Why is Car Insurance Higher for Young Drivers?

Getting your first car is one of the most exciting times in life but it can also be a confusing experience trying to get insurance as a young driver. From voluntary excess to black box insurance, at Arachas we want to make getting your insurance as pain free as possible.

If you have got a quote already, you might have been surprised at the cost, but the reality is that young drivers are more expensive to insure. Let’s look at some of the reasons why and what you can do to reduce your premium as much as possible.

1. Age is a Rating Factor

There are a number of factors that affect every car insurance premium, one of the main factors is the age of the main driver. This means that an insurance company will assign a rating to each age from 17 upwards – the rating will decide what additional premium is for each age. Some insurers will do this in age brackets, but most insurers will typically have different rates for each year between 17-24.

A first-time young driver will always be rated higher than a first time 40-year-old driver, this is because insurers can see from previous claims that a 17-year-old first time driver is more likely to have a claim than a 40-year-old first time driver. They can also see that claims from under 25 have a propensity to be higher than other drivers.

Let’s take an example of how this affects your insurance premium. If you take two siblings living at the same property but one aged 18 and one aged 19, both siblings are students and have just received their provisional licence. Other than age, they have the same profile. If you get both siblings a quote on the exact same vehicle, you should expect the 19-year-old to get a significantly reduced premium.

2. Lack of a No Claims Bonus

Young drivers who are taking out their first insurance will not have a no claims bonus or driving experience to reduce their premium. Insurance companies will provide you with a discounted premium for every year you drive and don’t make any claims. This can be as a main driver or a second driver on a parent’s policy. All insurers will provide an increased discount up to 5 years claims free driving and some will continue to apply an increased discount up to 9 years claims free driving.

If you take the above example of the 18 & 19-year old siblings but this time the 18-year-old has been driving for 1 year claims free, you will now have a scenario where the 18-year-old may be getting a cheaper premium than the 19-year old as they now have a 1 years claims free driving.

3. Provisional Licence

Another driver of increased premiums for young drivers is having a provisional licence. A provisional licence is rated higher than a full licence so this will increase the insurance premium. Some insurers will give an extra discount if you have a provisional licence and have completed 10 driving lessons with an approved instructor. This will still be more expensive than a full licence. If you pass your driving test mid-year during your insurance, it is very important to make sure to tell your insurance company as you will get a reduction in your insurance.

4. Type of Car That is Chosen

The car young drivers choose to purchase will have a very significant effect on the cost of their insurance. Typically, an older car will cost more to insure than a newer vehicle. Newer vehicles typically have better safety features and within reason are generally cheaper to insure. A new BMW 320 DM SPORT will cost more to insure than a 15-year-old Toyota Yaris. When planning to save on your first car, it is important to try and select a car less than ten years old and ideally with an engine size of less than 1.4L. Once you go outside these guidelines, you will tend to see premiums increase. 

5. Failure to Shop Around

Failure to check multiple insurers can lead to young drivers paying well above the odds for their insurance. Some insurers offer specialist young driver schemes which will be considerably cheaper than other insurers. While your parents may have an excellent quote from their insurer, this may not necessarily be the best option for you. Each insurer has a set risk appetite, some will not want to insure any young drivers and as such their prices will be high. Arachas have access to several insurers who are actively looking to insure young drivers with an excellent level of cover available.

Find out more about the benefits of our young driver insurance or call one of our specialist sales agents on 01 582 7108 for a quote.