Why is it getting harder to find car insurance for young drivers?

A number of car insurance providers have ceased to cover less mature drivers, so it is now essential to search around for car insurance for young drivers. A spokesman for the ABI, The Association of British Insurers stated that the reasons that certain companies had ceased to insure younger drivers was simply that they were far more likely to make a claim than older drivers.

These claims accounted for a disproportionate amount of money paid out by insurance companies when compared to more mature drivers, this according to ABI representative Malcolm Tarling.

UK government statistics show that back in 2004 there were over one hundred and fifty deaths of drivers who were aged sixteen to nineteen.

As a result of what insurance company’s see as a greatly increased risk, they have steadily increased premiums to match that risk, but now many companies are simply turning their backs on providing car insurance for young drivers, and not issuing them with policies.

It has been very well documented that younger drivers are considered by insurance companies to be very high risk, they are not only more likely to be involved in accidents, and they are also more likely to be involved in accidents resulting in injury and death. Younger drivers are known to statistically drive at higher speeds, not obey traffic regulations, and drive in a more reckless manner than people of their parents age.

Over the past 30 years the number of young people driving on the countries roads has increased several times over, and with this has come an increase in risk to the insurance companies, this risk has been passed on in the form of higher premiums for
car insurance for young drivers, which is often paid not by the young person but by their parents.

The ABI has urged the government to take steps to protect young drivers such as imposing a mandatory one year learning period before obtaining a full licence.

The organisation also strongly suggests that parents should avoid taking out car insurance for young drivers using the old ploy that the young driver is an occasional user of the vehicle, when in reality they are the main driver, a young driver should only be added to the parent’s policy in this way when they are in fact, an occasional user of the vehicle.

The ABI say, that it is false economy to make such an addition to their policy as the younger driver is likely to make a claim, therefore, hurting the parents standing with the insurance company.

They went on to say that it is important that if the young person is the main driver, they should take out a policy in their own name, which may be more expensive at first, but if that young person is responsible driver they will over a period of years establish their own insurance record, thus reducing the premiums over time.

Therefore the bottom line is, car insurance for young drivers is becoming harder to find, and when you do find it, it will probably be more expensive, so it pays to shop around for the best deal available.

Youve now got your drivers license and for months, you eagerly search for a new car. Once you find your dream car, youre ready to take it out on the open road. Or are you? In many countries, it is compulsory to purchase auto insurance before driving on public roads and property. Auto insurance protects a third party against the financial consequences of loss, damage, or injury caused by any vehicle.

When first purchasing auto insurance, it is important to understand all aspects of the insurance. First off, an excess has to be paid. This is a fixed amount of money that must be paid each time your car is repaired through the insurance policy. A compulsory excess is the minimum excess payment that your insurer will accept. This varies according to your own personal details, driving record, and of course, insurance company. A voluntary excess is an excess that you agree to pay on top of the compulsory excess in case of a claim on the policy. A bigger excess reduces financial risk for the insurer, and thus they can offer lower premiums.

Depending on the location of the insurer, premiums may be government mandated or may be based on statistical data. The premium may vary based on many different factors that the insurer may deem will have an effect on the cost of future claims. These factors include gender, age, driving history, and usage of the car.

Because men average more distance driven per year than that of women, they have a higher proportionality of accident involvement. This leads insurance companies to offer lower premiums to women as opposed to men.

Teenage drivers have no driving record, and so they are less experienced on the road. This is the reasoning behind offering these teenagers higher driving premiums. However, these premiums may be lowered if the teenager decides to go through further driving training on the training that was required to obtain his or her license.

Car usage is also a large factor in determining premiums. By logic, it can be deduced that with more usage of the car, there is more potential for accidents, and thus more potential for claims on the policy. Insurers can estimate car usage by odometer, GPS, and OBDII (OnBoard Diagnostic) based systems. With the odometer system, customers buy prepaid insured miles and keep track of them on their odometer to determine when they need more. The GPS system tracks the usage of the car as it moves and records the distance it has travelled. The OBDII system works by utilization of the TripSense device. This connects to a computers OnBoard Diagnostic port, which is in all cars built after 1996.

Auto insurance may be both a blessing and a curse. Financially, it may save you a lot of money and keep you safe; however, auto insurance, like health insurance, can result in a lot of disagreement with the insurer and the insured. It may be wise to do you research before committing to one insurance program.

An excess payment is the fixed contribution you must pay each time your car is repaired through your car insurance policy. Normally the payment is made directly to the accident repair garage when you collect the car. If your car is declared to be a write off, your insurance company will deduct the excess agreed on the policy from the settlement payment it makes to you.

If the accident was the other drivers fault, and this is accepted by the third party’s insurer, you’ll be able to reclaim your excess payment from the other person’s insurance company. But what if the other driver is uninsured?

All motorists know that it’s a legal requirement (under Section 143 of the 1988 Road Traffic Act) to have insurance for any damage they cause to third parties. But still many drive without insurance. An estimate of the incidence of uninsured driving in the UK is hard to come by and, for the obvious reasons, those drivers involved in breaking the law have every reason to keep quiet about it.

Calculations from the Department of Transport suggest that in the UK around 5% of vehicles are being driven without valid insurance. This group of people not only impose costs on honest motorists in the form of higher premiums, but their presence on our roads also represents a serious risk to other road users. Consequently, uninsured driving is increasingly being regarded as a major social problem.

But driving without insurance is not a victimless crime. If you have an accident with an uninsured driver and the accident wasn’t your fault, the repair costs will be paid for by the Motor Insurers’ Bureau that’s funded in its entirety by the industry, or by your insurer. Therefore, if you’re involved in an accident caused by an uninsured driver you’ll eventually get you car repaired but you’ll still have to pay the excess and there’ll be no one to reclaim your excess from.

