Drivers between the ages of 17 to 25 years old must pay much higher premiums for car insurance than older drivers. This is because, statistically, they have more accidents, which makes them a higher risk for the insurance company. Almost a quarter of accidents involve at least one driver who is between the ages of 17 and 42.
Before 2012, young women paid lower car insurance premiums than young men the same age. However, the Gender Directive was implemented at the end of 2012, which stops insurers from quoting prices according to gender. The cost of insurance went down for some young men and rose for some young women.
There are several ways to pay lower premiums. Telematics is one way that has been introduced by some insurance companies. Called Black Box insurance, a device is fitted to the car that records data about the driving style as well as when and where the driver drives. This allows the young driver to pay premiums based on their driving record and not on the statistics of all young drivers.
The box is about the size of a deck of cards and contains a global positioning system (GPS) system that monitors the average speed, time of day when the majority of driving is done, mileage, braking, accelerating and cornering. This data is sent to the insurance company via satellite. The insurer will calculate a score based on the data and, if the driver drives safely, the premiums will be lowered.
If the young driver does not have an accident where they need to make a claim to their insurance company, they may get a discount on their next premium when the time comes to renew the insurance.
Cars are categorised into insurance groups. Some are considered higher risk than others, and the driver has to pay higher premiums. A small car with a small engine is categorized as a low-risk vehicle, and the driver will get lower premiums.
Modifications such as spoilers, fins, racing stripes and other extras will most likely result in higher premiums.
Young drivers who have passed a PassPlus, IAM or Max Driver qualification will get as much as 25 per cent off their insurance premiums with some companies.
Drivers who adhere to certain security measures pay lower premiums. These measures include:
Adding an older driver to the insurance policy of a young driver can reduce the premium. However, a policy that incorrectly names an older driver as the main driver when the main driver is actually a young person is called Fronting and is illegal. Insurance companies are always on the look-out for Fronting.
If a young driver has an accident and needs to make a claim, and the insurance company prove Fronting has been the case, the driver will not be covered by insurance, the parent could lose their no-claims bonus, and, it is possible, the insurance company could sue the parent for fraud.
The excess is the amount the driver pays in the event of an accident, before the insurance company starts to pay. The amount of the premium may depend of the amount of the excess. If the excess is high, the monthly payments of the premium can be lower. The risk in having a high excess is not having the required funds in the event of an accident. It is recommended to put aside the excess amount as a safeguard when opting for a higher excess to lower monthly payments.
When young drivers are looking for car insurance, they should consult several different providers. The cheapest policy may not be the best. It is important to understand exactly what the policy covers and compare the prices of policies from different providers that cover the same things.
It is also important to make sure the policy covers all the requirements of the driver. This includes the amount of excess that must be paid. A cheap policy could actually end up being very expensive if the amount of excess is more than the driver can afford.
If young drivers are not able to find affordable insurance online, it may be worth talking to a broker to learn about more options.