How Much Is Car Insurance For A New Driver?
Car insurance for new drivers can be expensive. For the youngest new drivers between the ages of 17-20, annual insurance premiums average around £1,800 and while car insurance for 21-25 years old isn’t as expensive, it still costs on average more than £1,000.
Why is it so expensive for these groups? And what can you do to lower the premiums and get the best price? Read on to find out everything you need to know about car insurance for new drivers.
Why is insurance for new drivers so expensive?
Car insurance for new and young drivers is so expensive because they’re seen as high risk drivers. According to statistics they are more likely to be involved in an accident on the road due to lack of experience or because of poor standards of driving i.e. overconfidence, drink/drug use or mobile phone use.
This makes car insurance expensive because insurance premiums are calculated based on risk. For example the latest statistics from AA and the Department of Transport show that young drivers are a third more likely to die in an accident compared to more seasoned drivers and that 23% of all young drivers are involved in an accident in their first two years of driving.
Because of these statistics insurance companies raise their premiums to compensate for the fact that they are more likely to have to pay out.
Ways to lower your premiums
Having just paid for weeks (in some cases months) worth of driving lessons, a driving test and the prospect of maintenance, car tax and fuel on the horizon, expensive car insurance is the final nail in the financial coffin. As such, it’s important new drivers try to reduce the financial burden of motoring especially as the majority are young drivers without high income or much in the way of savings. Here are eight ways you can lower your premiums.
Consider black box insurance
Black box insurance, or telematics insurance, can be a great way to reduce your car insurance cost if you’re confident in your driving and don’t mind being monitored. Your insurance provider will monitor your driving behaviour and amend your premium based on how safely you drive. This means that your premium will decrease or even increase depending on your use of the vehicle.
There are three different devices that are used in this type of insurance:
- Black box – this is where your insurance provider installs a black box (like in planes) in your car, which is then used to track your driving through GPS.
- Plug-and-drive – similar to black box devices, plug-and-drive devices track your driving through GPS but rather than being installed by your insurance provider it simply plugs into a charging point/cigarette lighter.
- Mobile App – mobile applications also track your driving through GPS but don’t require any physical hardware installation and aren’t offered by all providers.
As you can see from the table below, black box/telematics insurance can lead to some huge savings for young and new drivers, with an average of over £800 saved for drivers between 17-19 and an average of nearly £400 saved for those between 20-24.
However, black box insurance may not be suitable for you because it could lead to an increase in premiums. As we mentioned before, If you’re deemed to be driving unsafely then your premium will increase and driving unsafely doesn’t just mean reckless driving. Here are three other ways your premiums could increase because of black box insurance:
- Driving at night or unsociable times – insurers can deem regular driving at night more risky due to poor visibility.
- High mileage – more time on the road is seen as higher risk.
- Driving busy roads – busy roads are seen as higher risk.
Look at smaller, less powerful cars
In order to get an insurance quote on your new car, you’ll be asked for details of the vehicle and choosing a cheaper, safer or less powerful vehicle will most likely result in lower premiums. This is because parts won’t cost as much to replace, it’s less likely to be involved in an accident if performance is restricted and it’s likely to be deemed less of a risk for theft as it’s less attractive to thieves.
To help you find a small cheaper alternative, here are some of the cheapest cars to insure in 2020:
- Citreon C1 – avg. £1,181 p/y
- Toyota Aygo – avg. £1,182 p/y
- Volkswagen Up – avg. £1,215 p/y
- Ford KA – avg. £1,225 p/y
- Fiat 500 – avg. £1,270 p/y
- Vauxhall Corsa – avg. £1,342 p/y
Add a named driver
Adding an experienced driver to your policy if you’re a new/young driver will show the insurer that it won’t just be you using the car, so the price will be reduced. This is because an experienced driver is a low risk driver, this will make you appear as a lower risk when calculating your premium as it won’t just be you driving the vehicle.
Remember: check the T&Cs of policies when shopping around online for any exceptions/limitations which may impact your decision.
Increase your excess
Excess is how much you can afford to pay towards the total for any repairs your car may need in the event of a claim.
Increasing your excess reduces your premiums because not only will the insurer have to issue less money when it comes to paying for repairs, but because it also increases your trustworthiness as a customer.
By setting a higher excess, it’s almost guaranteeing that you won’t make any superficial or false claims as you are more likely to be negatively impacted because you would have to pay the excess and see your premiums increase.
Remember: only set the excess to a figure you are certain you can afford. If you can’t afford your excess because you only setit high to reduce your premium, your insurer could refuse to process your claim.
Use a comparison site
Just like any savvy shopper would go to different stores selling the one item they need in order to get the best price, insurance comparison websites do this for you by working with multiple insurers and showing you the cost of each one after you’ve inputted your details.
