HInts and Tips on how to reduce your insurance premiums as a new driver:

Learning to drive is a rewarding and liberating step towards independent travel. That said, independence comes at a cost. Aside from the initial expense of driving instruction and car itself, new drivers’ car insurance is one of the biggest costs.

New drivers face high insurance premiums because insurance is calculated according to risk; those with less driving experience are considered more risky than road users with a good driving history and no claims bonus that reflects this.

To help cut the cost of new drivers’ car insurance, it’s important to shop around for the best deal. You could invest a few days to call around a number of insurers or you could visit Go Compare.com who will compare insurance quotes from over 120 car insurers across the market, in a matter of minutes.

But before comparing insurance premiums, you may want to think about the car you’re driving. Some cars are cheaper to insure than others; the Association of British Insurers categorise cars into groups one to fifty. Cars in groups one and two are generally the cheapest to insure. Cars in these categories include the Toyota Yaris, Ford Fiesta, Citroen C1 and Vauxhall Corsa. You will see that these cars have small engines and popularity in common; cars with less powerful engines are seen as less risky and popular, common cars are easy to find spare parts for. So purchasing a car from the lower insurance groups will help keep the insurance premium down.

Next it’s important to decide the level of car insurance that you need. Car insurance is a legal requirement to protect you and other road-users and it’s a form of protection against the cost of claims. There are three levels of insurance: Third party, third party fire and theft and comprehensive.

• Third party insurance offers the lowest level of cover, simply covering claims raised by other road-users when you are at fault.
  
  
• Third party fire and theft covers other road-users and fire and theft insurance for your car too.
  
  
• Comprehensive insurance is the ‘safe’ option, covering all road-users, including the driver, for a range of incidents such as windscreen damage, legal expense and personal injury to name a few.
  
  
  

Contrary to logic, third party isn’t always the cheapest car insurance option. For example, in a recent quote for a male driver, driving a Peugeot 206 with 2 months driving experience, third party fire and theft was cheaper than third party only insurance by £803.19*. So it’s not always wise to assume that the barest policy is the cheapest!
Once you’ve decided on the level of insurance required, follow these follow money saving tips to reduce your premium:

Pay in one instalment
Insurers provide the option of paying for insurance premiums monthly or annually. The monthly direct debit option appears to be a lifeline for those with expensive premiums. But it comes at a price: the premium increases by approximately a ten per cent to pay monthly, a hefty uplift for new drivers. 

Add an additional driver
Adding an experienced driver to a policy can dramatically reduce the premium. In a recent quote, an additional driver reduced the premium by £535.63 from £3399.74* to £2864.11*. But note that adding another driver to your policy is quite different to fronting, which is illegal. Fronting is the act of declaring yourself as an additional driver on another’s insurance, when you in fact intend to be the primary driver.

Set a high voluntary excess
The voluntary excess is the amount you contribute to a claim in addition to the compulsory excess. Voluntary excesses generally range from £0 to £500. Setting a high voluntary excess can reduce the premium. In a recent comparison, increasing the voluntary excess from £250 to £500 reduced the premium from £3399.74 to £3373.54. But whilst every saving matters, it’s important to consider what you could afford to contribute to a claim.

Avoid small claims
Small claims that cost little more than the total excess should be avoided as they will prevent the build-up of a no claims bonus. This means that next year’s premium will be equally or more expensive than your current premium. Instead, you will be aiming to reduce your premium, showing the insurer that you are a safe, low risk driver.

Avoid customisations
Modifications are popular amongst drivers, so popular that it isn’t always clear that a car has been modified. However, it is important to declare all modifications to the insurance company. Modified parts are rarer and thus take longer to come by when repair work is required. For this reason, insurance premiums for modified cars can be more expensive. For example, the modifications of a rear roof spoiler and rear valance could cost £4641.69* to insure, whilst a standard vehicle would cost £3399.74* to insure.

If you’ve tried and tested these cost cutters and want to save further, you may want to ask your insurer about the telematics box or pay-as-you-drive insurance policy. The telematics box is a discreet monitoring box fitted under the dashboard. It uses GPS technology to monitor your speed in comparison to a road’s speed limit. It also monitors breaking, acceleration and corner handling speed using accelerometers. Drivers who drive safely will be rewarded with cheaper premiums whilst those with more erratic speeds and breaking behaviour will suffer in terms of insurance. This is a fair way to assess risk as it is based on the individual rather than generalisations. So if your driving is exemplary, why not look into the telematics box!

* Prices provided by Gocompare.com, correct on 13.04.2011. Prices based on a 19 year old male driving a 2006 Peugeot 206, 1.4 engine, having held a full licence for 2 months.