Saturday, June 13, 2009
Friday, June 12, 2009
How insurance companies are taking young drivers for a ride
Shelling out for a new car is enough of a financial burden as it is - even with the Government's scrappage scheme offering incentives.
So it can come as quite a shock to youngsters who have saved up to buy car to realise that their expenses may have only just begun - and they're set to get a lot more eye-watering.
Opting for a sporty model - that's the Peugot 206 GTi, for example, rather than the standard 206 - can push up your annual insurance premium by up to £6,485, taking the final cost of insurance to more than £11,000 for a young driver under the age of 21.
Buying a Peugeot 206 GTi, above, instead of a standard Peugeot can add up to £6,500 to insurance premiums while simple modifications can cost drivers dearly
Those three letters come at a price - and if your car happens to be second-hand - and you can pick up a used Peugeot 206 GTi for £2,500 - that means insurance costing more than four times the price of your car.
And the hidden costs don't end there. Simple modifications that cost car owners a few hundred pounds can end up adding large sums to their insurance bill. Research found that go-faster extras add an average of £2,682 to young drivers' insurance premiums.A rear spoiler can add £700 to a premium, while other modifications like tinted windows and upgraded exhaust systems also push up cover, comparison website uSwitch found. The cost of insurance for cars with modifications ranges from an additional £88 for a car with simple side skirts to £756 for tinted windows on a Ford Focus 1.6.On the same car, adding flared wheel arches can add almost £3,500. For those that go the whole hog with exhaust system changes can expect to pay an £6,225 - bringing the total car insurance cost up to £10,516.All drivers have seen their car insurance premiums rise by almost 10 per cent in the last 12 months, but new research by uSwitch.com reveals that, despite rumblings of an equality bill, it's still not an even playing field.Young drivers aged between 17 and 21 make up just seven per cent of motorists but foot 32 per cent of car insurance premiums - paying more than £3bn for their car insurance. If the Government's latest Equality Bill is passed the car insurance industry will have to openly justify the proportionate differences in young drivers' premiums.Some experts believe the hiked premiums for young drivers are justified.They account for 34 per cent of dangerous driving offences and out of the 8,479 drivers who were killed or seriously injured on the road in 2007, 30 per cent were under the age of 25. Young male drivers are ten times more likely to be involved in a motoring accident.Mark Monteiro, an insurance expert at uSwitch, said: 'Car insurance for young drivers is already really expensive so opting for cars that fall into a more expensive insurance group really isn't advisable.'"Insuring cars like the Peugeot 206 GTi will cost more than actually buying the car in the first place. As soon as modifications are made such as spoilers and tinted windows, premiums will rocket further.
'The Equality Bill has been designed to bring an end to age and gender discrimination across industries and places of work, as well as introduce more transparency.'If the Bill becomes law, the motor insurance industry will only be able to lawfully impose higher premiums for young drivers if based on published actuarial and statistical data.'Whether the Equality Bill comes to be passed or not, the most important advice to young drivers is to research the cost of insurance before you purchase a vehicle.'
So it can come as quite a shock to youngsters who have saved up to buy car to realise that their expenses may have only just begun - and they're set to get a lot more eye-watering.
Opting for a sporty model - that's the Peugot 206 GTi, for example, rather than the standard 206 - can push up your annual insurance premium by up to £6,485, taking the final cost of insurance to more than £11,000 for a young driver under the age of 21.
Buying a Peugeot 206 GTi, above, instead of a standard Peugeot can add up to £6,500 to insurance premiums while simple modifications can cost drivers dearly
Those three letters come at a price - and if your car happens to be second-hand - and you can pick up a used Peugeot 206 GTi for £2,500 - that means insurance costing more than four times the price of your car.
And the hidden costs don't end there. Simple modifications that cost car owners a few hundred pounds can end up adding large sums to their insurance bill. Research found that go-faster extras add an average of £2,682 to young drivers' insurance premiums.A rear spoiler can add £700 to a premium, while other modifications like tinted windows and upgraded exhaust systems also push up cover, comparison website uSwitch found. The cost of insurance for cars with modifications ranges from an additional £88 for a car with simple side skirts to £756 for tinted windows on a Ford Focus 1.6.On the same car, adding flared wheel arches can add almost £3,500. For those that go the whole hog with exhaust system changes can expect to pay an £6,225 - bringing the total car insurance cost up to £10,516.All drivers have seen their car insurance premiums rise by almost 10 per cent in the last 12 months, but new research by uSwitch.com reveals that, despite rumblings of an equality bill, it's still not an even playing field.Young drivers aged between 17 and 21 make up just seven per cent of motorists but foot 32 per cent of car insurance premiums - paying more than £3bn for their car insurance. If the Government's latest Equality Bill is passed the car insurance industry will have to openly justify the proportionate differences in young drivers' premiums.Some experts believe the hiked premiums for young drivers are justified.They account for 34 per cent of dangerous driving offences and out of the 8,479 drivers who were killed or seriously injured on the road in 2007, 30 per cent were under the age of 25. Young male drivers are ten times more likely to be involved in a motoring accident.Mark Monteiro, an insurance expert at uSwitch, said: 'Car insurance for young drivers is already really expensive so opting for cars that fall into a more expensive insurance group really isn't advisable.'"Insuring cars like the Peugeot 206 GTi will cost more than actually buying the car in the first place. As soon as modifications are made such as spoilers and tinted windows, premiums will rocket further.
'The Equality Bill has been designed to bring an end to age and gender discrimination across industries and places of work, as well as introduce more transparency.'If the Bill becomes law, the motor insurance industry will only be able to lawfully impose higher premiums for young drivers if based on published actuarial and statistical data.'Whether the Equality Bill comes to be passed or not, the most important advice to young drivers is to research the cost of insurance before you purchase a vehicle.'
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