While insurance premiums for young and first-time drivers remain obstructively high, new research indicates that, by ticking off a few criteria, those same drivers can get much cheaper insurance in their second year of driving.
Figures given to Motorcheck by insurance firm Coverinaclick show that a 21-year old driver on a provisional licence could pay as much as €3,936 for their first year’s premium. But, by getting their mandated 12 professional lessons, passing their test, and keeping their noses clean to get a first year of no-claims bonus, that premium could fall to €936 in year two.
Prudence is important
Jonathan Hehir, managing director of Coverinaclick.ie is advising those who are about to embark on their motoring journey to be prudent in their approach and to do what they can themselves to cut costs. “While insurers are the ones who set the prices, young drivers still have some control over their fate in terms of the premiums they pay – particularly once they have gained some driving experience” Hehir told us. “We ran the numbers and if these drivers can reach and complete 3 driving “milestones” — get 12 professional lessons, attain their full licence and earn a one year no-claims bonus, then they will see a huge reduction in what they are charged for motor insurance, as we can switch them to one of our Lloyds underwriters. Even those who only manage two out of three and don’t get their test the first year will still see a marked decrease in premiums.”
Which does raise the question — if statistics show that young drivers can, by being careful and hitting their marks, qualify for much lower premiums in year two (and are therefore actuarially much less of a risk) why are they still being so heavily penalised with high premiums in year one, rather than being given incentives from insurers to train and improve their skills?
Why then do first time buyer premiums remain so high?
A spokesperson for the Insurance Ireland told us that: “Motor insurers provide a range of practical supports to younger drivers to enable them to gain driving experience. Some insurers provide driving training courses and technology solutions are also available to monitor and reward safe driving. Insurers make decisions on insurance cover based on their underwriting criteria, their risk appetite and their claims history. This will include factors such as the type of vehicle, its engine size and its age, but the weighting applied to each factor is a matter for each company. Decisions in relation to cover options and products are also a matter for individual insurers.”
Insurance Ireland also made the point, as it has done many times in the past, that payouts in Irish courts for personal injuries are much higher than in other countries, including the UK, where compensation payments generally run at around one quarter of the amounts granted here.
The outlook for first time drivers
So, it seems that the insurance industry will continue to penalise young drivers, rather than encouraging them, but Jonathan Hehir has at least a few crumbs of comfort for those looking to bring down their premiums. “There are several steps drivers can take to ensure they get the best value motor insurance premium” he told us. “Moving from a provisional to a full licence has definite cost cutting benefits, and drivers can save up to 30 per cent on their premiums simply by achieving their full licence. The advent of the N-plate has had little impact, and no insurer has indicated any changes or new rates based on the new ‘N’ plate law, but you can help yourself by being added to a parent’s policy for a period to help get the driving test. While traditionally most insurers will insist on a full year, some providers offer discounts to young drivers who have six months’ experience on their parent’s policy.
“Look at the model and engine size of the car you are going to buy. Don’t be afraid to ask for different quotes for various cars. Check the differences between third party fire and theft and comprehensive, according to the value of the vehicle. And remember that some insurance companies specialising in insuring young drivers are only available through certain brokers.”
Be selective in the age & engine of your car
The make and model aspect is especially important. Young drivers need to carefully balance the competing demands of vehicle age (older cars are cheaper, but they’re less safe and can be more expensive to insure as a result), and engine size (smaller is better for insurance purposes, but not necessarily for fuel economy).
Most of all, younger drivers need a solid car that’s going to be reliable and safe, so it’s more vital than ever to know the history and background of a car when you’re buying. Thankfully, Motorcheck can help with that…