How young drivers can cut insurance costs

If you’re a teenage driver you’ll know already that the cost of car insurance is high - but did you know that a recent EU ruling on gender discrimination could send some teen premiums even higher?

Insurance providers base their quotes on the likelihood of you making a claim. One way they do this is by looking at how much driving experience you have; assuming that the less experience you have the more of a risk you pose.

Obviously this is bad news for teenage drivers who are seen as high-risk, and therefore attract high premiums to match.

For example, a newly-licensed 18-year-old man driving 10,000 miles a year in a 2005 Ford Fiesta could expect to pay at least an eye-watering £6,016.02 for insurance, according to our research.

Female drivers tend to attract lower premiums than men, but a recent ruling at the European Court of Justice could see the cost of their motor premiums shooting up.

Here’s a look at the new ruling, how it will affect teenage motorists and what all young drivers can do to lower motoring costs without falling foul of the law…

What was does the ruling mean?

The European Court of Justice’s ruling last week means that, from the end of 2012, car insurance providers will no longer be able to let a customer’s gender influence their premiums, marking an end to the car insurance battle of the sexes.

For the ladies, this means that you can no longer expect to pay less than your male counterparts for car insurance. For men, who are seen as statistically more likely to make an insurance claim, you can expect the cost of insurance to go down by around 10%.

Who’ll pay more?

If you’re a woman under the age of 26, then unfortunately you will be hardest hit by the ruling, which comes into force officially on December 21, 2012. insurance expert Julie Owens predicts that prices will begin to change before that date though.

Julie said: “Although the ruling doesn't come into force until December 2012 it is likely we will see a convergence in pricing over the next 18 months.”


Don’t cut corners to cut costs

Of course there are various things all young drivers can do to make sure you get the best car insurance price for your own personal circumstances, and the level of cover you need.

Adding an older, more experienced driver to the policy as a named driver is a perfectly legitimate way of lowering the cost of cover.

However, parents and their children should be warned against ‘fronting’ the policy to lower the cost of car insurance.

Fronting is when someone registers themselves as the main driver on a policy to lower premiums, when in fact their son, daughter or other less-experienced driver is the genuine main driver of the vehicle.

If the insurance provider discovers your policy was being fronted while processing your claim, they could reject it because the premium they quoted (based on risk they assessed) was not based on correct information.

Worse still, you could be found to be driving without insurance, an offence which could land you with a £200 fine and see your license endorsed with six penalty points. car insurance expert Steve Sweeney said: “Fronting is illegal and will be classified as fraud by an insurer. Those considering lying to their insurer to save money are playing a very risky game. A motorist claiming to be the main driver - when this isn't the case - is a dangerous move. It may save you some money but if caught, your insurance will be invalidated and a younger driver could face court, charged with driving without insurance.”

Not everyone realises fronting is illegal though, with Motor Insurer’s Bureau and Aviva research showing that 35% of drivers believe that fronting is a legitimate loophole in the law.

Reducing the cost of cover

A better way of lowering your costs is to compare car insurance policies to find the most suitable cover for you for the best price possible.

You might also want to install security equipment like a steering wheel lock, which can help to reduce premiums if they are Thatcham-approved.

Minimising the amount of optional extras you buy with your policy can lower the cost of cover, but you should carefully consider what extras you need before opting out of legal expenses, for example.

Even something as simple as keeping your car locked in a garage overnight will reduce the risk of claim in the eyes of your insurer, and should be reflected in cheaper premiums.

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