How young drivers can cut car insurance costs
A survey says 96% of young drivers feel 'priced off the road'. Here are some tips for cutting your insurance premiums.
An incredible 96% of young motorists feel 'priced off the road', thanks to the crippling cost of car insurance. As a result, more than one in five young drivers (21%) has thought about driving without insurance, which is a criminal offence.
These were the shock findings of a survey conducted by young driver insurance specialist Young Marmalade for MPs on the House of Commons Transport Select Committee.
Other illegal practices considered
MPs on the inquiry into motor insurance heard that three in 10 young drivers have considered altering the information they provide to insurers in order to get a lower quote. Of these, half have considered changing the main driver of the car - a potentially illegal practice known as 'fronting'.
And 57% of young drivers were unaware that, following accidents, insurers usually pass personal details to solicitors, car hire firms or garages, in return for referral fees.
At the inquiry, ex-Home Secretary Jack Straw MP said that car insurance premiums are at "extortionate" levels. He told fellow MPs that some claims management and referral companies were "parasites... engaged in bribery". Mr Straw also warned motorists to expect higher premiums.
10 tips for young drivers
What can young drivers and their parents do to curb the cost of car insurance? Here are 10 tips to get you started:
1. Choose your car carefully
Newly-qualified drivers must choose their first car carefully, because the make, model and age of a vehicle make a huge difference to insurance premiums. Of course, a modest run-around costs a lot less to insure than a fast, sporty vehicle. And modifications such as alloy wheels, a turbocharger or a special paint job bump up your premium further.
2. Get cut-down cover
For many young motorists, fully comprehensive insurance is beyond their means. These drivers should consider dropping down to third party, fire and theft (TPTF) or third party-only cover. After all, limited cover is better than a criminal record for driving without insurance.
3. Keep a clean licence for a year
Young drivers are most likely to have an accident in their first year of driving, as they learn about life on the open road. So, be sure to drive ultra-cautiously in your first year, as keeping a clean, full driving licence for more than a year will help lower your premium.
4. Shop around
According to the latest British Insurance Premium Index survey from the AA, shopping around for car insurance can slash your premium. In fact, the AA found that getting quotes online could reduce your premium by more than a third (36%).
5. Sharpen your driving skills
By taking an Advanced Driving Test from the Institute of Advanced Motorists, you become a safer driver. After passing, many insurers will lower your premium. Similarly, a six-module course called Pass Plus can result in premium reductions of a third from 14 insurance companies that support the scheme.
6. Become a 'named driver'
While your own personal policy may cost an arm and a leg, it costs far less to add yourself to your parents' policy. Indeed, around 2.5 million mums and dads include their children on their car insurance cover.
However, this is not an option for a young driver who is the main driver of a car, because insurers regard this ruse as fronting. Such deception can lead to your policy being cancelled, a criminal conviction, driving ban, court fine or even imprisonment.
7. Demand discounts
You can prune your premium with a wide range of security and safety discounts. For example, fitting an anti-theft device such as an insurer-approved car alarm, engine immobiliser or tracker will lower your premium, as could insuring two or more cars with the same insurer. Also, adding another named driver to your policy could mean paying less, not more.
8. Pay a voluntary excess
Your motor insurance policy will include standard policy excesses, typically £100 to £250, which is the sum that you must contribute towards each claim. However, you can increase these by choosing to pay a higher, voluntary excess towards claims.
For example, a voluntary excess of £500 to £1,000 shows your insurer that you're serious about driving carefully, so it could pull down your premium by 10% or more. Just ensure that it's not so high that you can't afford to claim.
9. Don't pay monthly
If you can afford to, think twice about paying for your car insurance via monthly premiums. In many cases, insurers charge yearly interest of up to 30% APR for letting you pay in monthly instalments. Instead, pay your premium as a single payment. If you can't afford to do this, then consider spreading the cost interest-free over 14 months with a 0% purchase credit card. Just make sure you put the money aside to pay off the bill.
10. Take care of your car
Keeping your car safe and well-maintained will reduce the risk of an accident or theft claim. So if you have a garage, driveway or off-street parking, use it and don't park on the road. This should reduce your premium by around 5%.
Likewise, always lock your car when leaving it unattended and take your keys with you. Remember: thieves need only a few seconds to nick your motor. Also, service your car regularly (at least once a year) and check your tyres, lights, engine oil and coolant levels every month or two.
Finally, the very best way to keep your insurance premiums affordable is to drive carefully, so go easy on that accelerator pedal!
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Please note that articles on MSN Money do not constitute regulated financial advice, which recommends a course of action based upon the specifics of your personal circumstances. The articles are intended to provide general personal financial information. We urge you to consult an Independent Financial Adviser (IFA) before making any important decisions about your finances. You can search for an IFA in your local area. Any statement regarding financial services products and tax liability is based on legislation and tax practices as at 6 April 2011, which is, of course, subject to change. The value of any tax benefits or reliefs depends upon the individual circumstances of the investor. When investment performance is mentioned you should remember that past performance is no guarantee of future performance. Where products have an underlying investment content, in many cases the value of the investment can fall as well as rise. For with-profit based investments, there is no guarantee as to the level of bonuses that will be declared, if any. Where mortgages or secured loans are explained do remember that your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it. All mortgages are subject to underwriting, status and are not available to people under the age of 18.
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