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Frequently Asked Questions |
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Should a young driver insure in their parents name?
Not if the young driver is the main user of the car, otherwise the policy may be invalid and the insurer could refuse to pay out for a claim.
Young drivers will generally save money in the long run by building up their No Claims Bonus as soon as possible. People sometimes decide to insure the car in one of their parents' names. Whilst there may be a cost advantage in the first year of doing this, it may work out that in the following years this becomes a false economy.
A No Claims Bonus is a bonus applied to the main driver of the vehicle. If a parent insures a car in their own name with a young driver named on the policy then the following may occur:
| |
Year 1 |
Renewal |
Two Year Total Cost |
| Parent Risk |
£300 |
apply NCB of 40% |
£180 |
|
Young Driver Risk
As named occasional driver |
£700 |
|
£700 |
|
| Premium |
£1000 |
|
£880 |
£1880 |
At renewal the premium does not decrease by much, this is because the younger driver is only counted as an occasional driver and therefore the insurer tends to make the assumption that they have not necessarily built up enough valid experience to qualify for a discount. This is one of the main reasons why additional drivers do not qualify for No Claims bonus.
We could now consider insuring in the young drivers name:
| |
Year 1 |
Renewal |
Two Year Total Cost |
| Young Driver risk |
£900 |
apply NCB of 40% |
£540 |
|
Parent Risk
As named occasional driver |
£200 |
|
£200 |
|
| Premium |
£1100 |
|
£740 |
£1840 |
If we compare the two examples above it will be apparent that it may be more expensive to insure in a parents name and that a young driver is not accruing their own discount.
It is highly recommended that the main user of any vehicle be the main insured name. This can work out financially better and you can avoid the risk of invalidating your policies.
The best course of action is to speak to specialists who deal with Young Driver Car Insurance. We have a panel of selected insurers who offer discounts for younger drivers. Click here for Car Insurance quotes.
Many younger people try to avoid the higher premiums associated with their age by insuring their car in a parents name and adding themselves solely as a named driver.
This is technically this known as "fronting" and it is never recommended. In some cases where this is done a claim could be classed as invalid meaning that a payout would not be forthcoming from your insurer and also that this younger driver could potentially end up being convicted of driving without insurance.
At a minimum the fine would be £100's with the potential for up to 6 points to be added to your licence.
The information that a car was being used for commuting by a student could be all an insurer would need to potentially invalidate the policy on the grounds of fronting.
To address this, the best situation would be to insure the car in the young drivers name. This carries the added benefit of them being able to start to accumulate their No Claims Bonus.
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