Young drivers pay the most for car insurance across all demographics. From an underwriting perspective the reason is clear, that young drivers are statistically more prone to not just having an accident but more serious claims that involve a high personal injury cost.
According to the Association of British Insurers (ABI), drivers aged between 17 and 24 are involved in 24% of all fatal accidents yet they only account for 7% of all UK driving licence holders.
In fact, the average claim cost for drivers aged 18-20 is around £5,500 whereas the claim cost for drivers in their 50’s is nearly half that. There are similar number for claims frequency, where around 9% of young drivers make a claim with their insurer as opposed to around 5% for people in middle age.
As a young driver, your cost is still going to be relatively high until you have earned some No Claims Bonus and aged a few years but there are still a number of steps you can take to keep your cost as low as possible.
Buy a low insurance group rated car
The insurance group of the car is probably the biggest rating factor that affects the cost of young driver insurance. The higher the group, the higher the price of your insurance and vice versa.
Each car is placed into one of 50 insurance groups based on a number of factors including the engine size, acceleration speed, performance of the car, cost of replacement parts and cost of repairing the vehicle.
Insurance underwriters use these insurance groups to apply a price weighting to each group number. However, they also combine driver age with insurance group and apply a much larger price the higher the car group and the younger the driver. For example, an experienced driver in their fifties will pay significantly less for driving an insurance group 20 car than an eighteen-year-old driving the exact same car.
Young drivers should opt to purchase a group 1 rated car or at least a car that has a group rating of below 5. The lower the group the better.
Source: Admiral Insurance
Add a named driver
You can often reduce your cost by adding an older and more experienced driver as a named driver on your policy.
From an underwriting point of view, having a named driver means that you, the inexperienced driver, will likely not be driving the car as much, which means there is less chance of you having an accident, reducing the insurance risk.
However, be careful not to add a named driver who has previous driving convictions and/or a history of making claims. All named driver details will need to be declared to the insurer when doing the quote and could actually have a negative impact.
If you’re thinking that you can make another older driver the main driver in order to reduced your costs then don’t. This practice is known in the industry as fronting and considered to be insurance fraud, the penalties for which can be severe.
Fronting often happens where a parent is stated as the main driver of the car but in fact it is their son or daughter doing the majority of the driving. Insurance companies are very wise to people trying to game the system in this way and they will cancel and invalidate your insurance if found out. Getting your insurance cancelled is a sure way to ruin your credibility with insurers and obtaining insurance in the future will become much harder.
Opt for a telematics (black box) policy
In order to try and help young drivers get cheaper cover, many insurers now offer telematics policies, also known as black box policies.
A telematics policy involves a box shaped device being fitted to your car. Depending on your exact model and year of manufacture, the device can be fitted by yourself or if not, the insurer will arrange for someone to fit it for you.
The idea behind telematics insurance is that the box will enable the insurer to track a number of key risk indicators that help calculate your insurance cost. The data collected can include:
- Exactly where you drive based on GPS technology
- Where the car is located at any point in time
- The exact dates and times of the day you have been driving
- How fast you drive and how quickly you accelerate
- How well you use your brakes
- How well you take corners
- How many miles you drive on motorways and other road types
- Your overall mileage and how many individual trips you make
- Your overall driving style in order to calculate your insurance price
Advantages of telematics black box car insurance
- Insurance cost can work out cheaper for young drivers
- Can help young drivers improve their driving skills and behaviours
- Can help prove liability with claims
- Curfews and other restrictions can help reduce risk and accidents
Disadvantages of telematics black box car insurance
- Starts to become more expensive as you get older
- Mileage restrictions may be enforced by insurer
- Adding additional miles to your policy may be costly
- Some policies may have night driving curfews
Overall, a telematics policy will likely benefit a young driver in helping to keep down insurance costs. Some insurers may only offer a telematics product to drivers under a certain age. Comparison sites will usually include both telematics and non-telematics policy types, so comparing prices is made easy.
Avoid car modifications
Anything that changes the original specification, alters the performance or increases the desirability of the vehicle, will likely attract an increase in your insurance.
All Modifications (mods) must be declared to your insurer when doing the quote or before you add the mod. Failure to declare all mods can result in your insurance being cancelled and any claim invalidated.
The worst offenders as far as underwriters are concerned are anything that changes the engine and performance, particularly if it increases the overall speed of the car or the acceleration rate. You may even find that some insurers will refuse to offer a quote due to the mod changing the specification and affecting the overall insurance group rating.
Adding a spoiler, bodykit or even changing the paintwork can also increase your insurance due to making it more attractive to thieves. The increase in price for mods will be higher for young drivers as a percentage price weighting will increase the overall cost more due to the high starting point cost for young drivers i.e., a price weighting is not a specific amount for a mod but a percentage added or discounted from your current price.
It sounds obvious but spending time shopping around for a better price can yield big savings. Not all underwriters think the same way and each insurer will have their own statistics and view on what price to charge a specific risk.
Comparison sites are an easy way to garner the view from large parts of the insurance market without having to visit each insurer’s website. Always try at least two or three comparisons as some sites may have unique rates that they’ve negotiated for their own customers. Some sites may also have certain insurers or specific rate schemes that only a few other comparison companies have access to.
Drive safely and build up your No Claims Bonus
By far the best way to keep your insurance costs down is to build up your No Claims Bonus (NCB) or No Claims Discount as it’s sometimes called.
NCB is the largest rating factor affecting how much discount your insurance gives you. Even just one year of NCB can give you up to 25% discount on your price with 5+ years NCB giving you up to a whopping 75% discount.
You earn No Claims Bonus by not causing an accident and not making a fault claim. You get one year of NCB for every full year of driving claim free and you can take the No Claims Bonus you earned with you when you change insurance companies. Many insurers will cap their NCB discounts at 5 years but some go up to 9 years or even a bit more.
Underwriters like customers who have lots of NCB as it indicates that the person is a good driver who does not claim. As a result, you will find that insurers are competitively priced for these risks. Your goal as a young driver is to be in this enviable position of having lots of NCB and cheap rates being offered to you.
Therefore, the bottom line is to get a low insurance group rated car with no modifications, add an older and more experienced named driver, shop around for the best price on telematics policies, drive safely and keep accident free in order to build up your No Claims Bonus.