To think the Government should provide 3rd party insurance?

[CakeMeIAmYours]

My nephew recently turned 17, so the family all put our heads together and found that we could just about afford to buy him a small used car and a course of driving lessons - all good so far!

That was until I checked the insurance costs - the cheapest I could fund was just short of £7,000

There's just no way we could afford that, and insuring him on his DMum's car wasn't that much cheaper either.

I'm at a bit of a loss as to what the answer is here; his lack of driving experience means that he is basically unisurable, but without that experience, his insurance costs will never go down.

This seems monumentally unfair to me; the legal requirement to have insurance has basically given the private sector a license to print money. As it is mandatory to carry insurance, they can charge whatever they like.

I'm not a huge fan of 'Big Government' but I am increasingly thinking that if the state legislates that it is a requirement to carry insurance, then they should provide it themselves.

It would be an additional cost to the government, but without a driving license, employment opportunities are very limited. Surely it would be cheaper in the long run to have such a scheme rather than risk all the young people out there who are struggling to find jobs becoming long term NEETS?

That may be the one, Tuttut. I couldn't remember exact figures (haven't got them to hand) so I didn't want to quote sums which were just too good.

Hmm, ok, I'll do a bit more shopping around. I got the £7k figure from Confused.com so thought it was fairly representative.

I guess my point is that in the normal run of things, if the price of a good is greater than a person is prepared to pay for it, they just go without. If less people demand the good, then the price falls and an equilibrium point is reached.

With car insurance, there is no choice in the matter, you have to have it, therefore you have to pay whatever the going rate is.

The legislation essentially sticks a spoke in the working of the market which results in higher prices.

I'm not suggesting for a moment that we should scrap the requirement for insurance, and do think it is a very valid point that young drivers cause accidents. I just think this is an example of market failure and one of the rare instances where I wonder if the government should step in to correct it.

I'm just kicking the idea around here - not suggesting it is a magic want to cure all ills

Thanks tuttut I'll have a look at that

With car insurance, there is no choice in the matter, you have to have it, therefore you have to pay whatever the going rate is.

Or you go without by not having a car.

The insurance market is trying to address the issue of people driving without insurance by introducing these black box type policies.

Insurers and the police have also introduced the Motor Insurance database to try to eliminate uninsured drivers.

Look at it from their point of view - insurance is a pot of money taken in - in order to pay out claims. If the pot isn't big enough for the value of claims - the Insurers lose money. They have to charge enough to cover those claims.

It is not a right to have your own car at 17 and many families are now realising this and keeping these youngsters off the road until they are a bit older and less likely to go bonkers with a hatchback with a go faster stripe on it.

I think the NHS needs the Governments' money far more than entitled teenagers!
(Mine's not having a car anyway! )

I agree however OP that insurance for young drivers is outrageous, and increases the number of people driving without insurance which then drives up insurance premiums.

Don't know what the answer is though.

Or you go without by not having a car

...and probably not a job either, which creates a whole range of other problems.

YABVU.

What is your nephew trying to get insured to drive? Thats my first question... He may have to consider getting a much less powerful car to drive for first car.

He needs to do a lot more shopping around for insurance, and play with stuff like the excess. I know elephant.co.uk were good for young drivers, not sure if they still are.

the legal requirement to have insurance has basically given the private sector a license to print money

Actually, pernicious insurance fraud and failure to insure (leading to a huge bill for the Motor Insurers Bureau compensation fund) is doing a lot more to rack up the cost of insurance. It is a massive problem.

I don't think it is a cartel. Apparently lots of insurance companies make a loss on motor insurance but use it as a loss leader to get their hooks into customers for more profitable products.

And we have to do some things for ourselves, surely, without looking to government.

I really don't agree that you need a driving license to get a job at 17 - maybe when you're older it is relevant but not at 17.
And millions of people have jobs that don't require a driving license - you just need to get there.

DD (17) has a car, her insurance is £400 p.a. while learning and £1100 when she passes.

And we have to do some things for ourselves, surely, without looking to government

Ordinarily, I am the biggest advocate of that sentiment. In this case however, it is the legislation that (IMO) has caused this problem.

The legislation shouldn't be changed for all the obvious reasons, which still leaves the problem.

I understand the 'entitled teenager' comments, and do to a large extent agree with them. It is unfortunately the case though that people with a driving license and car are more employable.

I also disagree that you need a driving license to get a job at 17, unless you live out in the country with no access to public transport and too far away from anything to cycle. (have you considered a moped?)

Yabu

Very roughly speaking, the accidents middle aged women have more lower-speed bumps and bashes, middle aged men have fewer accidents at higher speeds with more damage per accident. Teenage boys have more accidents, they tend to be high-speed and they are more likely to end up killing or seriously injuring other people - the compensation for which is very costly. The insurance price simply reflects this situation.

Trills

You do round here, public transport is dreadful or non-existent. However I would not expect anyone else to fund it, certainly not the government.

And as for a moped!

Nevah!

Katie Really? Wow. I did a 'comparison quote' for DNeice just out of curiosity and it was still over £3k.

I will certainly have another look though in light of the comments. Looks like I should be able to get it down to a slightly less frightening level.

It just seems so unfair, when I had my first car at 17 with no experience my insurance was about £400 although that was when dinosaurs roamed the earth

Cake, have you tried 'elephant.com' for a quote. Confused was an absolute rip off.

I think you have a point. But no.

Premiums vary depending on lots of factors including area, type of car etc
so 'my niece pays this' is pretty meaningless without all the variables.
n general, the more rural you are, the lower the premium - inner city premiums will be the highest.
Also never consider any car above a 1200cc for a young driver - ther's just no point!
Also - premiums for girls are still cheaper than for boys (they have less accidents - surprise!)
This will change as those idiots in Europe have decided it isn't fair - even though it's statistically logical!
Basically Insurers will not be able to use a person's sex to rate a risk after December next year - it will also affect life insurance.

You definitely don't need a car to get a job. I worked from the age if 16, didn't have a car until I was 26 (& could afford both car & insurance myself)

It just seems so unfair is reasonable

The Government should provide is not reasonable

It isn't a legal requirement to have a car, so it isn't a legal requirement to have insurance!

Insurance premiums are so high for 17 year olds because the likelihood of having an accident is so high. Having the government handle the insurance wouldn't change that, so the premiums would still be high.

You can get a licence without being insured on a car (except the instructors car, obviously). A licence might help for a job but a car not so much. And at 17, most employers wouldn't really expect it.

On practical advice, a friend found it cheaper to buy an old mini for his son, and insure that, than add him to his own insurance!

iamamug is right about not being able to use sex to determine risk. DH is an actuary and reckons it's political correctness to the point of stupidity.

never consider any car above a 1200cc for a young driver - ther's just no point!

^ This with bells on. Certain brands are also favourable with insurers. Basically anything that your grandma would love to drive...

Ordinarily, I am the biggest advocate of that sentiment. In this case however, it is the legislation that (IMO) has caused this problem.

Nope, its kids wanting to drive something too powerful and showing off to their mates that cause a significantly higher number of serious accidents and thats the problem. Not the legislation.

If it were the legislation and not the person driving the car then you would have a situation where there was horrendously high insurance across the board for all age groups - especially when in cases of older learner drivers - there isn't because insurance is worked out purely on who causes the biggest payouts.

MoneySavingExpert has a pretty comprehensive guide to minimising insurance costs for young drivers, here: www.moneysavingexpert.com/insurance/car-insurance-young-drivers