Student Car Insurance Guide

Being a student is more expensive than most people realise. The maintenance loan and grant often don’t even cover the rent, never mind food, books, nights out and travel. Student motorists are hit even harder than most: premiums for  young drivers are at record levels. For those who only drive once each week to the supermarket the average motoring cost of a trip could have as high as £50. Thankfully there are ways to cut these costs, and students can rack up some of the biggest savings from taking out a telematics policy. These are the policies that fit  ‘black box’ into your car that informs the insurer about your driving, allowing them to base premiums on your driving skills and how much you actually get behind the wheel. Students who are good, or just infrequent, drivers, can obtain gigantic savings by switching from a traditional insurance policy to a telematics-based option. You may want to check out a student car insurance forum where you acn find out about ways to obtain a student car insurance discount.

The high cost of being a student motorist

You might have aspirations to be Jeremy Clarkson (or even James May), but unless you’re particularly lucky your income will be only a tiny fraction of theirs. Clarkson made over £14 million from the BBC last year. That’s over 2500 times the maximum maintenance loan for a non-London student. Yet your insurance premiums are probably several times Mr Clarkson’s despite the fact you drive an old banger and he drives notoriously accident-prone sports cars and SUVs. Hardly seems fair, does it? But insurers price based on risk, and chances are that as a young student you’re not as safe on the road as an ageing television show presenter, even if he’s speeding around a test track and crossing continents in jalopies.

There is some good news though. The latest (October 2013) figures from the AA’s British Insurance Premium Index show that premiums are falling  for almost all drivers and fastest for young motorists. Insurance premiums for 17-22-year-olds fell by 5% to 6%, while those aged 23-29 saw their premiums fall by 7% – 9% in the last quarter. The same age group saw their premiums fall by 15.5% over the last year. This downward trend is the reverse of what many were expecting from the gender neutralisation changes and great news for young drivers.

But despite the drop in premiums, standard policy prices remain at levels too high for most students to afford. Drivers between the ages of 17 and 22 will still regularly pay between £2,000 and £15,000 for car insurance annually, up to four times what middle-aged motorists pay. Even with several years of driving experience under their belt, twentysomethings with cars will often still pay over £1000 annually. Rates finally level out in your thirties, but (hopefully) you’ll have the money then to pay them. It’s during your teens and twenties, when education costs are steep, unemployment high, and wages low, that driving is so cost prohibitive.

Why students pay more

Insurance companies aren’t just duping young drivers, charging students more because they believe you wouldn’t know any better (although that may be part of the astronomic prices). The fact is, young drivers are statistically more likely to be involved in accidents, from fender benders to fatal crashes, making them riskier for insurance companies to cover. In 2011, 22% of road accidents involved drivers ages 17 to 24, a rate rivaled only by the elderly age group–and only 1 in 8 motorists in the UK is under 25.

1 in 5 new drivers will have a crash within six months of passing their test. When those drivers are 17-year-old males the rate rises to 40%. Young male drivers are more likely to speed, drive after taking drugs, neglect to buckle up, and engage in other risky driving behave, including overtaking blind and speeding around corners. Young drivers also lack the experience of older drivers, which can lead to mishaps, particularly when inclement weather makes travel tricky. Slippery roads were a contributing factor in 9% of accidents among young drivers, but only in negligible percentage accidents among older, and presumably more experienced, motorists.

Young male drivers, who are more prone to speed and drive intoxicated, have much higher crash rates than young female drivers, but don’t hope that your gender will save you pennies, women. EU regulations prevent discrimination on the basis of gender in insurance premiums and rates for men and women of the same age will generally be the same. Under the typical insurance plan, the company knows little about your driving record: previous accident points on your licence will increase your premiums but there is little incentive for good driving. Take all your turns smoothly and accelerate gently, even as a student? Under the standard issue insurance scheme, you’ll generally still face premiums that rival those paid by amateur drag racer who lives down the hall.

Risky behaviour

As we already noted, 22% of all road accidents involve drivers between the ages of 17 and 24. But the situation is even graver than that and if insurers are charging students and young people thousands of pounds for cover per annum, it’s mostly to offset the costs they incur the company with their reckless, inexperienced driving.

  • Road accidents are the single biggest cause of accidental death among people aged 15-24. Some 74% of deaths of young adults occur on our nation’s roads.
  • In 2011 alone, 421 people were killed in accidents involving young drivers and nearly 4,500 people were seriously injured. Nearly 50,000 people were slightly injured in accidents involving young drivers, and surely there were thousands of other mishaps that thankfully didn’t result in injury but could have caused significant property damage.
  • Among those killed or seriously injured by young drivers, 1552 were the driver themselves, 936 were passengers of that driver’s vehicles, and 2406 were occupants of other cars or pedestrians.
  •  Drivers under age 25 have the highest rate of breath test failures after a crash and in roadside checks. In 2012, 5.27% of drivers under 25 failed or refused a roadside breath test, compared to just 3.39% of drivers over age 25. Alcohol was a contributing factor in 4% of accidents involving young drivers, compared to 2% of those involving older drivers.
  • The Association of British Insurers (ABI) found that young drivers are far more likely to make a catastrophic claim–meaning extensive injuries and damages, with payouts topping £500,000–than other drivers.
  • Young drivers are also much more likely to make catastrophic claims including 3-5 bodily injuries, meaning their crashes involve a greater number of people. U.S.-based research found that the high rate of the accidents among 16-19-year-old drivers soared even higher when passengers were present. The presence of two or more passengers increased the risk of fatal crash among 16-19-year-old drivers by more than five times.
  • Young drivers are less likely to buckle up when with passengers, presumably due to peer pressure. And of young people killed in traffic accidents, only 1/3rd of drivers and 1/5th of passengers were seat-belted.

