How to reduce new-driver car insurance costs

How to reduce new-driver car insurance costs
For new drivers, your first car insurance policy can be an expensive one.

This puts new motorists in a difficult position when learning to drive as they are often the ones with the least financial support behind them - unless they have the bank of mum and dad to rely on.

To help we have compiled this guide which explains why newer drivers face higher insurance costs and offers ways for new drivers to try and reduce their car insurance costs.

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Why is car insurance for new drivers expensive?

Insurance works by calculating the possibility of risk - therefore, new and newly qualified drivers are simply a bigger risk.

There is the higher probability of a relatively inexperienced driver being involved in an accident, so it's no surprise that the average premium (the amount of money you actually pay to an insurance company for coverage) of drivers aged between 18 and 20 years is £972, according to data from the Association of British Insurers (ABI).

However, it is possible to find ways of reducing the cost of insurance of new drivers.

Why is car insurance for new drivers expensive?

How does age affect the cost of car insurance?

Data from the Association of British Insurers (ABI) shows why age is such a key factor in setting premiums for motor insurance policies - the table below details average premium by age bracket of policyholder and also average claim. 

Age of policyholderAverage premiumAverage claim
18-20£972£3,667
21-25£649£2,905
26-30£502£2,520
31-35£426£2,274
36-40£378£2,279
41-45£343£2,199
46-50£326£2,265
51-55£306£2,233
56-60£277£2,216
61-65£252£2,180
66-70£241£2,225
71-75£255£2,495
76-80£291£2,572
81-85£352£2,886
86-90£415£3,690
91+£478£3,656

Five ways to lower your car insurance

The fact is car insurance prices for new drivers are expensive and until you become a more experienced motorist you won't really benefit from a significantly cheaper premium.

However, following these tips will go some way towards bringing the cost down, and while might not see a huge decrease in price it will certainly give you the best chance of benefiting from the highest policy reductions possible.

1. Pay a higher excess

When you are getting a quote for car insurance, you will be asked to decide a level of excess - this is the voluntary amount you are happy to pay towards repairs in the event of a claim.

If you set it at £50, your overall premium will be higher than if you have a voluntary excess of £200. Just make sure you can afford to pay out £200 if you need to.

2. Take out Black Box Car Insurance

With Black Box Car Insurance you can prove to your insurer that you deserve to get cheaper car insurance even for a new driver.

What is Black Box Insurance?

It's a way of helping young and new drivers to save money on their car insurance by rewarding safe and responsible driving.

The black box is installed in the car and used to monitor driver behaviour - quite simply, the safer you drive the cheaper your car insurance could be at renewal time.

It might not make your first car insurance policy cheaper but could apply a discount second time around.

Black Box Car Insurance

Helps young and new drivers save money by rewarding safe driving.

3. Adding an older named driver to your first car insurance policy

Instead of parents adding a child to their insurance, the opposite could result in reducing the cost of insurance for new drivers.

If a new driver adds a parent to their first car insurance policy, the price of the policy could come down. That's because the insurance provider will see an older and more experienced driver sharing the vehicle, and using it for some of the time, and may offer a cheaper price.

Again however, it’s important that the older driver does use or intend to use the car to avoid invalidating the insurance at a later date.

4. Choose a cheaper car

The make and model of car you drive can make a difference to the price of insurance - especially for young and new drivers. While new drivers will understandably want to get behind the wheel of the best possible car they can afford, that comes at a price.

Drive a powerful car with fast acceleration, and you'll not only pay more for it in the first place, your car insurance policy will cost more too. Opting for a more modest car is a way of getting cheaper car insurance for drivers. Cars are ranked by insurers in groups ranging from 1 to 50, with those in group 1 being the cheapest to ensure and those in 50 the most expensive. 

5. Ensure your car is safe and secure

Insurance providers like to know that the vehicle being insured is likely to be as secure as possible to avoid the risk of theft. This concerns security inside the vehicle, and where it is stored when not being driven.

If your car is fitted with an alarm, immobiliser or another security device, this may help in reducing the cost of insurance for new drivers. Much like car insurance groups, Thatcham Research has categorised alarms - the higher the rating of the security system in your vehicle, the more money you could save on your car insurance.

There's a more detailed explanation on Thatcham's category alarms here - and a selection of security products available from the RAC Shop here.

When the car is being driven, where is it left? You'll be asked for this information when comparing car insurance quotes. If the vehicle will be kept in a garage overnight, or parked on the driveway of your house, that should result in a saving on your insurance policy.

If you can only park the car on the street, you probably won't see a saving.

READ MORE: How to pass your driving test in five steps

Is it a good idea to add yourself to your parent's insurance?

For parents, adding their son or daughter to their own car insurance policy is an option, although there are two important factors to consider.

Firstly, having a new and inexperienced driver on a policy will increase the price - so mum and dad should be prepared to see their own insurance premium rise.

Secondly, if the new driver is listed as a named driver on someone else's policy, they can't be the main driver. Putting children on your insurance with the intent of them using the vehicle as their own and driving it for the majority of the time can be considered 'fronting'.

