Know Risk is a community education program designed by the Australian and New Zealand Institute of Insurance and Finance (ANZIIF) to improve our understanding of insurance and how it relates to managing the many risks we all face in life.
Insurance basics for young people
Everything you need to know when starting out
Turning 18 and having the freedom that comes with being a young adult — travel, obtaining your driver’s licence and moving out into your own place — can make for some of the most exciting times in a person’s life. But the flipside of having this newfound independence also means having to pay for things without Mum or Dad’s help. And one of those annoying things you have to think about as an adult is insurance.
We can see your eyes glossing over at the mere mention of insurance, which can, firstly, seem like an expensive and irrelevant dent in the not-typically-expansive income of a young person, and secondly, can be so confusing that it immediately turns you off. While we can’t do anything about that first issue, we can certainly help you tackle the second. So, let’s take a look at the most relevant insurance types for those who are getting out into the world as young adults.
If you have a car, then you already have compulsory third party (CTP) insurance — it’s factored into the cost of your rego. But CTP will only cover you for bodily injuries you or someone else sustains in an accident. It doesn’t cover you for damage to your vehicle or damage to someone else’s.
So, if your car isn’t on its last legs and it’s still worth a bit, you might want to consider getting your own car insurance. Even if your car isn’t worth much, you should probably consider insuring it anyway. Your car might not be valuable enough to bother with insurance, but what if you crash your car into someone else’s brand new BMW? If you’re found to be at fault in the accident, then you will be responsible for the cost of repairs for that European (read: expensive) vehicle.
We know you’re probably concerned about how expensive car insurance can be for people who are under 24, and we won’t lie to you — car insurance for young people is not cheap. While being on your P-plates will certainly increase the cost of car insurance, your premiums will remain quite high until you hit 25, at which point the risk of you being involved in an accident and having to make a claim starts to dip.
But car insurance is a wise investment, especially if you are an inexperienced driver, and there are a few different policy options you can choose from, so have a look at our car insurance checklist, which will help you figure out what kind of car insurance policy will be a good fit for you.
On the plus side, the safer you are on the roads (and, therefore, the fewer accidents you are involved in), the cheaper your car insurance will become as time goes on.
If you are one of the increasingly dwindling number of young adults who has elected not to continue to live with your parents, then we both applaud your bravery and sense of independence, and are also envious of that unabashed joy that comes with first realising the “my house, my rules” mantra of parents no longer applies to you. It’s a really thrilling sense of freedom.
If you are a magical young adult unicorn who has managed to buy their own home, then renter’s insurance is not going to be relevant to you (but home insurance will be — insert home insurance article here, because you never know what kids these days can afford). However, if you are like the rest of us who are condemned to just renting on account of that horrible housing market we keep hearing about, then you might want to investigate your renter’s insurance options.
While the owner of the property you’re renting is responsible for insuring the property itself — the foundation, roof, walls, fixtures, etc. — all of the contents inside the rental property won’t be insured unless you get yourself some renter’s insurance.
So, if you want to protect your valuables — things like laptops, iPads, jewellery clothes, kitchen utensils and appliances, artwork, bed linens, DVDs, CDs, books, etc. — against things like fire and theft, consider investing in a renter’s insurance policy (insert article here). You might be surprised at how easy these policies are to understand.
One of the best things about being young — and especially if you don’t have kids or a full-time job yet — is the freedom to travel and explore the far corners of the world. But the last thing you want when you’re enjoying the experience of a lifetime is to have that experience cut short by an event or injury that ends up taking its toll on your travel funds.
If you’re taking personal belongings and baggage with you, or if you are going to partake in any kind of sport or activity that carries the risk of injury (like skiing and the like), then travel insurance is certainly going to be relevant to you. Travel insurance will also usually cover you for any medical care you need while you’re overseas, as well as if you have to cancel your trip before its even started or you need to cut it short and return home for an unexpected reason.
Travel insurance is actually quite cost-effective; most policies are not extravagantly priced, and when you are young and healthy, you stand to benefit from a cheaper premium where travel insurance is concerned. Of course, you’ll need to be wary of some typical exclusions — travelling to places the government has advised against travelling to, partaking in high-risk activities, leaving your belongings unattended, reckless behaviour, etc. — but for the most part, travel insurance can help make your trip even more wonderful by giving you some added peace of mind.
If you’re about to embark on some travel, make sure you have a squiz at our travel insurance checklist (insert checklist here), which breaks travel insurance down into some bite-sized chunks and will help you have a better understanding of whether or not it’s worth considering, and how to go about getting a policy that’s well-suited to you.