Young drivers increasingly struggle to find affordable insurance cover, with those aged 17-22 typically quoted thousands. A young lad from Bolton hit the headlines recently, when he apparently received a quote of £17,800 a year to insure his £400 P-reg VW Polo, whilst another 17-year-old with a VW Golf; over £7,000.
As complaints soared, The Office of Fair Trading (OFT) launched an investigation to establish whether drivers were indeed being overcharged. It has since referred the market to the Competition Commission (CC,) as it found there were ‘reasonable grounds for suspecting that there are features that prevent, restrict or distort competition’.
As we await the outcome of this investigation and its recommendations, is there anything the typical teen can do to reduce premiums? As part of a new initiative by Admiral Insurance, young drivers can now get up to 5% off their bill by starting driving lessons from as early as age 11. If you are between the ages of 11 and 17 and you take one or more lessons under the scheme, you will qualify for a 5% discount with Admiral, the principal sponsor of the ‘Young Driver Scheme’. Figures from the Association of British Insurers (ABI) show drivers between 17 and 24 are three times more likely than other road users to be responsible for ‘catastrophic claims’. As many as 40% of 17-year-old males crash within the first six months of ownership; a statistic that Admiral is trying to reduce by way of incentive rather than restriction.
Further research shows the most critical time for new drivers is their first two weeks on the road. Too many are woefully unprepared and have a rather worrying lack of awareness. Perhaps it’s time to improve the learning process, to ensure that anyone tearing up their L plates is genuinely fit to get behind the wheel alone. In fact, a Green Paper outlining stricter rules for drivers under 30 was supposed to be released last year, proposing that new young drivers get a 12 month probationary licence, with a curfew between 10pm and 5am, unless someone else over 30 is in the car. Learners would be tested on motorway driving and there would be a total ban on all mobile phone use behind the wheel and a lower legal alcohol limit. But, incredibly, the Department for Transport has now shelved the plans as it says it doesn't want to ‘restrict the lives of young people’. As if high premiums and accident rates aren’t restrictive enough?!
If you are able to demonstrate great driving skills, you can get cheaper car insurance by installing a ‘blackbox’ telematics device. This is basically a GPRS monitoring system (with sophisticated added features) that the insurance company loads into the vehicle and then uses the readings to calculate insurance costs every 90 days. The technology works by imposing specified curfews and recording driver behaviour, with premiums accurately applied to a motorist's exact profile, which means safer young drivers pay less for their cover. But the system is not without its serious flaws. Whilst some policies do not impose a penalty for speeding (unless the driver goes at least 50 per cent above the speed limit), breaking curfew can incur a fine of £100; a factor blamed for the deaths of 2 teens last year. Tragically, they both suffered fatal head injuries when their car careered off the road, in what was described as an attempt to beat their curfew, which was “a very significant factor” in their speeding that night. The coroner, Mr David Dooley, suggested he was willing to write to the insurer, to make clear his “real concern of future deaths”, if the current system is not changed. Going forward, the blackbox could become mandatory for every driver; forced to use telematics or be hit with more expensive insurance premiums, if they decide to opt out. But the decision could already be made for UK motorists. EU regulations now specify that all new cars built from October 2015 will be fitted with a form of telematics (device) known as eCall, which is designed to tell the emergency services the whereabouts of your vehicle if necessary. Is this just the start of full compliance?
Historically, many parents have worked the system by putting their own names on the policy first. The process, known as ‘fronting’, can get you a cheaper insurance quote for the real main driver, but all parties should be aware that this can have serious financial and legal implications. If detected, insurers can refuse to pay out for any claims, or can settle a third-party claim and then attempt to recover the cost from the parent, as the policyholder. If the insurer declines a claim, the young driver could be treated as uninsured, resulting in substantial fines and penalty points.
Road deaths currently cost the economy almost £16 billion a year. In 2012, 24,793 people were killed or seriously injured on British roads, according to Department for Transport figures. It was reported that the Government’s (now defunct) proposed changes could have cut this death toll by at least 4,000 per year, with a saving of something like £225m annually. Perhaps it's time for insurance companies to be more proactive, with young driver schemes (like the one sponsored by Admiral) introduced into schools and the curriculum? Surely better training equals fewer accidents, equals lower premiums. Problem solved.