Reducing Insurance Costs for Young Drivers

Car insurance is a significant expense for young drivers. We look at how you can keep the costs down.

In our most recent post, we pointed out how much things had improved for young drivers — because today, they have a range of fantastic little cars available in which to gain driving experience. But it’s not all good news. Getting yourself on the road has become much more expensive, with the average new driver spending around £7,000 in their first year.

A hefty chunk of that money goes on insurance. According to moneysupermarket.com, the average 18 year old can expect to pay £1,109 for fully comprehensive car insurance. Things are no better by aged 21 (£1,078), and it’s only really by age 24 that things start to improve (£876).

How can they get away with charging so much?

If you’re a young driver having to stump up around £1000, you might be feeling victimised. After all, you’re not a maniac, you drive pretty sensibly… why should you be singled out for high premiums?

It all feels like some global plot hatched by jealous oldies.

However, high premiums for young drivers are based on nothing more than cold statistics. The Road Safety Charity, Brake, has some sobering statistics:

  • One in four 18-24 year olds (23%) crash within two years of passing their driving test
  • Drivers aged 17-19 only make up 1.5% of UK licence holders, but are involved in 9% of fatal and serious crashes where they are the driver.

Research shows that the reasons behind these stats are pretty much as you’d expect: young drivers lack the experience to assess hazards, they tend to be overconfident about their ability, and they’re more likely to take risks.

Insurance companies calculate the average level of risk for your demographic group and set the insurance costs to match. So even if you’re the most skilled, risk-averse young driver imaginable, you’re still going to be penalised for the risky driving of your peers.

Reducing Your Insurance Costs

Fortunately, there are some ways in which you can really reduce your insurance premium. Here are our top three:

1. Pick the right car

Picking the right car can save a bundle on insurance. Cars in the UK are ranked into insurance groups, ranging from cheap-as-chips Group 1 all the way up to Group 50. For new cars, groupings are calculated according to the vehicle’s cost, performance, safety, security, repair costs and other factors.

Note that even within an insurance group, there can be some big variations. Helpfully, thisismoney.co.uk recently listed the ten cheapest cars for 17-24 year olds to insure. We were delighted to see the Volkswagen Up! top the list and the Skoda Citigo come in third — they’re two of the cars we picked as perfect VW cars for young drivers.

2. Compare the rates on all classes of insurance

To reduce costs, it might seem logical just to search for ‘third party’, the most basic type of insurance cover. But this isn’t usually the cheapest option for young drivers: in fact, fully comprehensive is often more economical. The reason is that third party insurance is often chosen by young drivers who are greater risks (for example, if they’ve already had a crash), and insurance companies push the prices up to compensate.

Therefore, young drivers worried about costs should always compare all the types of insurance. If you can get comprehensive cover for less money, make the most of it!

3. Add a named driver to your insurance

Adding another named driver to your insurance can often reduce your premium. The insurance company assumes, reasonably, that the younger higher-risk driver will be spending less time behind the wheel. So, provided the named driver is a lower risk, this should reduce the premium.

Surprisingly, only a third of younger drivers use this. Maybe they’d rather pay more and keep their parents out of their pride-and-joy!

What about telematics?

Telematics involves having a ‘black box’ fitted to your car that transmits detailed information to the insurance company about how the vehicle is being driven. For example, telematics data shows the insurer information about the car’s speed, braking and steering patterns, time of travel and much more.

Black boxes have been fitted to well over a million UK cars. Their principal advantage for younger drivers is that insurers may offer a much lower premium. As we noted above, young drivers can be penalised because the average risk for their age group is higher. The black box gives you a chance to demonstrate directly to the insurer that you’re a lower-risk driver. Keep your speed down, brake smoothly and take corners at a reasonable speed and your insurer will know it!

Reductions for telematics insurance can be really substantial — one source suggests around £800 a year for 17 to 19 year olds.

However, there are a number of potential downsides to using telematics:

  • Some young drivers just don’t like the idea of the insurer ‘spying’ on their driving. For them, it’s just another example of corporations monitoring every aspect of their lives — especially when one of the great joys of driving is about the sense of freedom.
  • You could get an unexpected increase in your premium if you stray outside of your policy’s assumptions. For example, you might have anticipated driving 3,000 miles a year, but a trip to Scotland with your friends bumps that up to 4,000. The black box will inform your insurers and your premium could rise as a result. Of course, that’s fairer for the insurer, but you might not see that as an upside!
  • The black box monitors the vehicle, not the driver. That means that if you share the car with a more careless driver, you’ll pay the penalty.

Telematics remains one of the most effective ways for younger drivers to reduce their premium. Just be aware of the possible downsides.

Once you’re on the road…

So you’ve picked your first car, you’ve clenched your teeth and paid the insurance. Now all you need to to is keep it in shape. And if you’re in the Cardiff or South Wales area, there’s good news. Welsh VW Specialists is an independent garage specialising (as the name suggests!) in all the VW group marques, including Audi, Volkswagen, Skoda and SEAT. We provide services, repairs and MOTs, delivering a main dealer level of care at affordable prices. To book your vehicle in, or for any enquiries, get in touch.