Fronting is illegal and is seen as a method of fraud. If you're suspected of fronting, your car insurance could be declared void as a result.

Pay as you go car insurance

One way of keeping your costs down could be pay as you go car insurance.

As you would with your phone, you can pay as you go or on a monthly rolling subscription.

Pay by Mile car insurance works this way. You pay a monthly parked premium, to insure your car while you’re not using in and then you only pay a few pennies (as little as 4p) per mile.

So, there could be savings to be had by paying for what you use, rather than annually.

FAQs for reducing young driver car insurance costs

  • Can you negotiate car insurance?

    Technically yes, although don’t expect to haggle down an insurance salesperson like you might a second-hand car dealer – and if you’re not comfortable negotiating, you may prefer other routes to a potentially cheaper premium.

    If you do decide to haggle, make sure you know the market by comparing your renewal quote to others. Have an idea of what you’re willing to pay before talking to the customer retention department, being firm yet polite throughout.

    Negotiating your premium only works for drivers who already have car insurance, so this won’t work for brand-new drivers.

  • At what age does car insurance go down?

    Many motorists have a long-held belief that the cost of car insurance premiums falls when you hit 25, but in reality, it’s not quite as black-and-white as this.

    In truth, there is no such ‘magic age’ at which premium costs will drop, as this will depend on your experience, driving history, car, socio-economic background and a whole host of other determining factors.

    That said, the longer you’ve been driving and the more years of no-claims bonus you’ve managed to build up, the easier it should be to find a cheaper premium.

  • Does car insurance go down after 6 months?

    That depends on you and your driving, although be aware that most insurance companies tend to work in terms of years when dealing with your no-claims bonus, so you will likely only start seeing reductions after 12 months.

    Brand-new drivers with no insurance history are generally the most expensive to insure, so your first premium is likely to be the most expensive before the cost steadily reduces as you build up a no-claims bonus.

  • What is the best insurance for a new driver?

    Finding car insurance if you’re a brand-new driver can be difficult – especially if you’re a teenager – but there are certain types of insurance that can help reduce your premium while keeping you and others safe on the road.

    Telematics (also known as black-box insurance) sees a device affixed to your car that monitors your driving behaviour. If you’re a careful driver you could soon see significant savings on your premium prices.

  • What's the cheapest way to insure a new driver?

    There are a number of measures you can take to get cheaper car insurance as a newly-qualified driver. These include taking out telematics insurance, naming an experienced driver on your premium, driving a less-powerful car, and paying for an entire year up-front.

  • How long are you considered a new driver?

    That will depend on your insurance company and when you passed your test. Most insurance companies will assess your driving history and how many years of no-claims bonus you have acquired before reducing your premium accordingly.

  • What cars are cheap to insure for first time drivers?

    Generally speaking, the more powerful your car the more expensive it’ll be to insure if you’re a newly-qualified driver. If you’re looking to keep costs down, choose a car with a smaller engine. This will mean it’s cheaper to run, too.

  • What engine size should a new driver get?

    Generally speaking, the more powerful your car, the more expensive it’ll be to insure if you’re a newly-qualified driver. If you’re looking to keep costs down, choose a car with a smaller engine, such as 1L or 1.2L

    A smaller engine will also mean it’s cheaper to run.

  • How much will my car insurance go down after 1 year?

    That depends entirely on you and your driving. If you’ve banked one year of no claims, its likely your insurance premium will be lower after twelve months, provided no other circumstances have changed.

  • Is it cheaper to be on your parent’s car insurance?

    Being added to your parent’s car insurance policy might be a good option, although it’s essential to remember two key things before doing so:

    Firstly, having a newly-qualified driver named on their premium will likely see your parents needing to pay out more, so check they are OK with that beforehand.

    Secondly, if the new driver is listed as a named driver on someone else’s policy, they can’t be the main driver. Putting children on your insurance with the intent of them using the vehicle as their own and driving it for the majority of the time can be considered ‘fronting’.

    Fronting is illegal and is seen as a method of fraud. If you’re suspected of fronting, your car insurance could be declared void as a result.

  • Which age group pays the most for car insurance?

    Generally speaking, the age group that pays the most for car insurance tend to be those aged 20 and under, with average premium costs falling from 20 – 60, before rising again for those over retirement age.

  • Does engine size increase car insurance?

    Larger engines tend to produce more powerful cars and that can cause concern amongst insurers, as these more powerful vehicles come with a greater perceived risk. A smaller engine could see you pay out less for your premium, which might be something to consider if you’re looking to cut costs.

  • How do I lower my car insurance for a young driver?

    There are a number of measures you can take to get cheaper car insurance as a newly-qualified driver. These include taking out telematics insurance, naming an experienced driver on your premium, driving a less-powerful car, and paying for an entire year up-front.

Car Insurance cover for less than £165

Get Car Insurance cover for less than £165 (that’s what 10% of our customers paid).^

^ 10% of all customers buying Car Insurance Plus with us from 1st January 2020 to 30th June 2020 paid less than £165. Based on comprehensive Car Insurance Plus, purchased direct, excluding any additional products and upgrades, with payment on an annual basis. Your premium will depend on your circumstances and the level of cover you choose.