Teenage car insurance and cutting the cost of learning to drive
Paying for your teenager to learn to drive can cost an arm and a leg - and that's even before you have to foot the bill for car insurance once they've passed their test.
All parents want to ensure that their children are properly prepared before they get behind the wheel of a car, but there's no escaping the fact that driving lessons and insurance for teenage drivers don't come cheap.
Here, we look at how you can cut costs of learning to drive and some of the best ways to save towards driving lessons.
It is usually much more cost-effective to book a block of 10 driving lessons rather than paying for them individually as you go along.
If you can, try to show your child some of the basics before they start - it might save some time when they are with an instructor.
If there is a while to go before driving is on the agenda, start saving for lessons as soon as possible, or encourage your teenager to put a bit away every month.
One of the best ways to do this is through a regular savings account. These usually require a monthly commitment of £10 up to £250 and in return offer rates as high as 6% annual interest before tax. Even if the proceeds don't end up going towards driving, paying into an account regularly is an excellent way to start the savings habit.
Insurance for teenage drivers
When they've passed their test, most teenagers will use their parent's car until they can afford to buy their own.
Adding their name to your insurance policy can be much cheaper than arranging standalone cover for their own vehicle, but remember that if they are lucky enough to have their own car, parents mustn't be tempted to 'front' the policy to lower the cost of car insurance.
Fronting is when someone registers themselves as the main driver on a policy to lower premiums, when in fact their son or daughter is the genuine main driver of the vehicle.
If the insurance provider discovers the policy was being fronted while processing any claim, they could reject it because the premium they quoted was based on inaccurate information.
There are plenty of legal ways to cut costs, such as requesting a higher voluntary excess. The excess is the portion of any insurance claim you must pay yourself, so if you are planning on increasing it, make sure you are still able to afford it, otherwise you might not be able to make a claim at all.
You might also want to install security equipment like a steering wheel lock, which can help to reduce premiums if they are Thatcham-approved.
Even something as simple as keeping the car locked in a garage overnight will reduce the risk of claim in the eyes of your insurer, and should be reflected in cheaper premiums.
Younger drivers should also consider going for a telematics-based insurance policy. These allow insurers to calculate premiums that properly reflect individuals' own driving behaviour.
The insurance provider fits a 'black box' data recorder free of charge to its customer's car, which monitors things such as acceleration and braking speeds, as well as mileage and what time of day the car is used. The driver won’t benefit from a lower premium upfront, but if he or she is able to demonstrate that they are a safe driver they will either receive refunds throughout the year, or be given a bigger discount when their policy is renewed - the exact method will depend on the insurer.
Bear in mind that if the car is shared, the black box won't know who's driving, so you will all need to abide by the insurer's criteria, which may include a night-time curfew.
Teenagers who can afford to buy their own car can help lower their insurance by resisting the temptation for more power and equipment than they need. Just 0.2-litres of engine size can increase insurance costs by £250, while a higher spec could push the car into a higher insurance group even without bringing any more power. And if your teen is keen to modify their car, gently remind them that fancy alloys or a souped-up exhaust will also bump up the cost of their cover.
Even if there are just two car owners in the household, it can be worth clubbing together under a single multiple-car policy, as these can bring good discounts. It doesn’t always prove to be a cheaper option, though, so it’s worth weighing up the cost of having separate policies for each car in the household versus a multicar policy.
Whichever type of insurance cover you go for, remember to always compare several policies before buying to find the most suitable cover for you for the best price possible. You should also bear in mind that most insurers charge more for you to pay for your insurance monthly rather than annually, so it is cheaper to pay a lump sum for the year if you can afford it.
Paying monthly is more expensive because insurers often treat monthly payments as a loan from them to you, and will therefore add on an 'interest charge' which can be as high as 25% or 30%.
What else you should know about teenage car insurance
If you have insured your child and perhaps they are heading off travelling for a couple of months, or aren't planning on taking their car to university, and their car insurance is due to lapse while they are away, don't be tempted not to renew it.
Following the introduction of the Continuous Insurance Enforcement (CIE) Regulations, it is now an offence to keep any vehicle without insurance unless you have notified the DVLA that the vehicle is being kept off the road, so cover is vital for all drivers even if the car is only used occasionally.
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