Car insurance for teenagers and young adults

It’s good to be young, but not if you want to insure a car. All of the statistics show that as a group, teens pose the highest risk to auto insurers. While some are good, safe drivers, others are a complete hazard.

Drivers aged 17-24 make up just 7% of UK license holders and drive fewer miles than average, but are involved in 24% of all fatal crashes, according to the Association of British Insurers ( ABI).

Even the cost of insuring a modest small car is high. For example, looking at data provided to us by Compare The Market between June 2021 and May 2022, an 18-year-old who lives in the North West of England and obtained a full UK license at last year was looking at an average £1,402 year for an entry-level Fiat 500.

The only way to get a good insurance record is to keep driving safely and, over time, accumulate a no-claims discount, but while the first few years will be the most expensive, there are ways to reduce the bill.

The starting point is to choose a low-powered, low-value (but still safe) car from a low insurance pool. Then apply one of the price reduction factors for anyone insuring a car: park off-street if you can; lower the mileage and specify a higher deductible.

Who drives ?

It can be tempting for a parent or senior citizen to pretend they are the primary user of a teen’s car to save money on insurance premiums, then add them as a named driver. . But if the younger person drives it regularly, it is illegal. Insurers call it ‘fronting’. If an insurer discovers that a person is guilty of facade, their policy could be declared invalid and they could be forced to pay all costs resulting from an accident. It can also lead to criminal convictions.

Conversely, if the young driver can insure their own car, adding an older, named driver to the policy may reduce the premium, as the risk is spread. Going back to the example of the 18-year-old in the Fiat 500, the average premium with a relative added as a named driver reduces the average from £1,402 to £1,297.

Black boxes

It is agreed that the best way for young drivers to lower their insurance is through telematics car insurance policies, often referred to as “pay how you drive” or “black box”. Telematics policies primarily use GPS technology to measure a vehicle’s driving. Insurers then use this information to make risk decisions based on driving performance. This information is taken into account along with other traditional risk factors, such as the driver’s age and place of residence, to set premiums. “Safe” drivers will generally receive lower premiums than “less safe” drivers.

Many young people are reluctant because they feel spied on, but if they are safe driving, black box insurance will be the best option. According to analysis by compathemarket.com in May 2022, more than three-quarters (78%) of drivers aged 17-20 could save an average of £1,137 by choosing a telematics policy over a conventional car insurance policy .

There are specialized insurers who take care of young drivers. One of the oldest, Marmalade, offers specific nominative insurance for young drivers. It has a telematics policy for driving a parent’s or grandparents’ car (a beacon and app know who is driving), it also has a telematics policy for young drivers in their own car as the primary driver .

Term insurance

For many young drivers, an annual insurance policy may not be necessary, and that’s where the growing market for term or pay-per-mile car insurance comes in. For example, many young people may only want to use a car when they get home from college or university.

Again, Marmalade uses a black box for its Pay as You Go insurance policy on a relative’s car. You start with 500 miles and arrange an automatic top-up from 100 to 500 miles when there are 50 miles left. Unused miles are valid for one year. Prices start from £175 for 500 miles – with top-ups from £18. The driver always earns a claim-free bonus for a year without a problem. Another company, go shorty offers fixed term auto insurance for 18-75 year olds from one hour to 28 days to drive cars you don’t own.

For more information visit the Association of British Insurers website and see the section on young drivers.


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Justin D. O'Neill