£17,000 to insure teenager's £2,000 Corsa
By Lauren Thompson
27 July 2010
Reader comments (62)
A learner driver has been quoted a staggering £17,000 to insure his £2,000 Vauxhall Corsa.
Highway Robbery: James Hayes cannot find affordable insurance
Student James Hayes, who turns 17 next week, saved for months to buy his modest one-litre car but has been astonished at the sky-high quotes for insurance. He will have to work flat out over the summer to pay the premiums.
His case highlights how insurers are increasingly using prohibitive premiums as a weapon against young male drivers.
The failure of insurers to offer reasonably priced insurance is being blamed for an explosion in uninsured drivers, which drives up the cost of cover for others and leads middle-class parents to commit a crime by putting themselves as the main driver on their children's cars.
This reluctance to insure young men is based on accident statistics. Men aged 17 to 20 are almost ten times more likely to be killed or seriously injured on the roads than older drivers, while one in five new drivers has a crash within six months of passing their test, according to road safety charity Brake
.
The Association of British Insurers (ABI) says the average claim of a younger driver is also three times more than older drivers.
But their refusal to cover male teenagers for affordable premiums has led to almost a quarter driving uninsured, according to Brake. And this ends up costing all motorists as they foot the £500m annual bill for accidents caused by uninsured drivers. Fines for driving without insurance can be as small as £200 plus six points on the licence.
James Daley, editor of Which? Money, says: 'Uninsured driving is just a knock-on effect of insurers charging high premiums. If insurers really want to combat this then they need to come up with innovative solutions to help young drivers reduce their costs.
'It's in everybody's interests to encourage young people to be better drivers and those who are responsible and maybe need to drive for their job should not be made to feel as if they're being discriminated against.'
Tony Hazell: It's time the car insurance industry innovated to help good young drivers
Car insurance premiums have rocketed 11% in the past three months, according to the AA. The average premium for drivers who shop around is £704, but most young drivers can expect to pay at least £1,500 more than this.
Mr Hayes says: 'I used six comparison websites and the cheapest comprehensive quote I found as a learner driver was £2,257 with ibuyeco. This rises to £3,555 with Admiral when I pass my test. It's ridiculous when my car is only worth £2,000.'
The most expensive comprehensive quote he received was from the Green Insurance company at £17,000 per year. Mr Hayes, who is studying for his A-levels, earns £5.60 per hour working at a supermarket during the holidays and weekends. As well as his insurance, road tax and MoT, he will also have to pay for driving lessons at £13 per hour.
Many youngsters get their parents to insure their car and go on the policy as a named driver — an illegal process known as 'fronting'. Mr Daley says: 'This really is a middle-class crime. Families think: "Well, everybody else is doing it so why shouldn't we?"
Mr Hayes, who hopes to work in the film industry after he finishes his studies, does not want third party-only insurance and does not want to invalidate his insurance by fronting.
Direct Line told him that it keeps all quotes generated by customers — so if someone initially got a quote for themselves, decided it was too expensive and got a new quote with their parent as the main driver instead, the insurer would not pay out on this policy because it has obviously been fronted.
A spokeswoman for Direct Line says: 'Fronting is fraud and the consequences could be grave — ranging from an additional premium being required, to the cancelling of a policy (and therefore non-payment of the claim) as well as the policyholder being added to the financial industry's fraud database.'
Malcolm Tarling of the ABI says: 'It is not uncommon for premiums for young drivers to exceed the value of their car. The main risk is not loss or damage to the car itself, but the potential cost of personal injury awards made against the driver if they cause an accident. This can easily run into tens or hundreds of thousands of pounds.'
For the cheapest cars to insure, visit www.thisismoney.co.uk/cheap
Will Thomas of Confused.com says: 'When you've passed your test, take the Pass Plus course. Only 6% of 17 to 25-year-old males do, but it saves them £1,037 on average before they reach 25. Start with a small-engine run-around in order to build driving experience.'