Learn how to keep car insurance costs down for young drivers
Car insurance is a legal necessity, but with cover for young drivers often costing more than the car itself, how do you know which level of protection is best for you, and how can you keep the costs down?
Car insurance levels of cover
There are three main levels of car insurance cover to choose from – you must have at least third party insurance by law, but you may wish to have greater protection:
Third party
If you were to cause an accident, your insurance company would cover the cost of any damage to the property of others, and any injury caused to others. It would not cover the cost of injury to you or damage to your own car.
Third party fire and theft
Provides the same level of cover as third party but would also cover your own car if it were stolen or damaged in a fire.
Fully comprehensive
In addition to the cover in third party fire and theft, fully comprehensive cover would cover the cost of any damage to your own car and injury to yourself, even if the accident was caused by you.
Remember, any damage caused by another driver to you or your car will be covered by their insurance. In this case it doesn’t matter which level of cover you have. The type of cover you get will depend upon your circumstances, your attitude towards risk and the value of the car you are driving.
Car insurance premiums – working out the cost
The amount that you pay for your car insurance is called a premium. Insurance companies will take all sorts of information from you in order to work out what your monthly or yearly premium will be. This includes:
- your personal details, such as age and postcode
- information about the car you will be driving
- the level of cover you’re looking for
- how many miles you think you’ll be driving each year
- any previous car insurance claims
- any criminal convictions
- whether you have a no claims bonus – the number of years you’ve been driving without having made a car insurance claim
This information allows the insurance company to build up a picture of how ‘risky’ you are, and they will calculate your premium based upon this. The higher the company deems the risk is, the higher the premium will be.
Comparing car insurance
Comparison websites allow you to enter your details and compare insurance costs from a wide range of companies, but remember that the cheapest option may not always be the right one for you. Be prepared to pay a little extra to get the cover you’re happy with.
While many insurers can be found on comparison sites, some choose not to appear on them – you’ll need to check with them directly to find out their prices.
Car insurance tips
Most insurance companies give you the option of spreading the annual cost of your car insurance through monthly payments. This is a useful way to spread the payments out, but the amount you pay over the year will generally be quite a bit higher than paying in one go.
If you don’t have enough money in your account when your monthly payment is taken by the insurance company, they may cancel your insurance. You’ll be told of this in writing and will then no longer be insured. You must then buy replacement insurance before driving your car again.
Lastly, be wary of fake companies offering car insurance – you can see if they’re fully registered or not on the Companies House website.
Find out more about getting cheaper cover in our guide Car insurance for young drivers – top tips
This article is provided by the Money Advice Service.
