Young Drivers Insurance…

So article two is here and the main issue to be addressed is young drivers’ insurance. In
beginning a definition of a young driver would be most appropriate. A young driver, in the eyes
of insurance companies would be any individual who is driving either:

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• 1. Under the age of 25 years or
• 2. Driving for less than two years or rather, an individual who has been issued their drivers’ permit within two years

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Either way, falling into any of these categories would mean high or higher premiums than
possibly any other demographic. Can this be justified or is it a rip off? Well for those who do not
understand what insurance does, how it works and its purpose, it may seem to be a rip off.

However, it is NOT…

The higher premiums are as a result of higher risk. It is only obvious that a less experienced
driver would be more likely to be involved in an accident than an experienced driver.
Furthermore, there is empirical evidence and statistics to back up. As such, the insurance
premiums are calculated to reflect the risks. By doing this, the insurance company can be able to:

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• 1. Cover its fixed and operating costs
• 2. Pay employee salaries
• 3. Function at a profit (it is still a business and as such, must be profitable)
• 4. Pay out on claims (if this cannot be done then the insurer has failed)

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In an attempt to dodge these higher premiums many young drivers either drive without
insurance or would drive a vehicle that they themselves are not covered for.

The first option is illegal and should not even be an option. However, option two is legal and quite popular in our country. This however is ill advised since firstly, what happens in the event of an accident? Well, what happens is that you, the driver, is liable to the cost of all damages and injuries both to your vehicle and to the other parties’ involved. The other down side of choosing to drive under your parents insurance as a youngster is that you do not get the chance to build up your NO CLAIMS DISCOUNT. By having insurance and not claiming, the insurer rewards you with what is referred to as a no claims discount. It is self explanatory and this discount results in huge reductions of your premium as time goes by. Therefore, it is always good to get as early a start on building your no claim discount since it can prove to be quite beneficial.

There are a number of ways that young drivers can reduce their premiums. Unfortunately, many are unaware of these options and as such are not necessarily paying their lowest premiums. The next article would advise on how these young drivers as well as experienced
drivers could lower these costs.