Extortionate increase in insurance after passing test

[Daisyhoney]

My son aged 19 passed his driving test recently - first time so really proud of him. But then came the kick in the teeth. He rang his insurance company to update them and (he had the phone on loud speaker) the man said and I quote ' it'll just be a little bit extra ' . How much extra ? my son asked only to be told £3002!!!
I thought I must have misheard but no that figure was correct and the monthly payments would go up by £350 per month 🥴
I feel so bad for him, he's done so well buying his first car and passing first time. I know he's now deemed as a higher risk but surely this just isn't fair on the youngsters. Why can't there be a cap on how much insurance companies can charge?

surely insurance companies just shouldn't charge so much in the first place especially as these are their future business.

Insurance companies don’t pluck figures out of the air. It’s to do with the risk they face. A 19-year-old male new driver is very high risk to them and they don’t particularly want to insure them. They don’t care about “future business” at this time.

@daisypond

surely insurance companies just shouldn't charge so much in the first place especially as these are their future business.

Insurance companies don’t pluck figures out of the air. It’s to do with the risk they face. A 19-year-old male new driver is very high risk to them and they don’t particularly want to insure them. They don’t care about “future business” at this time.

I think you may be right.

@Daisyhoney

Daisypond ( love the name btw ) he only bought a cheap second hand car so he could get in practise before his test but he didn't check out what the insurance might go up to after he passed. We were both a bit shocked tbh.

Ok, so who did he practise with when he was practising? Can he add them to the policy? That should help.

Do you live in area with a high crime rate? This could be contributing too. I’ve been driving for over twenty years and I pay around £700 a year. My car is 10 years old and every insurance company I looked at wanted at least another £3k to insure my 19 year old DD. Sadly I think it just stops them driving.

What do you mean 'who should pay?' surely insurance companies just shouldn't charge so much in the first place especially as these are their future business.

So how do you expect an insurance company to pay for the compensation and legal costs of the major claims that younger and typically younger male drivers create? The money reflects the risk that driver in that vehicle poses of a claim and how costly the claim is likely to be. Those that pose a higher risk pay more, that’s simply how any insurance works. If you have a larger house with lots of valuables it costs more to cover due to the risk of a larger claim based on the underwriting company’s risk analysis. Cars and drivers are no different.

I’d suggest that your son shops around and looks at black box policies as others have said.

What do you mean 'who should pay?' surely insurance companies just shouldn't charge so much in the first place especially as these are their future business.

Insurance basically works on a “pooling” system - we all pay into the pot and those that need it receive out of the pot. If your son is to pay less than his fair share (which is “expected cost of accidents plus admin by the insurer plus profit by the insurer) then someone else has to pay more.

In fact - from what I remember of the general paper (which I took over 15 years ago - I don’t work in general insurance) there is already significant cross subsidies in favour of the young. Their “true” cost is even higher than is charged.

Since the 20th December 2012 there is also a massive cross subsidy in favour of men. This is because on that date “gender neutral pricing” came in which means that you have to charge a 19 year old male and a 19 year old female the same even though a 19 year old male is massively more likely to crash.

If he can make it through the next year without a crash then his costs will go down massively - it is the first year post passing that is really dangerous for drivers.

(Alternatively - tell him to get married! Dh and I got married very young and were shocked to find that once we informed the insurance company our premiums fell by quite a lot. Probably a bit extreme a solution though….)

It just is what it is I’m afraid. Insurance companies run algorithms to decide how risky someone is to insure and that determines their premium.

Age, experience, locations, annual mileage…etc those things all impact highly. It’s not wrong that someone with a high chance of having an accident pay 6x more than someone with a very low chance. That’s how the whole insurance industry works. Imagine how annoyed you’d be if you were paying the same house insurance premiums as someone living in a £5m house in a high crime area of London.

Fwiw I work in insurance, I’m now in my late twenties but I had to drive in my late teens/early twenties for my full time job and some years my monthly insurance payments were 1/3 my monthly wage! It was brutal but now I pay about £200 a year and would decline the opportunity to pay more to subsidise a load of new drivers.

