As we navigate finding a suitable insurance policy for my 17yr old daughter and her freshly acquired Driver’s Permit, we’re now confronted with the reality that for many young drivers in the UK passing the driving test is just the first hurdle. Finding affordable car insurance is the real challenge. So why is insurance so expensive for young drivers, and what can be done to make it more accessible? Let’s take a look…
The Price of Inexperience
The most significant factor in high insurance costs for new drivers is risk. Statistically, newly qualified drivers are far more likely to be involved in accidents than their more experienced counterparts. Data from the UK Department for Transport shows that young and newly licensed drivers are disproportionately represented in road accident statistics. As such, and rather unsurprisingly, insurers will base their premiums on risk assessment and charge higher rates accordingly to cover the potential for costly claims.
For many new drivers, particularly young ones, annual premiums can exceed £2,500—often more than the car’s actual value. Even for those in their mid-to-late twenties, premiums remain significantly higher than for drivers with several years of experience.
Limited Options for New Drivers
As my daughter and I are now discovering, most mainstream insurers categorise new drivers as high-risk and either charge prohibitively high premiums or refuse to cover them altogether. Those who do provide coverage often impose restrictions, such as high excess fees (the amount the driver must pay out of pocket in the event of a claim) or mileage caps. The excitement of getting a new car for my daughter is slowly fading…
Some insurers offer black box (telematics) policies, which track driving behaviour through a device installed in the vehicle. These policies can provide discounts for safe driving, but they also come with limitations. Many have curfews, penalizing drivers for late-night driving, and some even monitor braking and acceleration patterns, potentially leading to increased premiums for behaviours that may not necessarily indicate unsafe driving. However, I personally think that if black boxes can help reduce premiums even in the slightest, then I’m fully in favour.
The First-Car Dilemma
Choosing the right first car is another major factor in insurance affordability. Insurers classify vehicles into insurance groups based on factors such as power, repair costs, and safety features. Many new drivers, eager to own a cool or more powerful car, inadvertently choose vehicles that fall into higher insurance groups, pushing their premiums even higher.
Additionally, older cars—often a more affordable option for new drivers—can sometimes be more expensive to insure because they lack modern safety features or have higher repair costs. This leaves new drivers in a difficult position: buy an older, cheaper car that might still have high insurance costs or spend more on a newer, safer model in hopes of slightly lower premiums.
The Role of Insurance Fraud and Fronting
Some new drivers and their families resort to risky practices to lower insurance costs. One common but illegal method is “fronting,” where a parent or older driver is listed as the main policyholder while the new driver is added as a named driver. While this can significantly reduce premiums, it is considered fraud, and if discovered, it can invalidate the insurance policy, leading to severe financial and legal consequences. You might be inadvertently fronting – with the best intentions – but beware of the risks!
What Can Be Done to Help New Drivers?
As my daughter and I are now experiencing first hand, high insurance costs for new drivers are a serious barrier to car ownership. But here are a few tips to help you potentially lower premiums for any new driver:
- Black boxes/Telematics – As mentioned above, I’m a fan. More insurers should offer flexible telematics policies that reward good driving without overly restrictive curfews or excessive monitoring. Be sure to explore this option thoroughly.
- Price comparison website – The UK is famous for the plethora of comparison websites. Spend the 20 or so minutes entering all the information they ask and sit back and await your quotes. Remember that even the smallest insurance company listed is still insured by one of the big re-insurance companies so you should be in safe hands.
- Explore the possibility of a manual transmission car – Historically, manual drivers were considered more experienced and engaged in driving, leading insurers to associate them with lower risk (though this is changing as automatic cars become more common). If you haven’t yet got your driving licence, it could very well be worth your while to do your test on a manual transmission car.
Conclusion
Car insurance is an unavoidable and often frustrating expense for new drivers in the UK. It can be argued that insurers are justified in charging higher premiums due to increased risk, but the current system places an immense financial burden on young and newly qualified drivers. This potentially dissuades young people from getting their licences in the first place. The UK’s Financial Conduct Authority Insurance needs to work with insurance companies to re-examine the system with thoughtful reforms and fairer pricing models to ensure affordable car insurance is less challenging for those just starting their driving journey. As always, Car Sleuth is available to chat with you about these challenges!
