GIOVENTU » Young drivers

Insurance premiums: enough to drive you crazy

A quick guide for young drivers (and their parents!)

For many young drivers, affording the cost of car insurance is more challenging than passing your driving test. 

Many younger drivers consider insuring in their parents’ names.  Equally, many parents who are often organising the insurance for their son or daughter also consider insuring in their name with their son or daughter as a named driver. 

What are the consequences of this and what is the best way to arrange affordable insurance for a young motorist? Read on…

Provisional Drivers

Some people have a misconception that you cannot insure a car unless you have a full driving licence; this is not the case.  Learner drivers can insure vehicles and the premium they pay is often similar (and sometimes cheaper) than the premiums for drivers who have just passed their test.  This is because some insurers rate the risk of a supervised learner driver lower than a new driver who is unsupervised.

If you are a learner driver, you do not have to insure in your parents’ name and can insure a car in your own name.  Below you will find an explanation of the advantages of insuring in your name.

Young Drivers with a Full Licence

If you are a young driver who has just passed your test, you may be itching to get on the road and drive.  Insurers see you as a very high driving risk, statistically you are far more likely to make a claim than a more mature driver and, indeed, that claim is likely to be more costly to the insurer.

Young drivers can get insurance though and it is worth comparing as many prices as you can from as many sources as possible.  It is also worth considering taking a pass plus course as car insurance with a pass plus discount can be substantially cheaper for a first time driver.

Vehicle Ownership and Fronting

Although insurers take differing views on vehicle ownership, as a rule of thumb the owner of a car should also be the policyholder.  This satisfies the principle of insurable interest.  Certainly the name driver of a car should be the policyholder.

Fronting

If a young driver owns a car and then insures it in a parent’s name with the younger driver as a named person on the policy, you are running a considerable risk.  Fronting, as it is called, is the practice of insuring in another person’s name just to get a cheaper policy.  It is fraud and, if proved, can lead to void policies which may mean claims not being paid, driving without insurance convictions for the young driver and even prosecution for fraud.

Many people ignore these risks but can easily be caught out when a loss adjuster reviews a claim - particularly if it is for a theft of a vehicle from a school or university!

No Claims Bonus and Younger Drivers

The main benefit of a young driver insuring in their own name is that they build their own no claims bonus.  No claims bonus scales give huge discounts.

Generally, after a single year of driving then the young driver can get a 40% discount off the following year’s policy, this is in addition to other discounts.  Those other discounts will include those for being a year older and having had a licence for a year longer too.  Another reason that the renewal will be significantly cheaper is that more insurers have schemes for drivers with a year’s no claims bonus.  More choice generally means better rates!

It is often the case that a young driver will pay less than half of their first year’s premium at renewal.

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