New policy offers hope for young drivers

Insurers are slowly becoming more flexible with premiums for learners

The new exam will require learners to follow satnav directions for 20 minutes (OLI SCARFF / GETTY IMAGES)

A pair of L-plates will put a smile on the face of many a 17 year-old, but it's a different story for parents forced to pay through the nose to get their children insured.

Many insurers refuse to cover learners under the age of 21 or charge excessive premiums to allow them to drive the family car, but a new wave of bolt-on insurance products has hit the market providing a cheaper alternative.

The AA has recently launched its Learner Driver Insurance, available online, in co-operation with specialist Collingwood insurance. This costs £96.50 for a 28-day, fully comprehensive policy, making it a useful, low-cost way to get cover.

"Specialist insurers such as Collingwood Insurance regularly return a really competitive quote for provisional drivers. Not only is the price reasonable but the duration of the policy is also flexible, starting from 28 days, but you can add extra months as you need them," says Steve Sweeney, the head of car insurance at price comparison site Moneysupermarket.com.

The only stipulations to the Collingwood policy are that the vehicle you drive be worth under £20,000 and in insurance Group 15 or below, and you are accompanied by someone over 21 who has held a valid full licence for at least three years. This could include parents, grandparents, friends or any other relative. If the provisional driver has an accident, the claim is made on their insurance without affecting the main driver's own insurance.

Provisional Marmalade is another specialist insurance product for learner drivers with premiums between £90.95 and £99.50 per month. Again, the policy is in the name of the learner driver and is separate from the car owner's insurance, so parents can rest easy that their no-claims bonus will remain in tact.

"On a traditional policy, premiums to add an L-plate driver could be staggeringly high – often in excess of £3,000. The car owner also had to put their no-claims bonus at risk if the learner is responsible for a collision," says Nigel Lacy, the co-founder of Provisional's sister company, Young Marmalade.

There's undoubtedly room for innovative ways for young people to get cheaper cover. A 55 year-old man with a Ford Focus hatch 2005 and a modest 1.6 engine could see his premiums rocket from an average of £187 to £1,705 if he wanted to add a 19-year-old son to the policy, according to comparison site Confused.com. As well as levying sky high premiums, some insurers have raised the minimum age of named drivers to 21 or even 25, keeping provisional drivers out of the market altogether.

"The high cost of insurance has led to young drivers putting off attempting to learn – the number of 17- to 21-year-olds with a provisional licence has fallen by almost a third over the past 15 years – while an estimated 300,000, one in four provisional licence holders, drive uninsured," says Mr Lacy.

Despite the products' immediate financial benefits, one thing to watch out for is the excess level. At Collingwood, for example, both the damage excess and the fire and theft excess are £350. Another problem is that this is only a temporary reprieve and premiums may well rocket up again when the provisional driver passes his or her test.

Above all, the biggest risk is that there is no opportunity to build up a no-claims bonus. Drivers under 25 insuring their own vehicles will pay much more for the privilege, but the benefits of building up their own no-claims bonus can be impressive.

Nineteen-year-old provisional drivers going fully comprehensive on a 1995 Ford Fiesta 1.1 would pay on average £1,575 for cover, but for this they will have a year's no-claim bonus. Therefore, when they pass and renew their cover as a full licence holder, they can access much cheaper insurance. Confused.com says that such drivers with a year's no-claims bonus would pay on average £1,488, while those who had failed to rack up this would face premiums of a massive £2,221.

"Typically, premiums will dip in price when drivers hit 25, but while they're waiting, building a no-claims bonus can lead to valuable discounts in the long run," says Will Thomas from Confused.

Once drivers are fully licensed, there are other ways that they can cut costs. At Young Marmalade, for example, a low-cost insurance and car package deal is offered to individuals aged 18 to 25. The idea behind the scheme is that young drivers buy newer cars with higher safety ratings and take additional training in exchange for reduced premiums.

Young drivers should also take a Pass Plus course, as many insurers will offer drivers with this certificate discounts of about 35 per cent for the first year. Other tips include getting a car with a small engine; Confused research found that the Ford Ka returned the lowest premium on average last year.

"If the car is low value, drivers might wish to consider a third party, fire and theft policy, as young driver excesses could make the comprehensive cover a pointless exercise," says Mr Thomas.

Expert View

Will Thomas, Confused.com

Insurers see young drivers as a high risk – mainly because they are more likely to have an accident. To get cheaper premiums, a young driver will need to build up experience and a no-claims bonus. It will be expensive at first and there is no getting round this. However, after the initial outlay, young driver can expect their premiums to dramatically reduce year on year.

Drivers should get the benefit of claims-free driving by having either a car insurance policy in their own name, or ensure that the policy they are on allows them to earn no-claims bonus as a named driver.