Car insurance for under-25s

How much you have to fork out on insurance depends entirely on your circumstances. There are key factors that will affect your premium: where you live, the type of car you drive, and (you guessed it) your age.

Statistically, young drivers are much more likely to be involved in an accident than many other road users. UK figures show that almost a quarter (23%) of 18-24 year olds have some sort of crash within two years of passing their driving test.

Other factors that affect how much your car insurance costs include:

• Driving experience and history. If you’ve been driving safely for years, expect to pay less. For new drivers, it’s a little more difficult to prove you’re a safe driver without a record to speak of and providers will typically class you as high-risk pushing your premiums up.
• Where you live. Where you live can affect your premiums especially if you live in a high-crime urban area, where the risk is greater compared to rural areas.
• Claims history. If you’ve made several claims in the past, this can push your car insurance premiums up.
• The sum insured. The greater the amount you insure your car for, the more you will have to pay for the cover.
• Make and model of your car. If you drive a sporty and powerful car, expect to pay more while driving a smaller and safer car is likely to work in your favour.
• Security. If your car doesn’t have an alarm fitted and is parked on a busy street at night, the risk of it being damaged or stolen is greater so premiums will typically increase.
• Car use. If you have a daily commute in “rush hours” through busy roads, you’re more likely to see higher premiums than if you only use your car for leisure.
• Your pay frequency. Some insurers will charge you extra if you choose to pay monthly as opposed to annually.
• Your chosen excess. If you opt for a higher excess, you can expect cheaper premiums. Just make sure you can afford it if you do need to make a claim.

No matter how old you are, there are three different levels of car insurance available.

• Third party car insurance.The most basic form of car insurance available and also the minimum legal level of cover required in the UK. Third party insurance covers you if you damage someone else’s property or injure them while driving, and will also cover your passengers too.
• Third party, fire and theft car insurance. This type of policy offers mid-level cover, combining a number of benefits at a lower cost. It includes third-party liability cover when you damage someone else’s vehicle or property in an accident, plus it also covers loss or damage as a result of fire, theft or attempted theft.
• Comprehensive car insurance. Comprehensive is designed to offer a high level of protection for you and your vehicle against an extensive range of risks. It provides cover for loss of or damage to your vehicle caused by collision, vandalism, theft or attempted theft, fire, hail, storm, flood, explosion and earthquake. This type of policy ensures that your vehicle is repaired or replaced following an insured event. It also includes legal liability cover for if you are ever responsible for damaging someone else’s vehicle or property in an accident.

See how the different policies protect your needs:

With third party cover, you:

• can make a claim for any damage or injury caused to other people and their vehicles when an accident is your fault

• can’t make a claim for any repairs needed for your car or for any injuries you sustain

With third party fire and theft cover, you:

• can make a claim for any damage or injury caused to other people and their vehicles when an accident is your fault
• can make a claim to replace your car if it’s stolen
• can make a claim on damage from an attempted theft such as a smashed window and stolen car radio
• can make a claim on an arson attack or fire damage to your car

• can’t make a claim for any repairs needed for your car or for any injuries you sustain

With comprehensive cover, you:

• can make a claim for any damage or injury caused to you and/or other people and their vehicles when an accident is your fault
• can make a claim if it’s unclear who is to blame for an accident. For instance, if you return to your car after a day trip and see that someone else has obviously reversed into your car in the car park and driven off
• can rest easier knowing that you have an added level of protection and won’t have to shell out for expensive repairs, just the excess, if any, agreed on the policy when making a claim

Now that you know what you’re looking for, you need to know how to find the policy that’s best for you. Here are the important things to look for and what they mean.

• Level of cover. This refers to what is covered by a particular insurance policy, or, in other words, what the insurance policy will pay out for or provide. For example, a third party policy will only provide you with financial compensation if you have to pay for the repairs of someone else’s property, while a comprehensive policy will do this as well as pay out in the event of certain damage to your own car.
• Limits. Limits are the maximum sum something is covered for. For example, you might get car insurance that covers you for up to £5,000 worth of accidental damage. This means the insurance company will pay for up to £5,000 of repairs.
• Exclusions. These are the conditions under which the insurance company won’t pay out. For example, you might be covered for car theft, with an exclusion for unlocked vehicles. This means you can make a claim if your car is stolen, but if it was unlocked at the time of theft the insurance company won’t pay out.
• Excess. This is your contribution towards the cost of any claim. Compulsory excess is applied to your policy no matter what, and could increase if the insurer views you as being in a higher-risk category. You get to set the amount of voluntary excess but the higher the excess, the lower the premium. So just remember to set your excess at a level that won’t leave you shocked and out of pocket if you do need to make a claim.
• Premium. This is the main cost of your car insurance policy. The premium is the amount you pay to have an active policy. It can usually be paid in monthly instalments or one, annual payment.
• Discounts. There are many discounts available for most car insurance policies. Some of the most common are pay-as-you-drive, which cuts prices if you don’t use your car a lot; multi-policy discounts, which could usually cut 10-15% off premiums if you’ve taken out multiple insurance policies with the same provider; discounts of up to 20% for buying car insurance online; and no claims discounts, which gradually reduce premiums for each year you go without making a claim.

When you buy your vehicle from a car dealer, the car insurance you take out will depend on the value of the vehicle and the factors mentioned above.

Under-25 car insurance for expensive cars

If you drive a newer model car with a higher market value, or a classic or modified car, then comprehensive insurance may be worthwhile, although in some cases prices may be very steep.

If you took out a loan to purchase the car, many lenders — including car dealer finance companies — will require that drivers aged under 25 years old take out comprehensive car insurance as a condition of the loan. This can be expensive, but your lender may insist on it. While it can require you to get comprehensive insurance, it can’t tell you which insurer to get it from, so you should always shop around for a deal, and haggle.

One of the most effective ways to keep the cost of car insurance down is to drive an inexpensive vehicle, or drive your current car as long as safely possible.

Under-25 car insurance for cheap cars

A cheaper car might not need as much cover as a more expensive or newer car.

If you have a used car or an older model and your car’s market value is low, you could choose to only take out third party cover. That way you’re financially covered in case you cause a major accident, but you’re not paying more in annual insurance premiums than your car’s worth.

You might not need comprehensive cover, which covers events like theft, natural disasters, especially if the excess is higher than your car is worth. However, it’s always worth comparing the cost of comprehensive cover with third party cover, as in some cases, comprehensive can cost less.