With affordability and safety driving the conversation in the young driver insurance industry, insurers are starting to release next-gen insurance options to tackle the problem head on. Verity Hogan, Content Manager at Young Car Driver by Autedia, explains more
In the young driver insurance industry there are two hot topics: affordability and safety. It’s no secret that drivers aged between 17 and 24 pay the highest insurance premiums. It’s also not a secret that this is because this age group are also the most likely to be involved in an accident.
The road safety charity Brake found that 1 in 5 drivers crash within a year of passing their test. Government data from 2022 reports that 101 young drivers were killed on UK roads in that year, which represents 19% of all car driver fatalities, and over 1,200 were seriously injured. With male drivers in this age group four times more likely to be killed or seriously injured in a traffic collision than those aged over 25, promoting safety for young drivers is essential.
While these statistics underline the reasons why insurers perceive young people as high-risk drivers with higher priced premiums as a result, these unaffordable policies can be prohibitively expensive. Young drivers who can’t afford insurance are either prevented from getting out on the road and starting to build up vital experience or they may start to take risks such as driving without insurance.
That’s where next-gen insurance policies come in. These new types of insurance are unlocking affordability for young drivers while simultaneously promoting safety.
Black Box or Telematics Insurance
Black Box or Telematics Insurance is arguably the best-known next-gen insurance policy aimed at young drivers. By offering savings on insurance renewal for careful drivers, this type of policy incentivises safe driving and helps to make premiums more affordable.
A black box will be fitted in the young person’s car to monitor their driving. Keep within the speed limit, take time on sharp corners, and brake gently, and they could earn a discount, but show dangerous behaviours like accelerating rapidly, hard braking, and tailgating and they won’t qualify for any potential savings.
Some black box insurance providers may also put a limit on the number of miles a young driver can drive and establish a curfew, but policies without these restrictions are also available. These limits are designed to prevent young drivers from being on the roads at high-risk hours, such as late at night, and spending a lot of time behind the wheel without taking a break.
For young drivers who use their parents’ car, black box insurance can also sometimes allow parents and guardians to monitor their child’s driving. This has been shown to provide increased peace of mind and limit the likelihood that the young driver will take unnecessary risks.
Named Driver Insurance
Several car insurers are now starting to offer next-gen named driver insurance. These policies are known as Named Young Driver Insurance, and they require a black box to be fitted. This will be used to determine when the young driver is behind the wheel rather than their parents and monitors their driving habits each time they venture out.
Named Young Driver Insurance policies are in the young driver’s name, but the car they drive can be owned by someone else. That means they won’t affect their parents’ no claim bonus and could start building up their own if they drive safely. They shouldn’t be confused with standard named driver insurance, which is where a young driver is added to their parent or guardian’s policy (for an added cost) and there’s no way for the insurer to monitor who is behind the wheel.
Pay As You Go Car Insurance
Pay As You Go Car Insurance is a next-gen insurance product that could be ideal for young drivers who share their car with their parents and don’t need to drive regularly. Instead of taking out a standard 12-month insurance policy, they’ll only pay for the miles they’d like to drive.
Depending on the terms of the policy, the young driver will typically pay for a set number of miles each year that will reset on renewal. A black box will usually also need to be fitted so that their mileage can be tracked.
This could be a more affordable option if the driver uses their parents’ car to visit friends once a month or take a weekly trip to the supermarket, but they don’t need to drive every day. They might even be able to build up a no claims bonus too.