Young drivers bearing the brunt of higher premiums

Passing your driving test is an exciting time but young drivers are finding it increasingly difficult to find affordable insurance.

The recent increases in IPT (Insurance Premium Tax) disproportionately affect younger drivers who already have the highest premiums and there is no exemption being offered to young drivers who are seen as a high-risk category. They have also been affected by the change in the Ogden rate (see our previous blog for a more detailed explanation of the reasons for rising car insurance premiums).

Drivers between the ages of 17 and 19 represent only 1.5% of all licence holders in the UK, says the road safety charity Brake, yet they are involved in 9% of the traffic accidents that result in fatal or serious injury.

The charity adds that a quarter of all 18 to 24-year olds are involved in some kind of road traffic accident within just two years of passing their driving test.

Young drivers (under 25’s) may see their policy rise by as much as £1000 taking their overall annual car insurance cost to an average of £2000 or more. Car insurance is already at its highest level and these changes will only make it more difficult for many to be able to afford to drive, own a car and insure it.

Many are at risk of being priced out of driving altogether and this might make young people wait longer before learning to drive. Of course there is also a risk that young drivers might be tempted to drive without insurance or cut corners by taking out a cheap policy that doesn’t properly cover them.

There has been talk of a maximum premium for young drivers but this is unlikely to happen in the short term.

The biggest hike comes when you pass your test and become a full licence owner.

As a young driver, what can you do?

  • Downgrade your car to a less popular, smaller-engine model in a lower car insurance group (see http://www.parkers.co.uk/car-insurance/insurance-groups/)
  • Find a safer place to park your car overnight (insurance companies penalise you, for example, if you take your car to university and park it there as the incidence of car theft and break-ins is often higher in these areas)
  • Consider a telematics box policy (black box) which is like an electronic ‘minder’ in the car to limit the times when the car is driven, such as at night, as well as reporting on “how safely” the car is being driven (based on speed, cornering, acceleration, braking) – all which help to reduce the risk of a claim. These policies have been increasing in popularity in recent years and research suggests that you can save over £200 by taking out such a policy.
  • Check all the details are correct on your insurance policy and be honest!
  • Put an older, more experienced driver on your policy. It can help to lower the cost but they must not be named as the main driver of your car if that is not the case. (a practice known as fronting)

A-Plan can help find you an insurance solution

We offer the following products:

LEARNER DRIVER

Monthly pay as you go learner driver add-on cover with no risk to the parent’s no claims bonus.

visit: aplan.co.uk/learner

INSURANCE ON A FAMILY CAR

An alternative to being added as a named driver on a parent’s car insurance, still enabling the young driver to earn their own no claims bonus, with monthly payments available at 0% interest. visit: aplan.co.uk/newdriver

TELEMATICS

Competitive annual telematics policy with no night-time curfew or limited mileage endorsements. Also no increase in premium from provisional to full licence.

STUDENT DRIVER

Short term cover for students with a full licence on a parent’s or friend’s car, without risking their No Claims Discount.

For more information, please contact our specialist team in Oxford.

Find out more about our Young Drivers Insurance Solutions