What is a Compulsory Excess?

A compulsory excess is the minimum excess payment your insurer will accept on your insurance policy. Minimum excesses do vary according to your personal details and driving record and by insurance company. Today the average excess is around 100, but younger drivers could be faced with excesses of up to 500 – whilst more mature, experienced drivers with a good driving record, could be offered an excess of just 50.

So what is a Voluntary Excess?
In order to reduce your insurance premium, you may offer to pay a higher excess than the compulsory excess demanded by your insurance company. Your voluntary excess is the extra amount over and above the compulsory excess that you agree to pay in the event of a claim on the policy. As a bigger excess reduces the financial risk carried by your insurer, your insurer I able to offer you a significantly lower premium.

The garage has repaired my car but it won’t release the car too me until I pay the policy excess to them. Is this right?

Yes, that is normal practice. But make sure you inspect the car when you collect it. Satisfy yourself that the repair is perfect. Then make sure you keep their receipt for your excess payment as you will need this if you’re reclaiming against a third party’s insurance. And just in case there’s a dispute, it’s a good idea to make sure the repair garage gives you a repair schedule. This will list all the repairs that were made to you car.

Although these days it’s pretty easy to arrange your car insurance online, comparing quotes at the click of a button and paying by credit card for instant cover, one ever present difficulty still remains: the high cost of insurance policies. The fact that having car insurance in place is both a legal requirement and a sensible idea doesn’t detract from the annoyance of having to pay what seems to be an exorbitant sum, and most of us would jump at the chance of reducing the bill.

To do this we need to know what factors insurance companies use when deciding how much our premiums will be.

Perhaps the most important influence on the level of your premium is your own history as a driver. If you’ve a history of having accidents, then naturally you’re a higher risk to the insurer and so they’ll charge you more. Worse, if you’ve been convicted of a motoring offence such as speeding or driving while under the influence, then your insurance will cost you even more – especially if your licence was withdrawn.

On the plus side, a history containing no black marks such as accidents will result in cheaper insurance as you build up a ‘no claims’ discount over the years.

The next most important factor is what kind of car you’re trying to insure. Naturally, more expensive cars will cost more to replace, and so the insurance will cost you more too. This isn’t the whole story though, as other features such as engine size, the availability of cheap spares, and the difficulty of repair will have an influence too. Finally, some models of car are well known for being easier to break into or steal than others – the insurance companies are well aware of this and will adjust their quotes accordingly.

How you use your car will also affect the price you pay for cover. If you rarely drive and have a low annual mileage, then your premiums can be cut as you’re on the road for less time, and therefore have less chance of needing to make a claim. City drivers may also have to pay more compared to those who drive in quieter areas.

Where you keep your car is important too – if you have a secure parking area, preferably one that keeps your vehicle out of sight and under cover, then your risk is lowered, as will be your premiums. Cars that are regularly parked at the roadside are at a higher risk of being stolen or involved in collisions, and so will be more expensive to insure.

One final point to cover is that of how attractive your car is to thieves, and not just in the obvious way of how desirable your vehicle is! An expensive car with a good security system including an alarm and window etching etcetera will be more of a hassle for criminals to profit from, and so is less likely to be stolen than a cheaper car with little or no security. Also, a car featuring plenty of gadgets such as an expensive audio system or satellite navigation will attract greater interest from potential thieves.

So as we can see, even though car insurance is an expensive business, it’s not always as simple as it seems, and by looking at what insurers want in a ‘perfect’ customer, you may be able to drive down your premiums.

Car insurance is one of the most expensive costs involved in driving a car, and it’s not something you can avoid – a minimum level of insurance is required by law. That doesn’t mean you have to blindly pay whatever your insurer quotes though, as there are several simple things you can do to reduce the cost of your premiums.

1)Shop around and buy online: Figures show that many people simply renew their current policies without shopping around. The internet makes it easy to compare prices from different insurers, so why not take advantage of this? Plus, you’ll usually get a discount of 10% or more just for buying your policy online.

2)Policy type: do you really need a comprehensive policy with all the extras? Going for a third party fire & theft policy can reduce your premiums hugely, and is definitely worth considering if your car isn’t an expensive model.

3)No claims discounts: Nearly all policies feature a discount that increases for every year you don’t make a claim. The higher the discount available, the more you could save. Also look at insurers offering a ‘no claims bonus for life’ feature, where your current discount level can be fixed forever, even if you have to make a claim somewhere down the line.

4)Excess: The excess on a policy is the amount of a claim you have to pay before the insurer pays the rest. Choosing to have a higher than standard excess level will usually mean lower premiums.

5)Security: Fitting your vehicle with an alarm, immobiliser, or other security devices can lead to premium reductions. Parking you car off-road, for example on a driveway or in a garage, will also mean a cheaper policy.

6)Pay annually: Many insurers charge you interest for the privilege of paying in monthly installments. Pay annually if you can afford it to avoid this, or look for one of the companies who don’t charge extra for monthly payment.

7)Mileage: The more mileage you run up every year, the more your insurance will cost. Even if you can’t reduce your mileage, make sure you’re not overestimating how much you actually do drive, and give your insurer an accurate figure.

8)Drivers: The more drivers you have on your policy, the more it will cost. Reduce the number of people insured to drive your car to the minimum possible, and try to get the policy in the name of a driver with the lowest risk profile. For example, if a car is driven by both a man and a woman, insuring it in the woman’s name will often result in a cheaper quote.