurance.
In Australia, it’s mandatory to get compulsory third-party insurance, or CTP for short. This is the most basic type of insurance plan, and it covers the legal liability of a driver for injuries or death caused to a third party.
As important as this coverage is for young drivers, it doesn’t cover the bulk of possible incidents that can happen when driving. This means that incidents such as injuries and impacts on you and your vehicle are not covered by this insurance plan, meaning you have to pay out of pocket for them.
As such, getting comprehensive insurance is more often than not a very worthwhile investment for young drivers looking to safeguard their finances. As the name of the insurance implies, this type of insurance covers a wide scope of incidents, including, but not limited to:
- Accidents caused by you or the other party
- Theft and attempted theft
- Vandalism or malicious damage
- Fire, flood, and storm-related damage
- Collisions with uninsured drivers
While most car insurance providers charge more for comprehensive insurance plans, some offer special deals with no additional excess fee for young drivers. This makes getting a comprehensive plan a no-brainer to guarantee maximum protection.
In any case, it’s essential to do your research and pick an insurance plan that covers a wide range of incidents to safeguard your finances. Typically, budget-friendly cars don’t cost a lot to insure, but if they’ve been modified, then that could jack up the price of the premium a fair bit.
Not Listing Additional Drivers
A common oversight young drivers make is not adding all the potential users of the vehicle to their insurance policy. As much as possible, it’s best to do this before the creation of the contract to avoid having to pay administrative fees for your requested policy update.
In some cases, adding additional drivers may increase the cost of your premium. But this is for a good reason: it ensures that all drivers of the vehicle will have adequate protection and can file a claim in case the vehicle and the involved party get into an accident.
Furthermore, a young person’s car insurance policy can, in some instances, become cheaper if they list an additional driver who has demonstrated a wealth of driving experience in the field. That said, they must have an exemplary track record to have any bearing in the negotiation of the insurance plan’s final price.
But regardless of whether the insurance policy increases in cost or not, being truthful and adding all the likely additional drivers—whether they’re your sibling, spouse, or housemate—is always a good step to take to ensure you will have an easy time filing a claim in case of an accident.
Opting for a High Deductible to Lower Premiums
Another common mistake young drivers make is selecting a plan based solely on the fact that they offer a lower premium.
While the lower monthly cost may be enticing, it’s important to look at the full picture, including the event that you may actually find yourself in the middle of an accident.
A low premium, more often than not, is offset by a high deductible. A deductible is the amount you must pay out of pocket before your insurance covers the rest. If the deductible is set to an amount that you are unable to pay, you may be locked out of claiming your insurance policy.
For young drivers, who are very often students or young professionals with little savings, this can be problematic, as this demographic may not be able to round up enough capital to cover a high deductible fee.
As such, it’s essential to take a close look at your capital and spending habits before making the sweeping decision on your insurance payment method. If you have enough capital sitting around, then it’s more than possible to pick a plan with a high deductible and it being the best choice.
But it’s also important to weigh in the other side of the coin and consider the option of paying higher premiums to forego that high deductible, especially if you find yourself low on savings or emergency funds.
Missing Policy Renewal Dates or Payment Deadlines
As an insurance policyholder, you need to stay on top of your payment deadlines and contract expiration date.
Letting your policy lapse without making the required payments not only removes your protection for that period, but it also exposes you to renewal fines and other fees as per the contractual insurance agreement.
Moreover, if you only have a single car insurance policy, then driving with an inactive insurance plan means that you’re breaking the law by not having a car insurance policy to drive on public roads. This is considered illegal and can lead to a license suspension and other legal obligations.
To avoid this, it’s essential to make it a habit to make your payments on time. You can set up reminders on your phone’s calendar app or enable automatic deductions through your bank account.
Moreover, keep an eye out for your policy’s renewal date and stay on top of that as well. Talk with the insurer on how the renewal works for your insurance policy’s case, and follow it closely to ensure that you’re always covered.
Relaying Incorrect Mileage or Information
So, you’ve encountered an accident. In such an event, it’s imperative to be as truthful as possible. Providing inaccurate information about your vehicle’s mileage or usage is a mistake that can have serious consequences.
Some young drivers underreport their driving distance or frequency in the hopes of scoring a lower premium offer. However, this can backfire. If the insurance company discovers discrepancies, especially after an accident, it will rush to deny your claim or cancel your policy. In extreme cases, they may even label it as fraud.
In turn, this can damage your reputation with the insurer and other insurers that may come across this information.
As this is the case, it’s essential to be honest when reporting your estimated annual mileage and your vehicle’s primary use case. This way, their verification process won’t reveal any wrongdoings on your part, increasing your chances of successfully receiving your insurance claim.
Final Thoughts
We hope we’ve given you enough insights to help you navigate your car insurance policy more assuredly. All the best in driving the road safely!
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