How to manage risk and premiums for the inexperienced driver

It’s every young person’s dream and every parent’s nightmare – when our sons and daughters get the keys to their very first set of wheels and can officially drive themselves to where they need to go.  Besides the nostalgia surrounding your child’s impending independence, there are important issues of safety and insurance costs that go hand in hand with being a young and inexperienced driver.

There are, however, ways to better manage the inherent risks that come with driver inexperience and the resulting higher premium costs according to Aon South Africa, a leading insurance brokerage and risk advisors.  Mandy Barrett of Aon South Africa offers some important pointers on the do’s and don’ts of motor insurance for young drivers:

DO:

• A good place to start is to check the terms and conditions of your insurance cover.  If you have an open driver policy, you will be covered for anyone who holds a driver's license and drives the vehicle with your permission.  However, if the cover is on a nominated driver basis, make sure to notify your broker and add your child as a nominated driver on your insurance policy.  You run the risk of having any claim repudiated if your child does have an accident, as your insurance premium may have been on your risk profile and not that of your child.
• Telematics is a young driver’s best friend when it comes to building a track record and profile with an insurer. More insurers are using the data and analytics derived from telematics to develop risk rating profiles based on individual driving behaviour. The young driver who sticks to the speed limits avoids harsh braking and turns, drives responsibly, attends an advanced driving course and uses Uber instead of driving at night, can look forward to a better premium rating based on their responsible driving behaviour. 
• Investigate different types of cover available.  Third party insurance, while being much cheaper, is the minimum level of cover.  It only pays for the damage caused to another driver's vehicle and their property and protects any passengers (third parties), but will not cover any damage to your own vehicle, which will be a cost to your own pocket.  Third-party, fire and theft cover is an extension of third-party only insurance but also protects your vehicle if it is stolen, or if it catches fire.
• Comprehensive motor insurance is the widest level of motor insurance cover available, covering accidental damage to your vehicle in addition to third-party, fire and theft. If you have an accident, even if it was your fault, you can claim the cost of repairing your car and any other damage you may cause to a third party.  It is important to check your policy as some insurers design the basic comprehensive cover and you may then need to ‘buy up’ for additional cover and services such as towing fees, hail damage, roadside assistance and so on.
• Adhere to the provisions of your insurance cover– make sure any security requirements are adhered to such as a tracking system, immobiliser and that the vehicle is parked in a safe and locked premises at night. Remember that when a tracking device is a requirement, part of the requirement is that the tracking subscription is maintained.

DON’T:

• Some insurers offer the promise of low premiums and while these premiums may be cheaper, the catch comes in on having to pay a very high excess in the event of a claim.  Consider this example – on her vehicle worth R150 000, Sue gets a lower premium rate of R428 per month, on the proviso that she accepts a basic excess of 25% of the retail value of her car.  That means, should anything go wrong and Sue needs to claim for damages or theft of the vehicle, she will be liable for the first amount or excess of R37 500.  Always discuss such an option with your broker and get some professional insights on whether this is a feasible solution for your specific circumstances. 
• Don’t buy a high-powered, expensive first car.  We see parents buying their children expensive and high-powered vehicles, which is always a concern as they don’t have the experience to handle the power and the speed – and insurers will look at this power to weight ratio when insuring the vehicle and driver.  Safety and reliability should be a primary consideration so be sensible in your choice. Extras such as alloy wheels, sound systems and speakers all add to the total sum insured of vehicle insurance and ultimately the cost of insurance.
• Drinking and driving are off limits.  Besides being illegal and a serious risk to yourself and others on the road, an accident caused under the influence of alcohol or a drunk driving charge will wreck your risk profile for good.    

The advice of a qualified insurance broker will stand you in good stead and enable you to compare apples with apples, in addition to pointing out requirements or exclusions that may be to your disadvantage. Finally, when it comes to insurance for an inexperienced driver,  consider additional personal liability top up cover, given the risk of major claims in the event of an accident or incident where the young driver is proven to be negligent,” concludes Mandy.