Here are a few comparison sites you can use to get some quotes on your insurance. We recommend running quotes on them all to be sure that you get the cover you need for the price that best suits you.
When comparing quotes remember that the best value for money isn’t always the one with the cheapest price. Make sure to also compare the terms of the policies as some will differ in extent of the cover.
Remember: while comparison sites are good places to start your search, not all insurers are listed on them. DirectLine for example prides itself on not being listed on comparison sites.
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Store your car somewhere safe
Where you say you store your car impacts how much you will pay for insurance and you will be asked this when filling out your quote. An insurer will want to know whether or not the car is parked safely overnight and will ask questions relating to physical address and facilities.
If your address has off-street parking such as a driveway or a secure garage, you’re likely to receive a lower quote than if you’ve got to park your car on the street or away from the property because this will be deemed as a higher risk.
In the event that you have to park your car on the street, the insurer will likely use your postcode to quantify the risk of the area. This means you’re likely to be negatively impacted if you live in a city or a notoriously rough part of town.
Remember: safe always means lower risk and lower premiums. If you’ve got a garage but it’s too full to store your car, it might be worth having a good clear out to help reduce prices.
Drive fewer miles
Another question your insurance provider will ask you when filling out your quote is how many miles per year you drive on average. This will affect your insurance because the more miles you drive, the more likely you are to be involved in an accident. As a result your insurer will likely quote a higher premium.
However, driving fewer miles will have the opposite effect and reduce your premium. Find ways to save mileage by car sharing to work, walking/cycling when possible or taking public transport for longer journeys.
Remember: it’s important to be honest when starting your expected mileage or you may risk reducing your claim amount or even voiding your insurance.
If you can, pay upfront
How you pay for your car insurance can also affect how expensive your premium will be. You’ll be given the option to pay monthly or for the year once you’ve decided on a policy, and it’ll be cheaper overall to do the latter. However, this is only advised if you have enough saved up and can afford to do so, especially as the premiums are much higher for new and young drivers.
Monthly payments are more expensive than the flat annual amount because they are similar to finance payments where you receive the full cover but don’t pay for it all until the final month of your policy. This means for the months up to the final payment you will be paying interest. However, monthly payments can be beneficial because it spreads out the cost which is convenient if you have a lot of outgoings or simply can’t afford to pay all at once.
Will a driving course lower my premiums?
Advanced driving courses seek to further train drivers and help them become safer and more observant while on the roads. Examples of driving courses include the government backed Pass Plus and IAM RoadSmart.
While some insurers will recognise an advanced driving course as a step towards becoming a lower-risk driver and adjust your premiums accordingly, not all insurers are alike and others may not reward your effort.s
We recommend that you weigh up the cost of the course and the insurance together before making a decision. It might also be worth contacting the insurer beforehand to see where they stand or researching online to see if others have received a discount having completed a driving course.
Remember: even if the course doesn’t result in short term savings with a reduction in insurance, it may aid long term savings by helping you reach your no claims bonus.
How long will it take before my insurance price drops?
Unfortunately there’s no magic number when it comes to seeing insurance price drops, but usually the first three years of driving are the most expensive. With your first three years out of the way, you should notice your premiums steadily going down each year as you build up a no-claims bonus. This could even come as early as your first renewal, provided you don’t upgrade to a beefier car or change any details of your application that will negatively impact your quote.
Although a lot of people think insurance costs suddenly drop at the age of 25, this is not guaranteed. While it’s true that insurers may no longer classify you as a young driver and that insurance costs decrease in line with experience, what’s most important is that you continue to build up a no-claims bonus.
What’s a no-claims bonus?
So what is a no-claims bonus (NCB)? A NCB is something you build up over time as you continue to drive without claiming on your insurance policy. For example, an insurer may offer a five-years no-claims bonus where drivers who have driven for the last five years or more without claiming on their insurance will be eligible for a reduction in their insurance costs.
A NCB reduces your insurance premium because insurers will see you as less likely to make claims in the future. This means that the longer your streak continues the cheaper your premiums will become and a high NCB has been known to more than halve the costs of insurance.
Should you have a minor accident where repairs are perhaps less than the excess price you volunteered in the contract, you don’t have to make a claim and can keep your no-claims bonus. However, you’ll still need to report the accident for the insurer’s records otherwise you risk voiding your insurance.
However, if you were to be unfortunate enough to have an accident where you needed to claim on your insurance, your bonus would be reduced or completely cut depending on how long your NCB is. In the event of a claim, your no claims bonus will be reduced by two years as you can see in the table* below:
*figures shown may not be representative of all insurers’ conduct.
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Need more information to help you get started on the road easier? Check out our other new driver guides for everything you need.