Why is insurance for young drivers so expensive?

Why is insurance for young drivers so expensive?

We recently wrote a blog post about why car insurance prices are so high. We explained some of the different things that can have an effect on the price of car insurance in general, like fraud.

But how much it costs to insure your car can depend on other factors, too, like age. In this post we’re tackling the issue of why insurance is so expensive for young drivers.

Insurance for young drivers

The average annual car insurance policy costs 24.5% more in your 20’s than in your 30’s, and just under 50% more than in your 40’s. Why?

The price of car insurance is largely based on risk. Basically, this means the risk that you are likely to have an accident and make a claim. Insurers work this out by putting people into categories based on factors like age. Unfortunately for young drivers, they are much more likely to have an accident. In fact, 25% of all claims are made by drivers under 25-years-old. 😕

Whilst this gives a reasonably accurate idea of risk, it’s not great that it’s based on assumption, instead of actual behaviour or driving ability. At the moment, we also take this approach because that’s how our underwriters work. But part of our long term mission is to move away from this eventually. Of course though, this isn’t going to be easy and will take some time to figure out.

Is it possible to get cheap insurance as a young driver?

As your price is based on risk, anything that reduces the risk will reduce the price. 🎉 Great news for anyone wanting to reduce their premium, but how do you do this?  

Get a black box (telematics) policy

One option is to share your driving behaviour with your insurer. Some companies fit cars with a device that monitors your driving, called a “black box”. The better you drive, the cheaper your insurance, making it a great option for drivers who closely follow the rules of the road.

But sometimes “black box” policies come with restrictions, like not being allowed to use the car during certain times. It’s important to check whether there are any restrictions and how they would fit with your needs before signing up. Some companies tend to be much more strict and some quite lax, so it’s worth looking at reviews and asking around to see which options might be best for you.

Try adding a parent or additional driver to the policy

Adding a lower risk driver to your policy can bring the average risk score down, which, yep, you guessed it, means a lower premium to pay. If you’re thinking about adding another driver to your policy, important things to think about are their driving history and age.

The good news is that even someone who is slightly lower risk than you can reduce the price you’ll pay. 👍🏻

Remember, though, it’s important to be honest about who the main driver is. If you’re not, your policy could be cancelled or the insurance company might refuse to pay a claim. You could even get points on your licence for driving without proper insurance!

Think about the type of car you buy

It’s not just people insurers place into categories. They also put cars into categories called insurance groups. This is based on a number of things, like:

  • How much time and money might be needed to fix or replace the car.
  • How serious injuries to passengers and other road users are likely to be. It costs an awful lot to deal with injuries from road traffic incidents, and the insurer has to cover all the NHS’s costs.
  • The performance of the car. The higher the performance, the higher the risk of making a claim. As we’ve already learnt, higher risk means a higher price.
  • How safe the car is. Some vehicles are fitted with automatic braking systems known as AEB (Autonomous Emergency Braking). These are less likely to bump into the back of other cars, and therefore can have a lower risk rating.
  • The car’s security. Cars fitted with alarm systems or other security measures are less risky. These may have a lower cost.

Put simply, the higher the insurance group, the higher your premium. To keep the costs of insurance down, you’re better off buying a car with a lower insurance group. There are plenty of websites you can use to find out the insurance group of different cars to help you make this choice. 🚘

Short-term insurance options

For anyone who only needs a car for ad-hoc situations, annual insurance can be avoided altogether. If you know someone with a car (that is kind enough to let you use it), buying short-term insurance only when you need it could save you a fortune. This is particularly useful for those who don’t need a car all the time, such as students who might only need to borrow the family car when they are home from university on the holidays.

Cuvva offers temporary car insurance policies from one hour to 28 days.