In a recent post we explored reports that many insurance providers had started refusing quotes to young drivers. While many news articles focused on the negative side of this story we preferred to look at offering a solution to the problem.And here it is; our ultimate guide to young driver car insurance. A look at why motor insurance is so expensive for younger drivers and 14 in-depth tips to securing a cheaper premium now and in the years to come…
So why is young driver car insurance more expensive in the first place?
The main reason many young drivers face having to more from their motor insurance is down to “perceived risk”. One of the main factors insurance companies consider when calculating the cost of your premium is how likely you are to actually make a claim. The more likely an insurer thinks you are to claim on your policy the higher your premium will be.
And how exactly do they calculate risk?
Every insurance company use slightly different criteria to calculate risk and will give different weightings to those criteria. Those differences aside, all insurance providers will consider a group of key factors:
- Age
- Driving experience and record
- Claims history
- The car you drive
- Post code
- Gender
These factors having so much influence on the price of a car insurance quote spells bad news for younger drivers and the problem is made more frustrating by the fact many are out of your control. Let’s look at these areas in more detail and see just how much of a problem they can cause:
- Age – young drivers are just that, YOUNG, if insurance companies are going to hold that against you there’s little you can do.
- Driving experience and record – well if you’re YOUNG you won’t have much experience on the roads to help get a cheaper quote will you? Worse still, if you’ve managed to add a blemish or two to your record in this short time then your premium will be even higher.
- Claims history – again, if you’re YOUNG with LITTLE EXPERIENCE how can you have built up any no claims discount? And if you’ve already had to make a claim that will go against you as well.
- The car you drive – if you are lucky enough to be able to afford a nice new car expect to pay for that privilege with a higher premium, if you can only afford a cheap death trap expect to pay a higher premium, if you’re a motoring enthusiast who likes to modify their car, surprise, expect to pay a higher premium – anything out of the “middle of the road” norm and insurance companies will feel justified in increasing the cost of your policy.
- Post code – unsurprisingly some areas on the country are worse for accidents and thefts, usually these are big urban cities such as London, Manchester and Liverpool. More accidents and thefts equal more claims which equal higher premiums. So if things weren’t looking bad enough already, if you live in such as area the outlook just got a whole lot worse.
- Gender – and just to round things off young male drivers are persecuted a little further with the “boy racer” tag which will raise the cost of your premium no matter how competent and safe a driver you really are, talk about prejudice!
How Can Insurance Companies Justify This?
In one word, STATISTICS!
Insurance companies love statistics and much of the research conducted goes a long way to supporting their approach of charging more to cover young drivers.
Many of these reports highlight the fact that younger drivers:
- Speed more
- Are involved in more accidents
- Injure and kill more people on the roads
- Are more likely to drive under the influence of alcohol or drugs
- Suffer more thefts
- And as a result make more claims!
All these stats and facts result in the “perceived risk” that leads to car insurance providers dishing out higher premiums to younger drivers. And it is the worsening of this situation that has resulted in several insurers turning young drivers away.
Is There Any Good News?
It’s fair to say that having read the guide to this point the picture looks very bleak indeed. Insurance companies take a dim view of younger drivers and the statistics back them up.
However, it is important that we understand the problems in order to combat them and find a solution, and this is exactly what we are going to do.
OK, Now For The Good Stuff!
14 Great Tips To Help Younger Drivers Lower Their Car Insurance Premiums
By combining as many of these tips as possible you can significantly lower the cost of your insurance.
- Take the PASS PLUS course – I wanted to get this one out of the way first as it’s only an option within 12 months of passing your test. Choosing to take this advanced driving course can help lower your insurance costs as some companies offer a discount to drivers who have passed the course. The discounts will vary from one provider to another. In addition to cheaper motor insurance the course also reduces the risk of having a crash by improving your skills and experience on the roads, in the long-term this can help build trust with insurers and lower your premium even further. Visit the PASS PLUS site to learn more
- Avoid modifications – adding “mods” to your car is a bad idea for younger drivers and helps promote the “boy racer” tag that insurers use to bump up your premium. By resisting the temptation to “soop up” you can help prevent your quote from going any higher. If you do decide to modify your motor make sure you let your insurer know as failure to do so could mean your policy is invalid when you make a claim. This scenario could make getting future car insurance an even harder prospect.
