When it comes to car insurance, young drivers pay higher premiums than older drivers. This is a very annoying fact, especially when you are a young driver and you're just getting started in your chosen career, meaning your budget is tight. Most medical insurers take your financial situation into account, so why can't car insurance providers? And what exactly is the reasoning behind them charging younger drivers more? Well, there are two reasons:
- Inexperience. Insurance companies reason thatthe longer you have your licence, the more time you've spent on the road and the better your driving capabilities are likely to be. So naturally young drivers are considered to be a greater risk because they have less experience.
- The odds are against you. According to statistics, South African drivers aged between 18 to 29 cause five times as many accidents as any other age group. What's even more worrying is that most of the accidents caused by young drivers are fatal and alcohol related. The statistics also show that car theft and vandalism are higher amongst young drivers than any other age group.¹
Taking these statistics into account it becomes clear why insurance companies feel obligated to charge young drivers more. The risk of something happening is significantly higher and this risk factor is reflected in the price.
So how can a young driver lower his or her car insurance premium? Is it even possible? The answer is yes and here's how:
1. Get a smaller car. This is probably not something you want to hear (never mind consider) but the fact is that a 1.1 or 1.2 litre car will cost you a lot less per month than anything from a 1.6 upwards.
2. Don't pimp your ride. Modifications like alloy wheels, audio systems or souped-up engines make your car more attractive to thieves, meaning the risk of it being stolen is higher, and the higher the risk the higher the premium.
3. Increase your car's security. Have an immobiliser or an alarm installed. Also ensure that you have safe and secure parking for your car, preferably a garage that can be locked. Tell your insurance company about these changes and adjustments and they'll adjust your premium.
4. Increase your excess. The higher your excess the lower your monthly premium. Just be aware that if your car needs to be fixed after an accident the excess needs to be paid first before the insurance company pays the rest. If you decide to go this route make sure you always have enough money saved up to pay the excess.
5. Become a better driver. Take defensive driving courses and send your insurance provider copies of the certificates that show that you've successfully completed them. ²
These five steps will ensure that your insurance premiums get lowered, but even if you only implement one or two of them, the difference will be significant. And don't be cocky! Be a safe driver. Don't give your insurance company more reasons to label you 'high risk'.
1. Ntando Makhubu (2013-04-22), “Youth are greatest menace on SA roads”, http://www.iol.co.za/motoring/industry-news/youth-are-greatest-menace-on-sa-roads-1.1504068#.U6AsHvmSxqU
2. Gocompare.com, “Young drivers' car insurance guide”, http://www.gocompare.com/car-insurance/young-drivers-car-insurance/guide/
MiWay is a direct, short-term insurance provider offering a range of value-for-money insurance products. As well as motor, household and homeowners insurance, there are also add-on products such as warranty cover and liability cover.