Insurance Guide

Protect Yourself on the Road: A Guide to Car Insurance for Young Drivers

For many young people, the ability to drive means freedom and independence, plus greater opportunities for work, travel, school, and play. But the ability to drive comes with many responsibilities.

Statistically, young and inexperienced drivers are the most likely drivers to be involved in accidents. That’s why it’s important for young drivers to carry adequate car insurance to protect themselves and others.

On this page, we’ll talk about some of the important things to know about getting car insurance for young drivers, so you can be sure you’re getting the protection you need that best fits your budget.

Why do you need car insurance at all?

It's not mandatory in New Zealand to have car insurance, but car insurance can protect you in the event of an accident. Depending on the type of insurance you get, car insurance can cover you for any accidental loss or damage to your vehicle, fire and theft.  If you cause an accident, it could also protect you from additional costs that arise such as the costs to repair damage to another person’s vehicle or property that has been damaged in the accident.

Without insurance, these costs can be significant. If you’re found at fault in an accident, you may be held responsible for the costs associated to fix or repair the other party’s vehicle or property damage. These costs can add up! If you happened to damage a very expensive car, like a Tesla or a BMW, your liability could cripple you financially.

Obtaining insurance that protects your own car is important too. Your car is a significant investment and may be important for getting to work or school. If your car is damaged or stolen, you’ll want to make sure you can afford any repairs, or the replacement cost to buy a new car, should your car be written off.

For these reasons, we believe it’s important for you to have car insurance before you start driving, even if you are on a learner’s license. Whether it’s for a car you own or if you are driving someone else’s car, make sure you are insured to do so.

Why is insurance for young drivers different?

Statistically, young and inexperienced drivers are the most likely to be involved in car accidents.

Data from the Waka Kotahi New Zealand Transport Agency shows that young drivers, especially those under the age of 25, are 7 times more likely to be involved in a car accident than any other drivers. Under New Zealand law, insurers are allowed to charge different rates based on age and gender because of statistical evidence of higher risk.

The good news is that as drivers mature and gain experience driving, the insurance rates often go down. That’s because more mature and experienced drivers with clean driving records are normally considered a better insurance risk.

What types of car insurance are there?

There are three main types of car insurance you should consider carrying.

  • Third-party: Third-party car insurance covers accidental damage that you cause to other vehicles or property in the event of an accident, but it won’t cover damage to your own car. We will also cover your legal liability if you cause loss, damage or injury in an accident involving your vehicle. AMP’s Third-party policies also include limited coverage if your car is damaged in an accident caused by an uninsured person, provided that the driver or person in charge of your vehicle is free of blame, the person at fault is identified and has no valid insurance of their own.

  • Third-party, fire, and theft: This option is the same as above, but will also cover you in the event your car is stolen or damaged in a fire. AMP’s Third-party, fire, and theft coverage also includes coverage to replace stolen keys and change locks, towing and storage in the event of an accident, and coverage for emergency travel and accommodation if your car is stolen or damaged. There is also an optional benefit for hire car coverage in the event of a theft available at additional cost.

  • Comprehensive: Comprehensive car insurance covers everything above and will also cover the repair costs for your own car, up to the sum insured, if it is damaged in an accident. AMP’s Comprehensive policies also include coverage for windscreen repair and coverage for damage to a trailer attached to your car. Because comprehensive car insurance covers your vehicle in an accident and offers more additional benefits, it is normally the most expensive option.

AMP also offers additional coverage either as part of our comprehensive car insurance policy or at extra cost. This additional coverage can include roadside assistance, a rental car to use after an accident, or replacement of a broken windscreen. Contact AMP if you would like to discuss additional coverage.

What is 'excess'?

For an insurance claim under any type of policy, there is typically a portion of the costs that the insured person must pay at claim time. This is called an “excess.” Costs above this amount will be paid by your insurer up to any applicable policy limits.

There is a standard excess across all cover types but for Comprehensive car insurance you can select higher excesses – this is called voluntary excesses. The higher the voluntary excess amount, the lower your premiums will be. Typically, younger drivers will be responsible for a higher excess in addition to the standard excess, such as an age excess and/or an inexperienced driver excess, which is an excess amount higher than experienced drivers.

Find out more about excess.

What other factors influence car insurance cost?

In addition to the driver’s age and driving experience, several other factors can influence what an insurer will charge for coverage. There are some factors that increase or decrease the likelihood of being involved in an accident or from theft occurring.

  • Driver’s address: Some areas are more prone to higher risk driving conditions or increase the risk of theft.
  • Vehicle make and model: Vehicles with more powerful engines are usually more desirable to steal therefore are more expensive to insure than other vehicles. This can also raise the risk of accidents when being driven by an inexperienced driver.
  • Vehicle enhancements: Enhancements that raise the vehicle’s replacement cost will raise insurance rates. Vehicle enhancements can also increase the risk of theft. Also, if your enhancements change the power and handling of the vehicle, insurers may impose higher premiums or a higher excess depending on the experience of the driver.
  • Annual mileage: The more you drive, the more likely you are to get into an accident and the higher your premiums.

Can you get car insurance under your parent’s name to reduce costs?

If you will be a secondary or occasional driver on a car owned and usually driven by your parent, you may be able to add yourself to your parent’s car insurance policy. This may not affect the insurance costs but you will have a higher excess as a young driver.

If you are the registered owner of the vehicle, then the insurance will need to be in your name.

What should parents of a young driver know about car insurance?

Every parent wants to be sure that their child is protected when on the road. So, it’s important to ensure that your child is fully prepared to meet the challenges of driving with reliable insurance coverage.

If you already have a car policy with AMP, you should check with us about your options for adding your child to your plan. If you’re interested in switching your coverage from another provider to AMP, contact us today for a quote or get your car insurance quote online.

If your child will be a driver of your car, you must inform your insurer and your insurer may impose additional terms on your insurance to ensure that you and your child are adequately covered while driving the vehicle.

If your child will be the primary or only driver of your car, then they can be covered under your insurance, noted as a primary driver..

If you’re planning to buy a vehicle for your child, and if they are the registered owner of the vehicle, they will require their own insurance policy. You should consider in advance how the vehicle’s year, make and model, as well as any enhancements, may affect their insurance premiums.


Do you have more questions about car insurance? We can answer them for you. Contact us today for a car insurance quote or to compare different car insurance policies from AMP.

The information in this blog is of a general nature and does not constitute financial or other professional advice. Policy limits and exclusions apply - refer to the policy wording for full terms and conditions.