Age is more than a number when it comes to your insurance
Christelle Colman, Managing Director of Elite Risk Acceptances
New drivers applying for insurance for the first time are at a disadvantage when it comes to their age. According to Christelle Colman, Executive for Hi-Net-Worth Solutions at Old Mutual Insure, young drivers pay much higher premiums due to their risk profiles.
“Age is definitely a factor when you apply for motor insurance for the first time,” says Colman. “Transferring insurance from a parent’s policy to a child of 18 or 19 can almost quadruple the premium, and could even cost as much as the car repayment.”
Excess is also affected by age. Not only do young drivers pay higher premiums, but their excess is higher when there’s a claim. However, Colman advises parents and young drivers not to withhold any information from their insurance companies in an effort to lower their premiums.
Non-disclosure can be more expensive in the end
Adding a car to your policy and telling your insurance company that you are driving it, when in fact your child of 18 or 19 years old is going to be the one behind the wheel, could put you in serious trouble should there be an accident. Should your insurance company find out that you withheld information, they would have every right to reject your claim.
“The reality is, there is a high probability your child could have an accident,” says Colman. “Data has shown us that this is the time they have accidents; they are young, they are inexperienced. Boys are much more reckless drivers at this age, specifically, with data showing us they are involved in more frequent accidents with a higher severity.”
Education is key for new drivers
Colman advises parents to sit down with their children to talk about insurance and how it works. Following the rules of the road is as important as understanding the rules of their insurance policy, such as not allowing someone to drive their car if they are not listed as one of the drivers.
“You can be financially ruined if your child writes off their vehicle and was found to have been speeding or driving recklessly. In addition, you could be responsible not just for the loss of your own vehicle, but imagine if your child drove into a 7 Series BMW, for example. You would then be responsible for millions of rands worth of damage.”
Understanding the insurance policy restrictions
When a motor insurance policy stipulates that cover is only provided for specific named drivers, an insurance claim will only be successful if these drivers were behind the well at the time of the incident. “A situation that often occurs is parents listing themselves as the regular driver for their children’s care, in order to avoid the increased premium and higher excesses due to the high risk profile of the young drivers,” says Colman. This is a dangerous approach to take, as despite saving through lower premiums, claims my very well be rejected if the child is driving the vehicle at the time of an accident.
Also ensure young drivers are fully alerted as ot named driver clauses on policies, to ensure they don’t let their friends drive the vehicle if not listed as a driver.
“Insurance claims are settled in good faith. It’s about being honest with your insurer and disclosing the correct information upfront, because then you’ve got nothing to worry about,” concludes Colman.
