Car Insurance

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We’ve mentioned this before, but a recent article in the Independent on Sunday has nicely highlighted how the practice of getting insurance under a parent’s (or other relative’s) name, known in our industry as ‘fronting’ could leave you severely out of pocket.

Representatives from Zurich, More Than (Royal Sun Alliance’s consumer brand) and Norwich Union (currently being rebranded to Aviva) were wheeled out warning that fronting is a bad idea for all concerned.

Keith Lewis from Zurich said:

“Not only can it lead to a claim being refused but also both the young person and their parents can be charged with insurance fraud.”

wheras moreth>n’s Keith Maxwell adds

“One of the first things we check when a claim comes in is whether there has been any fronting. It’s not a wise move.”

So what can young drivers do about bringing down the cost of car insurance. The distinguished panel share some tips:

“The quickest way to cut this is by building up a no-claims bonus [in your own name], which can ultimately reduce premiums by half to two-thirds.” Keith Maxwell (morethan)

“This is the passport to cheaper premiums. It’s best to bite the bullet and start building it up as quickly as possible,” adds Erik Nelson (NU)

Agreed. It’s worth pointing out that although you will pay more in the short term, if you steer clear of too many claims, you will save money in the long run – especially when it is time to leave the family home.

“Look at taking the Pass Plus driving course. This advanced qualification can bring discounts of 10 per cent on premiums.” Erik Nelson (NU)

The Passplus course will save you money, but NU seem to be a bit stingy here. Some of our schemes offer a discount of up to 40% for Pass Plus qualified drivers.

“We offer a rapid bonus scheme. Basically, you insure the car in a block of nine months, at the end of which you are credited with a full year’s no-claims bonus,” Erik Nelson (NU)

What Mr Nelson doesn’t mention, is that these “Bonus Accelerator” policies, also touted by Admiral/Elephant, often have a few drawbacks. Frequently they charge you a higher monthly fee for 10 months than you would pay on a twelve monthly basis. Secondly, this undermines the basis of No Claims discount somewhat, and, as a result, some companies are reluctant to accept bonus from these accelerator policies. Companies, which have, in the past included such well known names as .. er.. Norwich Union! Quote from the thread linked above

“It seems a bit confusing as I got a quote from Norwich Union with 1 years NCB for £327 but when I spoke to them on the phone and tolod them it was a 10 month BAP, they said they didn’t recognise it and could only quote me over £500.”

Norwich Union have clearly changed their mind since then.

More Than and Norwich Union, have both run “Black Box” powered Pay as You Drive schemes, although, as Mr Nelson explains, Norwich Union have had to cancel these.

“We had hoped … that the car manufacturers would start offering the GPS boxes as standard. Ultimately, the expense meant we had to call a pause.”

Another thing we’ve been saying for a while, is that these schemes are using technology for its own sake – drivers who don’t drive as far can benefit from discounts on a limited mileage policy without having to submit to curfews or corporate snooping.

“Go for a smaller car in a low insurance group. And consider if you should go with third party, fire and theft cover rather than fully comprehensive, and whether you need the car for commuting or just leisure driving.” Keith Lewis, Zurich

This is all very sensible stuff. If your car is low value (let’s face it, most people start off with a banger) TPFT is the most sensible level of cover. We made a list of the ten cheapest cars for young drivers, but there are others that fit the common theme – low engine capacity, small cars with ready availability of cheap parts.

“Younger drivers will have an excess imposed, but by agreeing to a slightly larger one, the premiums can be cut.” Keith Maxwell (Morethan)

Very true. A voluntary excess can reduce the premium, but be careful not to raise it too high, as if you have an accident you may have to fork out the amount of your excess before you can get back on the road.

So, some good tips, and some iffy ones from the major insurers, but I have a few more young driver car insurance tips that might help out:

  1. Join an owners club or online forum. This can bring you a discount of up to 15% on a policy, easily covering any membership fees with the insurance saving.
  2. Take extra security precautions to reap an extra discount. So fit the best alarm you can, and try and persuade your dad to let you keep your car in the garage.
  3. Can’t find a PassPlus near you? Well there are plenty about, but perhaps you might find a more convenient venue doing the IAM or Max Driver courses. Don’t worry – we do discounts for those as well.
  4. Be wary of comparison sites. As you’ve seen above, some companies will try and foist a 10 month ‘accelerator’ policy. Another advantage to the companies pushing these is that it gives them an unfair advantage on aggregator sites if everyone else is offering 12 month policies – remember they are offering around 17% less cover. It is always best to include a specialist broker or two when it comes to ringing around. You will usually find that you end up paying less over the phone than you do online – despite what you might think.

To speak to a specialist now, you can call us on 08000 83 88 33.

  • Anonymous

    >alot of drivers aged less than 25 find it hard to get insurance. but my son recently went on to positivepresent.com and got interest free insurance on a 9 month accelerator. Plus he is paying monthly which has made it really affordable.

    One thing i was wondering was where is the best place to find pay as you go insurance? does this work and is it cost effective?

  • Dave Wilson

    >Pay as you go insurance proved to be a problem for Norwich Union, who had to ditch it after a year or so. As well as problems with cost of administration, a lot of young drivers will find the terms overly restrictive on their lifestyle.

    We’ve always said that something like a limited mileage policy is a much more useful and potentially cheaper option for the occasional young drivers that PAYD was aimed at.

    Add that to discounts of up to 40% for courses like PassPlus, and it’s clear why you should give a broker a ring before you take out a Pay as You Go insurance policy.

  • Nicola

    >Be very careful of Quinn Direct. They recommended only last week that i insure my 17 year old son on my car insurance.