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.

See our sections below:

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 ABI in 2015 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

Black Box Car Insurance is definitely one tip of how to get cheaper car insurance for new drivers.

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.

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.

Black box car insurance

Passed your test? New and young drivers could pay less at renewal with RAC Black Box