Why insurance costs are so high for young drivers:
One of the most difficult aspects about driving that young drivers and new drivers must face is insurance. Affordable insurance is hard enough for experienced drivers, but the consensus is that it is the insurance and not the cost of a vehicle that often enough out-prices new drivers from the roads.
Every insurance policy that is issued is based on risk. Insurance companies use statistics that have been gathered over many years to assess risk. While they gather data on almost every conceivable risk factor such as residential area, gender, occupation, mileage and more, the most influential factors in driver’s insurance risk are age and experience. Both have knock on effects on all the other factors that are considered when underwriting a policy.
No claims bonus
Your No claims bonus can have a positive – or negative effect on the cost of your insurance policy. The problem that new and young drivers face is that they have not had the opportunity to build up a driving history that would prove that they are safe drivers and that a no claims bonus would mitigate.
Sometimes by altering the excess on the policy by raising it will have a positive effect on the premiums. It is however important to remember that with a second hand vehicle you could risk raising the excess too close to the value of the vehicle. The problems that this creates is you could be essentially paying for third party insurance in a comprehensive policy. Read the fine print carefully.
Pay for what you need – type of insurance
A lot of very young drivers will buy an old car to start off their life of driving. The minimum standard of insurance is third party insurance that may on some occasions include fire and theft. It is wise to check the comparison with comprehensive cover because sometimes the difference is minimal. When the new driver is not the primary driver or the owner of the vehicle, it is possible for them to be added to the insurance policy as an additional driver.
If the new driver becomes the primary driver, they will have to have the policy recalculated and issued in their own name. Not to do so is called fronting and is illegal. However, if the new driver is only making occasional trips, in the car this is a particularly effective way of building up a good driving history and a No claims bonus.
Experienced drivers on the policy
It is also possible to do the reverse of placing an incidental new driver on the policy of an experienced driver. To reduce your premiums, you can place an experienced driver on your policy. This will reduce premiums especially if this driver has a no claims history on their own policy. This is the most effective way to avoid a situation that may lead to unintentional fronting.
There is usually an additional charge to the payment of monthly insurance premiums. This is because there is ongoing administration that needs to be paid for. If you pay for your insurance in an annual lump-sum, this will mean a discount. By the time you’ve done this for the third year running and you’ve accumulated a no claims bonus, insurance costs will begin to look a lot rosier.
The little black box is one the blessings that the insurance industry has to offer the new and young driver. This box monitors driving behavior as well as mileage. This is the one option that offers massive savings. The box can be installed or used as an app on your phone. It will however require good driving. It monitors speed and braking as well, so it could be a trigger for alarm at your insurance company too.
What you do for a living, has an impact on how much it will cost to be insured. Underwriters have clear picture of which professions are more likely to have an accident. It may pay off to check which job descriptors bring up a cheaper policy price when your job description could fall into one of several descriptors. It is important however that you never lie about your occupation.
Complete a Pass plus course
Completing a pass plus course tell your insurance company that you’re serious about driving safely. Speak to your driving instructor who will be able to arrange a course enrollment for you. It is also a good idea to check with insurers who will give you credit for this and who won’t. Your driving instructor will be able to sort out all sorts of things such as bringing test dates forward, booking additional lessons and advising on matters such as Pass Plus.
Choice of car
The car you choose, will contribute to how insurance costs are calculated. The more expensive the car is to replace, the higher the insurance premiums are going to be. Cars are classified into different groups for insurance purposes. Choose the cheapest group that has a car that will meet your needs, at least until you can manage to build up a no claims history.
Matt is a car enthusiast, who loves to write about anything with four wheels. He’s the Managing director of SpeedyTests.co.uk – which is a company in the… well guess? Auto industry, aiming to get learner drivers on the road faster.