- Improve security – any money saved on modifications could be better spent improving the security of your vehicle. Fitting an approved alarm and immobiliser system reduces the chance of theft (which makes you less of a risk) and can help lower your quote. Parking more securely at night, such as on the drive or in a garage also improves security and lowers insurance costs. Make sure your insurance company is fully aware of the efforts to which you are going.
- A smaller engine – remember when we said the car you drive affects your premium? One of the main reasons younger drivers have more accidents (and pay higher premiums) is that they aren’t experienced in controlling powerful vehicles. Opting for a 1.0 or 1.2litre engine (in a low insurance group) will result in far cheaper insurance compared to a 4litre super charged turbo! Also you will benefit from cheaper road tax and petrol costs, the savings from which can offset the cost of your insurance and make it cheaper.
- Going on your own insurance and building up no claims bonus – I won’t lie, in the short-term this could sting a little but past that point the savings are huge. Typically one year’s no claims will result in a 30% discount on your premium and by building up four or more years the discount can be between 60-70%. With this in mind going on your parents insurance to lower the cost in the short-term makes little sense. Some insurance companies allow named drivers to build up no claims bonus but usually this is not transferable to another provider.
- Look for rapid bonus schemes – when taking the plunge of going on your own insurance keep an eye out for rapid bonus schemes. These deals allow you to build up one year’s no claims bonus within 9-10 months as apposed to the traditional 12. This is great way of accessing the discounts available by having a no claims bonus more quickly.
- Look for worthwhile cash back offers – as well as rapid bonus schemes look to take advantage of cash back deals offered by insurance companies. Insurance providers operate in a highly competitive market and frequently offer these incentives to attract customers. Cash back offers between £50-£75 are not uncommon and can act as a nice little saver on the cost of your policy.
- Shop around online – with so many companies and policies available using the internet to speed up the process is a good idea. Price comparison websites such as confused.com and moneysupermarket.com compare quotes from dozens of insurance companies and a search only a takes a few minutes. The results, (while not 100% accurate) provide a quick overview of the prices available and let you find the deals that are right for you at a reasonable price. A little bonus tip here, HAGGLE! Once you have these quotes to hand try to barter with the insurers and challenge them to beat your lowest quote. We’ve already discussed how competitive the industry is and this is where you can take advantage and lower your quote even further.
- Consider specialist insurance companies – as well as getting quotes from mainstream companies don’t forget to check out those who specialise in young driver car insurance. Companies such as 4youngdrivers and Adrian Flux provide cover for many young drivers and are well placed to offer competitive quotes. Again use your influence as a potential customer to drive the price down as far as possible.
- Offer a higher voluntary excess –this is a useful tool but one that should be used with caution. By volunteering to pay a higher excess the cost of your quote will fall as there is less liability for the insurer. The important point to remember is not to set your excess at a level you could not comfortably afford to pay in the event of a claim.
- Limit your mileage – reducing your perceived risk is a major weapon in your arsenal for lowering car insurance premiums and limiting your mileage does just that. If you are on the road for a shorter amount of time you are less likely to be involved in an accident. By working out how many miles you will drive over the year and agreeing to stick to that limit it is possible to negotiate a further reduction in your premium. Be sure to leave yourself a few miles in reserve just in case.
- Pay upfront rather than monthly – in theory paying in monthly installments sounds like a good idea. In reality it can be very costly. Most insurers charge interest on monthly payments which increase the overall cost of your premium. Paying upfront may put a dent in your budget for a while but it is usually the cheaper option. Occasionally some insurers offer monthly payments that don’t incur any fees, if you can find a deal like this then great, if not it is better to bite the bullet and pay upfront.
- Insure third party only – if your car is worth relatively little you may want to consider only insurance yourself for claims made against you rather than covering damage and theft to your own vehicle. In some cases the cost of replacing a cheap vehicle may be less than taking out a comprehensive insurance policy.
- Drive safely, carefully and responsibly – I thought we’d finish with a nice easy one and this harks back to those young driver statistics we mentioned earlier. Sadly all young drivers get tarred with the same brush so by proving yourself to be a competent and trustworthy driver your premiums will fall. Avoid speeding tickets and other driving penalties and the savings happen sooner than you might think. Combine this with building up your no claims and insurers will soon be queuing up to offer you car insurance at a discounted rate.