Dh was on the policy so he could take him out when he first got the car so not sure if he still is now that son informed them that he passed his test. I'll have to check that one.

It can actually be cheaper going for a newer car. Some insurers don't like old cars as they are deemed less safe. You really need to balance the age of the car, the cost, the power, always add additional drivers, have a family policy if you can, and be careful in that crucial first year.

Well it does make sense that insurance rises after they've passed. Before they have passed they are always with an experienced driver who can point out and help them modify any dangerous driving. Once they have passed, they are on their own without checks or advice from an experienced driver in the passenger seat.

That is a crazy amount of money. I passed in my 30s with children (which I imagine makes me look safer than a 19 year old boy) and put my dad on as the other driver, which brought the price down quite a bit, but still paid around 1600 in first year.

I'll speak to him about the black box although I don't think he'll be that keen because of his working hours. As for paying 6 X what a low risk driver would pay, his quote for this year is well over 12 X what my dh pays for our car.

I passed my test at 32 and my premiums didn’t change. I think 25 is the cut off point for crazy price hikes.

I knew you’d say Corsa! it’s the boy racer car of 2020’s same as the old escort in the 80’s

Says a lot.

Tesco black box insurance is good. £900 for a 1.3 Ford
The black box has no restrictions on time of day; it’s mainly monitoring speed

On Shop Well For Less this week they went through exactly this process for the son of the family who was a similar age. They showed the things which had the biggest impact on reducing the premium, which IIRC were adding a parent as a named driver and installing a black box. PassPlus didn't make any difference in the example that they showed.

Ultimately, OP, I'm afraid insurers don't really want to insure 19-year-old new drivers. There should be a 14 day cooling-off period so DS needs to start shopping around.

@BluebellsGreenbells

I knew you’d say Corsa! it’s the boy racer car of 2020’s same as the old escort in the 80’s

Says a lot.

Haha!!! No seriously it was all he could afford at the time.😁

Once they have passed, they are on their own without checks or advice from an experienced driver in the passenger seat.

And instead of the experienced driver as a passenger, they might have a group of friends filling the car, who are perhaps being noisy and distracting the driver. Every summer there are news stories about serious accidents involving carloads of teenagers.

RTA are rhe biggest singe cause of death for under 24 year old. Even more so if male. Incredibly high risk for insurance companies.

So your son is ticking the boxes of a lot of the factors that are higher risk indicators:

19 year old newly qualified driver.
Old Corsa (yes the age and model will be a massive risk - less safety features on the vehicle, no idea of how mechanically sound it is, and it’s a Corsa which are notorious as boy racer cars).
Working hours - if your son is in a job where driving in the dark will be likely then that adds risk.
Location may be a factor here if it’s a high crime area or the roads around you are RTC hotspots, or lots of single carriageway A/B roads.
Etc etc.
So he will be one of the most expensive drivers in the vehicle combinations to insure. Change the factors (newer or different car that’s less powerful), black box, these will count.

Companies that quote the lowest rates for learners are not always the best for those that have passed.
Insurers are no longer allowed to discriminate between male and female drivers, although young men are by far the highest risk.
However, educate yourself on the topic and you can save hundreds if not thousands.

Thank you for all of your comments, there's been lots of helpful suggestions here. I will speak to him later and hopefully he will sort something else. I appreciate he's a high risk at his age but I was just venting a bit over the massive amount the insurance company expect him to find each month. One of his payments is more than ours for the whole year so I'm just really gutted for him. But thank you all 😊

Just to add we don't live in a high crime area

@Pinkchocolate

Do you live in area with a high crime rate? This could be contributing too. I’ve been driving for over twenty years and I pay around £700 a year. My car is 10 years old and every insurance company I looked at wanted at least another £3k to insure my 19 year old DD. Sadly I think it just stops them driving.

A friend of mine moved from Thornton Heath, which has a Surrey postal address, to London SE25 and her premiums almost doubled. There was barely half a mile between the two properties!

This was a long time ago now though, and I suspect that the post code analysis is a bit more subtle these days.

As he's using the car to drive to work and back, he also needs to remember to insure for commuting.