Congratulations! You've passed your driving test. Now for the bad news. If you are a 17-year-old male, the insurance company is going to want an annual premium of £2,000 to £3,000 a year.
Forget about the cost of buying an old banger or even the price of petrol. It's the insurance that is now the biggest challenge for any new driver about to take to the roads.
It's not hard to see why insurance companies set prices so high. Male drivers aged 17 to 20 are over six times more likely to be injured while driving than older men, and almost 10 times more likely to be killed, according to research by the Association of British Insurers.
Earlier this month, however, the insurance broker Swinton tried to ease the cost to new drivers by offering an initial six-month policy after which time, if no claims have been made, a 30% discount is offered on a year's renewal. This could bring down premiums for the first 18 months by about a third. And drivers who can get through the first year-and-a-half without a claim are then rewarded with a 45% discount when they come to renew. Had they been with a more traditional insurer, they would still only have built up one year's no-claims discount (NCD).
Swinton's initiative is the latest in a series of innovations as companies try to find ways to offer young drivers cheaper insurance, without opening themselves up to huge claims.
In October 2006, Norwich Union was the first insurer to offer a "pay-as-you-drive" policy aimed at first-time drivers and those who drive fewer than 8,000 miles a year. By using a black box installed in the car, the driver is charged according to when the journey is made and the type of road taken. By avoiding peak times and using motorways you pay less, while young drivers are charged £1 per mile to drive after 11pm — when accidents are more likely to happen. More Than launched a similar version called Drive Time, aimed at those aged 18 to 25 who want comprehensive cover, while Norwich Union also offers what the industry calls "accelerated NCD", by which drivers are offered the equivalent of a one-year NCD after nine months.
Insurers are also cracking down on parents who "front" children's policies. If the car is owned and predominantly used by a parent, then it is all right to add the newly qualified driver to the policy. However, if the car is to be mainly used by the new driver, they will need a policy of their own. Get caught fronting and the insurer may refuse to pay.
That said, there are a number of other ways in which it is possible to lower the premium:
• Opt for a small car with a small engine. Cars in the insurance groups 1-3 are viable — anything bigger and you will pay £5,000-plus.
• Adding a parent with a clean record to the policy will often bring the price down.
• Consider a " pass plus" training scheme. By paying about £180 for six extra lessons, you could save £700 on the first insurance premium alone. Check before you sign up what discount will be given by your insurer.
• Don't pay for the policy using instalments if you can avoid it. Kwik-Fit is a good bet for cheap insurance for new drivers; however, it charges 39.9% APR if you spread the payments throughout the year.
Women drivers
Sheilas' Wheels, the women's car insurer, claims to offer "bonzer car insurance deals" for female drivers. The companyhas built up more than 250,000 customers since its launch three years ago, but what does "bonzer" mean in premium terms?
Well, according to research, it can mean paying nearly £100 more a year than with the cheapest general insurer. The comparison site Moneyexpert.com found that the cheapest policy for a 35-year-old female Citroen C5 driver living near Glasgow was from Liverpool Victoria at £187 a year. That was £26 less than the best quote from Sheilas' Wheels, and £94 cheaper than women-only rival Diva Car.
Specialist women-only insurers sprang up a few years ago in recognition that women are safer drivers than men, and therefore represent a lower underwriting risk. But those included in the research proved more expensive than a raft of other general companies, including Sainsbury's Bank, Halifax
and even Esure, the company behind Sheilas' Wheels.
In car insurance, perhaps more than any other financial purchase, it pays to shop around. In some cases, the women-only insurer will give you the best quote; just don't assume from the marketing that it always will. They do, however, provide something unique with "handbag cover", which offers up to
£300 for handbags stolen from a car — in addition to the amount of cover provided for "personal belongings ".