Telematics can help

But young, cautious drivers can allay their insurers’ fears and knock down their high premiums by opting for a telematics-based policy and then driving safely or just infrequently. There are two main types of telematics policies: ones that uses driving performance data, and ones that measures only how far and when you drive.

  • If you know you’re a better driver than most people your age, opting for a full telematics policy that tracks your driving performance will typically give you the best savings. Policies provided by different insurance companies work in slightly different ways, but almost all of them track metrics such as road position, acceleration, braking and speed. Those who demonstrate they are safe drivers by performing well by these metrics will be rewarded with lower premiums. Some insurers start everyone in the lowest premiums and raise them for drivers who aren’t performing excellently, while others work in reverse, starting everyone on the highest premiums and cutting premiums for better drivers over time. Many others start somewhere in the middle, with the possibility of your premiums rising or falling depending on how you drive.
  • The second type of telematics policy is simpler, but typically doesn’t offer as good savings for students. It only tracks mileage and the time of day you drive. These policies often allow you to top up your mileage limit online if you need to by paying a little extra premium. They are a great option for the occasional driver and are cheaper than a traditional insurance policy as the insurer knows you’re not lying about how frequently you drive. If you’re a new driver who isn’t yet confident about your driving ability and will only use your car occasionally –for instance, on a weekly trip to the supermarket–this could be the best option for you.

Insurance premiums for those who don’t use telematics are based on the average cost to an insurer of claims from someone who fits your demographic profile and claims history. As most students are new drivers they have no, or very short, claims periods and hence are unable to discount their policy based on their past claims history. This is one of the reasons telematics offers such big savings to new drivers. Young drivers also typically are involved in, and the cause of, more accidents than older drivers. With traditional insurance policies even good drivers are paying for the mistakes of bad drivers based simply on their age. With a telematics black box fitted and a driving performance based insurance policy, you’ll no longer be subsidising your peers’ bad driving. Savings vary from person to person, and policy to policy, but it’s common to cut hundreds of pounds off the cost of your insurance by switching to a telematics insurer.

Other ways to save money

Telematics offers perhaps the biggest savings for a student driver, but there’s other way of cutting down the cost of motoring. Most of these savings can be combined with telematics insurance to offer even greater savings, or used separately. The savviest students use as many of these as possible to stretch their student loan as far as it can go.

  • Drive less – This is never going to be the most popular option, but it can be a real money saver. The cost of petrol and diesel fuel has been high for a few years now, making filling your tank a significant expense. Depending on where you live you might also have to pay costly parking charges. If you live close to the university, considering walking or cycling instead, or take advantage of student bus pass deals. Use your car only when it really is necessary, such as on shopping trips or driving back to your parents at the end of term. If you’re driving to the supermarket regularly you might be able to save money by shopping online instead. Often delivery will be free if you’re around at odd times of the day when those in full time jobs wouldn’t be home. If you finding yourself only driving once a week on average, you might be better off selling your car and joining a car hire club if one operates in your area.
  • Drive better – Driving better with a telematics policy will save you money in your premiums, but you can also making substantial savings by driving better no matter what type of insurance you have. Most drivers waste fuel by accelerating too quickly and braking too late, as well as driving in an incorrect gear. If you’re a particularly bad offender you could cut your fuel bill by as much as 30% by changing these habits.
  • Save on fuel – Some supermarkets offer discounts to those who do their shopping and top up their fuel at their stores. It might only be a few pence off each litre of fuel, but over time it really does add up. You can also save money by using a cash back credit card, some of which offer as much as 3% cash back on fuel. But remember to set these to pay off in full each month or the interest will cost you several times what you earn in cash back.
  • Traditional insurance – If you don’t want to go for a telematics policy, perhaps due to concerns over privacy or simply because you don’t think you’re a good driver, then you still need to ensure you get the cheapest policy. Once upon a time this meant only going for Third Party, or Third Party, Fire and Theft instead of Fully Comprehensive insurance. Today, as strange as it sounds, the opposite is generally the case. Despite offering more protection, fully comprehensive is generally cheaper. This is because insurance companies discovered that those who paid for fully comprehensive insurance tended to be better drivers and cost them less to insurance than those that opted for just Third Party cover.
  • Use the council’s MOT centre – The maximum cost of a MOT is now fixed, so whoever you go with will charge you at most £54.85. Some of these garages therefore make money by telling you that you’ll need to fix minor problems in order to pass your MOT. As you’re already at their garage most people will pay for the repair there. You can avoid this by going to a council-run MOT centre, as these generally don’t perform repairs themselves and therefore won’t exaggerate problems.
  • Got a parking ticket? Fight it – You won’t win every time, but with enough research and evidence there’s a good chance you can successfully challenge an unfair parking ticket.

Whether you are looking at university student car insurance or just need information on a student car insurance black box this guide should prove useful and to consider reading on a student car insurance forum where you will find out about the student car insurance cost.

See our GUIDE: Students, discount driving insurance, telematics, black box (and free multi-topic essay plan) .