Andy Leadbetter, Head of Motor and Home Insurance
Legally, you might be able to learn to drive when you reach the age of 17, but for many teenagers it may be financially prohibitive. Not only is there the cost of lessons and at least one driving test to factor in, but the price of insurance for young drivers can be astronomical.
Research from moneysupermarket.com found that an 18-year-old single male driver with a 10-year old Ford Fiesta in the Leeds LS18 postcode area would have to pay £3,167.69 for comprehensive car insurance annually. However, if the same driver waited three years and began driving aged 21 he would pay just £1,686.89 - that's a saving of nearly £1,500 a year, just for being a few years older.
Why do young drivers face higher car insurance premiums?
Unfortunately, young drivers pay the price for the reputation of their peers. Research shows that every day Britain's roads witness four fatalities or serious injuries as a result of accidents involving young people. It is estimated that the country's 18-year-olds alone cause 50 collisions a day - that's more than three times as many as drivers in their 50s.
Young males have been tarnished with the boy-racer image and they pay the highest premiums. An 18-year old male living in Manchester and driving an X-reg Peugeot 206 would pay £1,550 a year more for comprehensive cover than an 18-year old female, living at the same address, driving the same car.
Cars driven by young people are also more prone to theft and vandalism as crime rates are higher among their age group. University towns and cities generally report higher crime rates than other towns and rural areas. As a result students pay the price of having a car while at university, as do other young drivers who live in or around student areas.
Insurers calculate premiums on perceived risk - the higher the risk, the higher the premium - and the bad news for young drivers is that the odds are stacked against them. Insurers measure risks in different ways however, so it's important to shop around as premiums will vary.
Slash your car insurance premiums - pick your policy carefully
There are three policy options available to all drivers - third party, third party fire and theft and comprehensive cover.
Typically, experienced drivers are better off taking out a comprehensive car insurance policy to cover themselves for all risks and scenarios. However, the cost for a young person taking out comprehensive cover will be very high, and in many cases the cost of insuring the car for a year, will exceed the vehicle's value. Third party, fire and theft could therefore be a better option, particularly if you are driving an older vehicle.
For example, an 18-year-old male who lives in Cardiff and drives an eight-year old Nissan Micra, would pay more than £3,000 for a comprehensive policy compared to £1,617.15 for the cheapest third party, fire and theft deal.
To drive legally in the UK you only require third party cover. These policies cover any damage to a 'third party', but do not cover you or your car - so basically there is no insurance for personal accidents or damage to your vehicle, nor will it pay for a replacement if your car is stolen. With third party, fire and theft you do have protection in case your car is stolen or is set alight.
Other ways to save on your car insurance
The premiums mentioned above, all assume that the car is parked on the road at night. However, there are steps youngsters can take to bring the cost of their premiums down. The three main ones are undertaking a Pass Plus course as soon as you pass your test, including a parent on your policy as a named driver and parking your vehicle in a garage overnight. These steps alone can cut premiums by hundreds of pounds - for example an 18-year-old female Citroen Saxo driver in London could knock more than £600 off her premium with these steps alone.
Here are some additional money saving tips:
- Shop around - The Association of British Insurers estimates you could save as much as 35% on car insurance by simply shopping around. Use a car insurance comparison website to compare rates.
- Buy online - The majority of car insurance providers offer discounts to customers that buy policies online.
- Mileage limit - Agree to a mileage limit or to only drive at certain hours of the day (such as avoiding rush hour). Norwich Union offers a pay-as-you-drive scheme which reduces premiums by around 21% if youngsters drive only during off-peak hours.
- Car security - Add Thatcham-approved car alarms to earn discounts.
- Drive a car with a smaller engine - Think about the car you drive. A newer, reliable car that is less likely to be used by 'boy racers' will earn cheaper premiums.
- Do not let parents 'front' a policy - Though adding a parent as a named driver is a good money-saving tactic, don't insure the car in the parent's name with the son or daughter as a named driver. If the insurance company finds out, you will invalidate a claim and could be charged with fraud.
For more money-saving ideas check out our car insurance guide.
Have your say: What is your experience of being a young driver looking for insurance? Do you feel unfairly treated or do you think that the statistics prove a point and the premiums are fair? Are you a parent who has found cheap car insurance for their son or daughter? How did you find the best deal? Visit our community forum and let us know.
Disclaimer: Please note that any rates or deals mentioned in this article were available at the time of writing.
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