What can younger drivers do to protect themselves from insurance premiums which are now threatening to price many off the roads?
New figures released today (February 8) lay bare the full and miserable picture they face. According to the Association of British Insurers, the average 18 to 21 year old will have to pay 10 per cent of their annual salary on cover which means that from January 1 until this week every penny they earn will be spent just on insuring a car.
The average comprehensive policy for this age group is £973 but those at the younger end and not yet old enough to have built up a good record will be paying easily into four figures.
With all the other costs such as financing the car, fuel and road tax let alone things like rent or accommodation it is no surprise that the proportion of them not owning one is now falling.
The insurance industry is calling for government help but in the meantime here are some steps you can take to limit your exposure to the worst of the cost.
Choose the lowest category car possible. Insurers have 50 `ratings’ and cars such as a Toyota Yaris or other superminis in the lowest groups have the lowest costs. Don’t just assume though that because it is small it’s cheap to insure. Various criteria are used including the cost of repair with parts and labour, security devices, anti-collision systems, likelihood of injury and so on.
Although some of the latest small cars have indefensibly poor safety standards and insurers will penalise you for driving them, as a rule of thumb the newer your car the more chance of it having better anti-theft and anti-collision systems so although it might cost more at the front end, the purchase price, it might work out cheaper overall because of lower insurance. It is certainly worth factoring into your decision.
The ratings are determined by Thatcham, the insurance industry’s research body, and if you register with it online you can find the rating for your car at www.thatcham.org
Pay-how-you-drive. It is a sad but incontestable fact that younger drivers lacking experience are a greater risk and create bigger claims from their insurer. This is the reason their policies cost so much.
`Black-box’ or telematics, are by now a well known way to achieve lower costs. A device supplied by your insurer is fitted to the car which tracks how, where and when you drive and provides data the insurer can access.
On their own they will not give cheaper cover and just because you have one fitted doesn’t mean the premium will go down; you have to prove you are a reasonable and safe driver. Speeding on rural roads at night time will indicate you are a high risk driver, keeping within the speed limit in daytime will do the opposite, and the insurer will know.
Rewards for good behaviour may not necessarily result in lower costs but you may get benefits such as an increased annual mileage allowance or a lower excess, which is the amount you pay on any claim. There can be significant discounts, perhaps of the order of 25 per cent, so make sure your preferred insurance company provides it.
With online comparison websites it is a simple job to check prices but be sure you are comparing like with like and that the T&Cs such as the annual mileage allowance, the excess or who is named on the policy are the same.
Two other things. Not every big insurer is on comparison sites but all will be on google or some such search engine and it only takes moments to fill in their forms and get a quote.
You may also look at multicar policies where two or more vehicles are insured. This can be work out considerably cheaper than having two individual policies.
Put your money where your mouth is. If you believe you are a good driver offer to pay a higher excess and this will lower the premium. The excess is the part of the total claim you pay and the higher it is the more incentive you have to drive safely; the more you do that the more you work towards the ultimate goal of all drivers, getting that No Claims Bonus which is probably the single biggest thing you can influence in reducing the cost of cover.
The amounts vary from company to company but the ABI says that if you don’t make a claim for a year you could be in line for a 30 per cent discount, rising to as much as 60 per cent for five-years.
It pushes up the price a little but this is nothing compared to the cost of your next premium if you make a claim and lost it. You should know thought that there are some alarming stories of drivers who had built up a good claim-free record and who sensibly paid a bit extra for NCB protection but were then hit with big rises when they renewed. Do check first that you will get what you pay for.
The less time you are on the road the less a risk you are to an insurance company so, without telling a lie which would invalidate your policy, keep the mileage you expect to drive in a year as low as possible when filling in your details.
Pay at once.
If you can, pay the whole amount at once rather than monthly. Insurers think of a monthly payment plan as a loan and will often add an administration fee and interest.
Haggle and don’t renew automatically.
The last and most obvious point. This is a ferociously competitive market and a buyer’s market so get a few quotes, see the one most suitable and then get onto the company and haggle. Do not agree to the first figure you get when the time comes to renew a policy but go to the big websites and do some homework. If you can save £100 or more for a 15 minute exercise it’s not a bad hourly rate is it!