How to cut the cost of your first car insurance policy
- Your first car insurance policy might well be the most expensive in your driving life. Compare to find cheaper options
- For every year you drive without a claim or accident your insurance should become cheaper
- Everyone pays a different amount for their car insurance. Just because one insurer is great value for your friends or family, it may not be similarly affordable for you
Congratulations! You’ve passed your test and you’re ready to hit the road.
All that’s needed now is appropriate car insurance cover so that yo u can drive safely, legally and affordably.
Why's your first car insurance policy so expensive?
First, some bad news: this will be one of the most expensive motor insurance policies you will ever have to buy as statistically new, inexperienced drivers are more likely to be in an accident and make a claim on their policy.
Now here’s the good news: the more driving experience you have, the lower your premium can potentially become.
Even after just one year of claim-free safe driving, statistics on the likelihood of you making a claim reduce and your no claims discount (NCD) will start to develop.
While average costs for new driver insurance have been gradually decreasing since 2009, the premium will still comprise over a third of the cost it takes for a new driver to get on the road.
Choosing the right type of car, insurance policy, cover and policy details can all help to keep costs as low as possible.
Types of cover
There are three types of policy to consider when insuring your car for the first time:
Third party only: A policy that covers you in any event where you’re liable for injury to others, including passengers or any damage to third party property. Any damage to (or loss of) your vehicle will not be covered - you may find it's a cheaper option, but try not to buy based on price alone.
Third party fire and theft: This level of cover includes all third party liabilities plus coverage if your car is stolen or damaged by fire. Any damage caused to the car, or personal injuries suffered, by the policy holder will not be covered.
Comprehensive: The highest level of cover possible, comprehensive policies cover all third party liability, theft or damage to your car plus the costs of any damage or injury that's your own fault - these policies should catch your attention as a new, vulnerable driver but make sure you compare because they're usually the most expensive option.
Comprehensive policies can sometimes include additional benefits such as breakdown, legal or windscreen cover or free use of a courtesy car in the event of a claim.
If you’re buying your first car through finance, your loan provider will often insist on comprehensive cover.
Statistics also show that third party only policies attract higher-risk drivers which can mean insurrs rate the risk as higher and increase the premium.
How to keep your insurance premium as low as possible
One of the cheapest insurance options for new drivers is to have a telematics ‘black box’ installed to your car that monitors your driving and transmits information such as your speed and road behaviour back to your insurer.
If you prove you’re a good driver, your premium will reduce faster than a traditional policy.
Most telematics providers base their target market on the under 25s, so they would be a good option to consider for younger drivers - Matt Oliver, GoCompare
Adding an experienced named driver
Having an experienced named driver with a clean licence and claims history on your insurance policy will reduce costs as their statistics are sometimes factored into your premium price.
Be aware that if you're the second named driver on the policy, you may not collect NCD, no matter how frequently and carefully you drive the car.
You should never lie about being the second driver if you're acttually the main driver. It's known as fronting and is illegal.
A universal technique for any age or experience of driver, security measures such as alarms, immobilisers, tracking devices and where you park your car overnight are all considered by insurance companies when calculating your premium.
But remember that the cost to modify your car may outweigh the savings to be made on insurance, but there are special modified car insurance policies, too.
Some insurers have started to offer discounts for drivers who install a dashboard camera.
These devices film the road while you drive in order to provide evidence and prove you’re not liable in the event of a claim.
There are also some insurers who provide dashcam policies and provide the dashcam as part of the cover agreement.
The right car
The type of car you decide to buy will also affect your premium.
Cover providers categorise cars into 50 insurance groups based on factors such as performance, security, price, repair time and the cost of repairs.
Group 1 cars are the cheapest to insure but there are differences in premium between cars in this group depending on what insurers see as risk factors such as theft rates, engine size and, sometimes, age.
Using comparison sites before you buy your car can provide insight into how much insurance will cost before you make your historic first car investment.
How to pay for car insurance
Whether you pay in full or pay-as-you-go, it’s important to understand that all insurers have different policies and incentives for different ways of paying for your insurance.
Some insurers offer a discount for paying your premium in full and all insurers have different APRs for direct debit payments.
Pay-as-you-go policies are a new development in insurance that’s tailored for new drivers as they allow you pay for the journeys you make.
Plus, if renewed monthly, they can still generate an NCD.
Ultimately, avoiding accidents, fines and penalty points is the safest way to keep your future premiums down and, for the first two years of driving, keep yourself on the road.