So you have found the car of your dreams, you have saved up a deposit and you are ready to get those wheels and drive off to experience new adventures and fun in the sun. You have heard that car insurance for young drivers is expensive but when you find out just how expensive, the dream seems very far away. What can you do to reduce insurance costs as a young driver?
At Hippo, we have seen quotes of well over £2,000 per year for car insurance for young drivers. While the high cost of car insurance when you are a young and a relatively inexperienced driver with a limited driving history seems absurd there are some good reasons why they are inflated and if you understand the reasons you can often lower the cost.
Young drivers, particularly those under 25 have a disproportionate amount of accidents. This is just a fact unfortunately and is often driven by a few irresponsible young drivers who raise the premiums for all young drivers but there is very little that you can do about this fact. What you can do is look at how Insurance companies price for risk and “play the game” so that the premiums come down.
How your car affects your insurance premium and steps you can take to reduce premiums.
Less expensive cars More accidents mean more cars written off and expensive repairs. It stands to reason then that if you elect to lease or purchase a less expensive car then the insurance company does not need to cover as much outlay if there is an accident. Bottom line- if you get a less expensive or second-hand car, your premiums are likely to be reduced.
Engine Power Insurance companies reason that if you have a more powerful engine then the car can both do a higher speed and get up to speed quicker. The more powerful the engine – measured in cc capacity and also in its 0-62 mph time, the more expensive the insurance because insurance companies build in a higher risk that accidents are likely to be more severe in higher powered cars.
Safety matters So safety is a key factor for car insurance companies. The safer your car for drivers, passengers and pedestrians, the less likely they are to receive an astronomical claim for an accident from you or members of the public. Most insurers build in NCAP ratings into their calculations for the insurance premium to will pay so be sure to pay attention to the cars NCAP ratings, particularly for drivers and passengers.
Car part prices and labour costs are also key If the car you select is a premium car then its likely that replacement parts will be more expensive than a less premium car. Along with more expensive parts often comes more expensive labour costs where the workshop needs to invest in more expensive equipment (often by manufacturer),more in-depth training and more complex cars often take longer to fix. All these costs add up and the insurance company will put this into the premium.
Secure and safe equals reduced premiums Theft of cars is unfortunately still prevalent and all car owners pay more in insurance because of thieves or individuals that damage cars. If you have off-street parking, your insurance company will assume that there is less likelihood of theft but also of damage to your stationary car on the street and will reward you with a lower premium. Cars fitted with alarms also benefit from an insurance discount so if your car does not come with an alarm, consider fitting one.
How your own choices affect your insurance premium and steps you can take to reduce premiums and make them more affordable.
Add a more experienced driver to reduce your premium It is an unusual fact but if you add a more experienced driver ( preferably with a good driving record) to your policy, you can benefit where the insurance company reasons that this driver will be using the car sometimes so the overall premium can be reduced. Young drivers often add one of their parents to the policy to benefit from this little known fact.
What level of insurance cover do you really need? This is a difficult one as you will need to decide if you want comprehensive or just third party cover for your vehicle, which only covers third parties and does not cover you for damage to your own car. It’s difficult because most car finance funders will insist on comprehensive insurance as the only type of car insurance they will accept and will often ask for proof of comprehensive insurance. Make sure that you can opt for a third-party level of cover before going for the cheaper option.
Black box/telematics equals reduced premiums. Sure, it feels all a bit “big brother” but having a black box or telematics fitted to your car allows insurance companies to monitor how you drive and reward you accordingly. They can also stipulate that in order to qualify for the cheaper insurance you only drive the car between certain time periods – for example, no late night driving. Of course, if you drive erratically or exceed the speed limit then the insurance company can also charge you more or refuse to cover you.
Pay annually Young drivers- or any drivers for that matter- can often reduce their premium simply by paying annually instead of monthly. The insurance company gets their money up front and reward you for the privilege. You don’t have to pay interest on what is effectively a loan and paying annually often opens up additional, cheaper insurance options where some insurance companies reserve their cheapest premiums for those that pay annually - savings of up to 20% are possible.
Shop around Yes, it seems obvious but shopping around can really pay dividends. As a younger driver, every year that passes where you have not incurred a claim makes you statistically a reduced risk for insurers who then reward you with a no claims bonus discount and reduced premiums over time. Use comparison sites and make sure your no claims bonus is protected in order to benefit – there are not many rewards for getting older….but this is one of them!
At Hippo Leasing, just about the only thing we don’t offer is car insurance as we believe that you are better off shopping around to get the best deal. On the other hand, we do have a huge lending panel and a massive selection of new, nearly new and used cars. Call your friendly Hippo Leasing account manager today on today on 01254 956666 or simply email us at firstname.lastname@example.org.