Car Insurance Excess Options For Young Drivers

By Anna Chrisholm

How people handle their car insurance excess will make the difference between higher premiums and lower premiums. The excess is a way for the insured to take part in paying some of the costs when a claim needs to be filed. Some people are willing to let the car insurance company pay as much of the car repair bills as possible. When they set the excess low, they are allowing the car insurance company to assume most of the risk and they agree to pay higher premiums.

Car insurance companies base the premium’s amount on how big of a risk a particular driver will be to cause an accident. Young drivers are some of the highest risks on the roads because they are inexperienced. For this reason, they cause accidents more often than others because they are unfamiliar with how to manoeuvre the vehicle in difficult situations; therefore, they are charged the highest for their premiums.

Add Excess

Young drivers do have options. They can choose to pay excess for every type of cover that they purchase. Car insurance companies do not necessarily charge excess for all types of car insurance cover, but agreeing to add excess to these types of cover lowers the car insurance company’s risk and it can lower the young drivers’ premiums.

Once the claim is filed, the excess will be the amount that the insured will pay and the car insurance company will pay the remainder. Parents must be sure that they can afford to pay the amount if the young driver ever needs to file a claim to have the car repaired. If they can’t, this strategy isn’t going to be advantageous to anybody.

Non-Reflex Excess

Generally, car insurance companies are going to charge young drivers compulsory excess because they are such high risk. This would mean that they will have to pay a set amount pre-determined by the insurance company if they file a claim. Young drivers may agree to pay a non-reflex excess that is added to the compulsory excess. This will have the effect of lowering the premiums for drivers who choose to do this.

When a Large Excess Is Not Possible

The option of increasing the excess for young drivers may not be possible if the young driver has purchased his own policy. When young drivers have their own policies, they are charged the most astronomical rates because they are in an age group that has the most accidents. Since there is such a high probability of having an accident, young drivers will want to be cautious before they agree to pay, for example, 600 pounds excess for a claim they need to file.

Name the Young Driver to the Parent’s Policy

For these young drivers, it would be a better option to be added to their parents’ policies. Their parents premiums would be increased, but this amount will undoubtedly be lower than the amount the young driver will be required to pay on his own policy. Choosing to add the young driver to a parent’s policy may be the best plan especially if the young driver is only an occasional driver because he is attending school in a far away location. The parent can add the young driver as a temporary driver and this will keep their premiums low as well as help them avoid the need to add such a high excess.

Fronting

When parents choose to purchase a new policy and name their children as occasional drivers of the car, they must make sure that they are not “fronting.” This would mean that although the child is the main driver of the vehicle, the parents are claiming to be the main drivers with the child as a named driver. This would be inaccurate and cause the car insurance company to calculate the wrong amount of risk for this policy, and it is an illegal practice.

Pay the Premiums All At Once

Another way to avoid having to pay an exorbitantly high excess is to pay all of the premiums in one lump sum. To make their car insurance more affordable, people opt to make monthly installment payments, but this increases the cost of the insurance policy. Every month, the car insurance company will need to charge interest of about 15 percent. If the insured pays the premiums for the year, they will save a lot of money and their premiums will be lower. To further lower their premiums, they may only need to raise their excess by 100 pounds rather than 500 pounds to pay less for their car insurance.

Young drivers have options for lowering their car insurance premiums. They may choose to add excess to every type of car insurance cover, they may agree to increase their voluntary excess, they may be named on their parents’ car insurance policies and they may also choose to pay the premiums all at once, if possible. Because they are young and inexperienced, they will be charged the highest rates, so they need to find ways to assume more of the risk for their car insurance companies. When they do this, the result should be lower premiums.