Are your Children Hurting your Car Insurance Premiums?

It’s common knowledge that young drivers under the age of 25 are going to face higher premiums than their more seasoned counterparts.

However getting the best deal on car insurance when it comes to including children is not always as straightforward as simply not listing them on your policy.

The general consensus is that if your children don’t drive your car on a regular basis, then it’s best to not include them on your policy.

In NSW a male driver under the age of 25 is going to be forced to pay a premium of around $2600 per years to insure their car.

Compare that to a family policy, where the majority of driving is done by the parents and you are looking at paying $2345 per year – slightly less than the rate for an entire family.

However by removing your children from the policy and only including adults over the age of 45 then you’ll get a significant drop to only $868 per year on average.

So at first glance it appears far better value to simply remove your children from the policy altogether, or have a family policy.

*Based on average premiums in New South Wales

The real catch for families trying to find a way to best reduce their premium comes in the details of the actual policy.

While you might not have to include all the drivers on the policy itself, most insurance companies have different levels of excess for drivers of different age and experience levels.

If you need to claim on your policy and the driver involved is still at a probationary level, expect to pay a higher rate of excess than a driver aged over 45 and listed on the policy.

The same applies to drivers under the age of 25. If they are the driver and you are required to make a claim then it’s very likely that the level of excess will be higher.

Similarly if you have already listed a young driver on the policy and you as the driver, who are aged over 45, makes the claim, in some instances the level of cover might actually be decreased.

So if the level of cover reflected a $600 excess and you have your children on the policy then that excess might be reduced to $400.

It’s also important to note that some insurance companies don’t actually cover your children unless they are listed on the policy.

As always it’s essential to fully understand the PDS and make sure it’s tailored to your situation.

Adding your children to your policy might cost you more in the short term, but that might well be worth it in the event that you are forced to make a claim.

Tips to reduce your car insurance costs with children

• Make sure that your children are actually covered if they are not listed on the policy.
• Check to see if there is a difference in the level of excess, depending on who is driving the car in the event of an accident.
• Fully read the PDS to ensure your policy is right for your family and there aren’t any nasty surprises should you need to make a claim with one of your children as the driver.