One of the drawbacks of passing your driving test at an early age is that you lack experience in more than just driving. Car insurance for young people, can be a complicated business and whilst many people will have advice from voices of experience this isn’t always the case.
Choosing your insurance provider isn’t a snap decision. The other drawback to being a young driver is that you fall into one of the high risk brackets that insurance providers base their prices on. This is because statistically, drivers are most at risk of having an accident in the first two years or so after they pass their test.
According to the Office for National Statistics, one in five newly qualified drivers will have some kind of crash within a year of passing their test. Combined with the increasing numbers of young drivers on the road in the last fifteen years – and therefore an increasing number of young drivers involved in accidents – statistically speaking, you’re a bad bet for insurance companies to make.
While you can’t do anything about the nature of insurance rates and statistical identity, you can help reduce the extra cost of being a young driver. Insurance providers are competitive and some companies specialise in young persons car insurance.
A useful place to start in the search for lower insurance is to find one of these specialist providers. Once you’re there, make sure you check the summary of cover provided by the insurance company. What kind of benefits does it offer? Car insurance for young people may generally be more expensive than for older drivers but largely you’re looking for the same policies. These include:
Loss or Damage – how much will your insurance company pay to repair or replace your car if it’s lost, damaged or stolen?
Third party liability - how much can you claim for accidents that you’re legally liable for?
Legal Costs - how much cover do you get for any legal costs that might be incurred as a result of an accident or other incident?
Suspending cover – if your car’s going to be off the road for a long time, what options do you have for saving money on your insurance? You should be able to suspend your cover and claim a refund if you decide you can’t afford or don’t need your own car.
Continental use – are you covered for driving in Europe? Remember that most car rental companies won’t lease vehicles to young drivers.
A specialist insurer for younger drivers should offer to base their quotes upon your merit as a driver rather than as a statistic. At the very least they should offer some form of no claims bonus, or some way of reducing your costs as you gain experience.
It may not sound perfect but other insurance companies will likely treat you the same as any young driver even if you’re careful, responsible and have no black marks on your record – well, at least until you turn 25 and go into an older demographic.
Below are some tips to reduce your auto insurance bill, prevent
substantial premium increases and avoid becoming assigned risk.
Claim Reports: You know about credit reports, you should also
know about claim reports. C. L. U. E. ® (Comprehensive Loss
Underwriting Exchange), is a claim report service provided by
ChoicePoint, Inc. ChoicePoint, Inc. states on their web site
“C. L. U. E. is a claim history information exchange that enables
insurance companies to access prior claim information in the
underwriting and rating process. C. L. U. E. Personal Property
reports contain up to five years of personal property claims
matching the search criteria submitted by the inquiring
insurance company. Data provided in C. L. U. E. reports includes
policy information such as name, date of birth and policy
number, and claim information such as date of loss, type of loss
and amounts paid. ”
Tip: C. L. U. E. reports contain information on claims history by a
residence address. Just like credit reports, a C. L. U. E. report
may have errors. It is advisable to obtain a copy of your
C. L. U. E. report at ChoiceTrust. com to check your report for
errors.
Credit reports: Insurance companies are now looking at credit
reports to determine future premiums. They have determined that
people with better credit scores have fewer claims.
Consequently, if you have a poor credit report you may find
yourself paying more for car insurance.
Tip: Always make at least the minimum payment for your bills on
time, particularly your insurance bill.
Glass Coverage: Most auto insurance salespeople recommend “full”
glass coverage for an additional premium, when you purchase
collision coverage for your car. They remind you how much it
costs to replace all your windows if broken by a vandal. What
they do not tell you, and it is unlikely that they would even
know (I would only trust the answer from an underwriter, not a
sales representative), is whether your insurance company will
use a previous glass claim to increase your future premium and
whether they will report your glass claims to C. L. U. E.
Some insurance companies will report glass claims to C. L. U. E.
and then use these claims to raise your premium or even worse,
cancel your car insurance policy making you assigned risk with a
substantial premium increase. Allstate notified me that after
four claims in less than five years, they terminated my auto
insurance policy and then offered to sell me coverage in their
Indemnity Company with a shocking premium increase. These claims
consisted of two claims for a broken windshield, one for a
stolen and recovered car and one accident.
I had a sports car and had to endure a total premium increase
over a period of four years of approximately $12,000 and remain
claim free before I became eligible for coverage outside of the
assigned risk pool. I wrote a letter to the president of
Allstate complaining that they should not have considered my
glass claims when canceling my car insurance because the glass
claims were made under a separate part of the policy for which I
paid a separate and additional premium. Allstate responded in a
letter stating “Although this claim activity does not indicate
that you were directly at fault in each loss, the frequency and
severity of the above losses was not within our range of
acceptability. After careful review, I regret to inform you that
we cannot reverse our original decision regarding the above
policy. We have however continued to offer coverage in our
Indemnity Company. ”
Tip: Check with the underwriting department of your insurance
company to see if they will consider glass claims when assessing
premiums or if they report glass claims to C. L. U. E. If yes, do
not make a glass claim. The two windshields which Allstate
provided me with were aftermarket windshields which would have
cost me less than $300 each. During the last 30 years of my
driving history, I have experienced two broken front
windshields, one broken rear windshield and two broken side
windows. While the financial risk of totaling a car can be
substantial, the financial risk of replacing a windshield is
comparatively insignificant. It does not make sense to file a
glass claim if it will increase your premium. You may even want
to decline this coverage altogether and save the premium.
Tip for leased vehicles: Some lease agreements require that the
car be returned with an OEM windshield. If you lease a car and
replace a front windshield using your “full” glass coverage,
insist that the insurance company provide you with an OEM
windshield from the manufacturer. If you pay for the windshield
yourself, check your lease agreement carefully to see if you
must use an OEM windshield from the manufacturer or if you can
use an aftermarket windshield. Some people with leased cars who
have replaced a windshield with an aftermarket windshield are
shocked, when they return their car, to find that the leasing
company is charging them $800 for a new OEM windshield, even
though the aftermarket windshield is in perfect condition.
Car Rental & Towing Coverage: While it may be a good idea to
have this coverage, it is not always a good idea to use it. Some
people have realized that this coverage is not just available
when an accident has occurred. For instance, some people have
used the car rental coverage when their car was in a repair shop
or the towing coverage when their car broke down on the road. As
with glass coverage, using this coverage may be the same as
filing a claim.
Tip: Check with the underwriting department of your insurance
company to see if they will consider rental or towing claims
when assessing premiums or if they report these claims to
C. L. U. E. If yes, do not use car rental or towing coverage unless
you have had an accident, in which case it will be part of the
accident claim. If you are concerned about towing costs when
your car breaks down, you can buy one of the roadside assistance
memberships such as the one available from AAA which provides
additional benefits not provided by your automobile insurance
policy
