Wasim Bux is the Product Manager at personal motor insurance broker iGO4. Here, he answers five of the most frequently asked questions about car insurance for young drivers.
So, you’ve passed your driving test and have been out on the roads for a couple of months now, but you still can’t quite get your head around all of those car insurance terms your parents keep slipping into conversation. Although it can seem complicated, it’s important that you at least understand the basics of your insurance policy and how it works.
So, if you’ve got some unanswered questions about car insurance, read on to find out more.
Why do you need to have car insurance?
Under the Road Traffic Act 1988 it is compulsory for drivers of any age and experience level to be insured on all vehicles they’re driving, no matter what length of time this may be for. This is to ensure financial protection is given to others in accidents where the fault lies with you.
Insurance protects you from having to pay out of your own pocket for accidental damages to other vehicles, vehicle drivers, passengers and pedestrians, which could otherwise be extremely costly. However, it can also offer you financial protection in the event of damage, vandalism or destruction by fire to your own vehicle.
If you’re found driving without car insurance, you can be faced with a penalty fine, points on your licence or even disqualification from driving altogether. Your car may even be seized by the police, so don’t ever be tempted to drive without insurance.
What types of car insurance cover are there?
In the UK, there are three main types of car insurance available. These are comprehensive cover, third-party insurance, and third-party, fire and theft insurance.
Third-party is the minimum requirement that everybody must have. It will offer you cover for any damage or injury your vehicle causes to other people or their property. However, this doesn’t give you any financial cover if there are damages to your car.
Third-party, fire and theft covers any damage, loss, theft or destruction by fire to your car. This is in addition to standard third-party coverage which helps you to cover the cost of damage to other people, their vehicles and property.
Comprehensive is the most extensive policy offered by a car insurance provider. Not only will it cover damage to your car from crashes, floods or theft, but it will also cover any damage to other cars and property caused by collisions.
It’s easy to assume that comprehensive will be the most expensive type of cover, but this is not always the case. So, shop around and always check the price difference between the cover levels.
Why is car insurance more expensive for young drivers?
With so many car insurance providers and policies to choose from, you should never find yourself paying extortionate amounts anyway. But, in general, young drivers do cost more to insure. This is because they are considered to be higher risk, due to their lack of experience. This comes from yearly driving statistics that show drivers under 25 are significantly more likely to be involved in accidents than those over this age threshold.
With this in mind, insurers calculate the costs of young drivers’ car policies to reflect this increased risk. This also encourages these drivers to be more sensible on the roads, to get these costs down quicker.
What are premiums and excesses?
The most basic terms you need to understand when it comes to car insurance are ‘premium’ and ‘excess’.
When you sign up to any car insurance provider, you’ll be required to begin paying a premium, which is a set amount you pay for the policy coverage. This can vary in cost depending on a number of factors, including the extent of the coverage you choose. However, your premium can also be influenced by things outside of your control, such as the type of car you’ll be driving in, the area you live in and what you’ll be using the car for.
Your excess is the amount you have to pay when you claim on your car insurance, and this can be made up from both a compulsory and voluntary amount. Your compulsory excess is a set amount given by your insurance provider, while your voluntary excess is the amount you choose to contribute yourself, often this will help reduce your premium.
Many car insurance providers will offer no-claims discounts which can shave a good amount off your premiums. This is a reward given to drivers who haven’t made a claim on their insurance policy for a given number of years. Normally, the most significant discount is seen from 0-1 years, with a 5-10% discount for each year thereafter. It is usually capped at 9 years, although some insurers do offer longer reward periods.
How can I reduce my car insurance premium?
As well as the previously mentioned no claims discount, there are many other ways you can gradually reduce your car insurance premium. But, to benefit from these, you need to prove you’re a responsible driver.
Modern technology like dash cams and black boxes can be particularly helpful in proving that you’re not a high-risk driver, which is why they’re particularly popular options for young drivers. Black boxes are installed in your car as a way of monitoring your driving quality and sending this information across to your insurance provider, so they can reward you for sensible and accident-free driving. Dashcams record everything that is happening outside of the car, so can be useful as evidence for accidents where the fault has been wrongly judged to be yours or can’t be determined.
You may also benefit from lower premiums by undertaking Pass Plus lessons, which will teach you how to drive on the motorway, in harsh weather conditions and in the dark. Your insurer may take these extra skills into account, which could lead to a lower insurance cost.
Getting to grips with car insurance is crucial for all drivers at some point or another. For newer drivers, ensuring you know the basic terms and rules for car insurance will protect you from potentially massive costs if you have an accident as well as from breaking the law; it can also help guide you to become a better driver. So, brush up on your knowledge with my answers to these 5 commonly asked questions.