(i) Compulsory and Voluntary Excess:
All insurance policies for young drivers come with a ’Compulsory Excess’. This is the amount you must pay towards any claim you make. Most UK Insurance Providers have a minimum Compulsory Excess of £200 for new drivers.
Insurers will usually offer you a discount on your premium if you agree to a further ‘voluntary excess’. The higher your voluntary excess, the less the insurance company must pay towards your claim. For this reason, higher voluntary excess will usually result in a lower premium, and you can significantly lower your premium with voluntary excess. The combination of your compulsory and voluntary excess is known as the Total Excess.
Example: If your agreed Total Excess is £400 and you make a claim worth £2000, you will be responsible for paying £400 towards the claim and the insurer will cover the remaining £1600.
(ii) Main Drivers and Named (Additional) Drivers:
Every insurance policy will have a Main Driver: The person who will be driving the car the majority of the time. Named drivers are also known as additional drivers. These are extra drivers such as parents or siblings that can be insured to drive your car on an occasional basis.
(iii) No Claims Bonus or Discount (NCB):
Your Insurance Company will provide you with a 1-Years NCB for each and every year of claim-free driving that you have. This NCB can be used as a discount on your next policy and is transferable across all UK insurance companies.
Making a claim will cause you to lose your NCB. The exception to this rule comes once you’ve built a 4-Year NCB where you can opt to ‘protect’ your NCB. A protected NCB allows you to make one claim without affecting your NCB. Subsequent claims will result in you losing your NCB and you’ll have to start collecting again.
In general, only the Main Driver on a policy is awarded a NCB. The exception to this lies with a few insurance companies that are offering NCB’s for named drivers. Bear in mind that named driver NCB’s are non-transferrable and can only be used at the Insurer that issued it.
(iv) Insurance Groups (1-20 and 1-50):
Insurers use insurance groups to classify the level of risk a particular car is to insure. All cars sold in the UK since 1st January 2010 are classified under the new grouping system of 1-50 whilst prior models use the older system of 1-20. Higher groups represent a greater risk to insurance companies than lower groups.
As a first car buyer you should be on the lookout for a car that is cheap to insure. Smaller cars with low powered engines tend to be the cheapest to insure but bear in mind that the styling of a car can negatively affect the insurance group of a car. Insurers are particularly interested in the type of buyer attracted to a particular car, and a 1.2L hatchback that tends to attract ‘boy-racers’ will be more expensive to insurance than a 1.2L hatchback that attracts middle-aged women.