Tips for how younger drivers can beat the car insurance trap

Car insurance costs are on the up, after it emerged that following a steady period of declining prices, premiums have now gone up for the first time since June 2011.

Drivers can expect to fork out a hefty £582 a year for cover, according to car insurance provider Confused.com

But for the under 25s, that is a drop in the ocean – on average youngsters now pay about £1,911 for car insurance - although this is down by £792 since this time last year.

Despite that high cost, many younger drivers still want the freedom of being behind the wheel. We explain how they can try to beat the high insurance cost trap and we also reveal how it can be possible to drive something more fancy than a tiny-engined hatchback and still keep costs down. 

Men vs women and car insurance costs

Until fairly recently, female drivers have been offered some respite from high costs, as they are seen as much safer - this is especially true for younger drivers. Firms have even set up with the specific purpose of offering cover to women, with the likes of insurance firm Sheila’s Wheels making the most of their better claims history.

But the days of cheaper premiums for women are numbered, thanks to a European Court of Justice ruling, which says insurers cannot charge men and women different premiums because it constitutes discrimination.

The change came into effect on December 21 2012 and the younger you are, the bigger the impact.

So, with both men and women under 25 in the same boat for the first time, here are some tips to secure your cheapest car insurance option.

Tricks and traps: How to get better car insurance offers

- Compare prices Use an online comparison service to do the hard work for you. Put in your details and check the prices that come up. You can alter the excess that you are willing to pay and the mileage you will drive and get new quotes. Also check the insurers that don't feature in comparison sites, the big two are Direct Line and Aviva. This is Money's car insurance search is powered by MoneySupermarket and will search more than 130 insurers for you.

- Haggle! The car insurance market is notoriously competitive. Once you've been on This Is Money's comparison and found your cheapest price (below), get on the phone and start bargaining!

- Avoid paying monthly charges - direct debit installments generally come hand-in-hand with high interest rates. An alternative is to borrow the money on a 0 per cent purchase credit card and then clear it within a year.

- Think outside the box: An accelerated no-claims bonus, such as Admiral's Bonus Accelerator, could give you a year's no claims bonus after just 10 months.

- Or, if you've previously been insured as an additional driver on another policy, see if you can transfer a no claims bonus to your own insurance coverage. Some insurers do this, including Direct Line.

- Try for a discount by insuring two or more vehicles between friends or family members with the same firm.

- Try for a discount by insuring two or more vehicles between friends or family members with the same firm.

BLACK BOX: SOME OF THE BEST

AA drivesafe - Anti-theft tracker installed in your car for free - Online drivesafe dashboard 24/7 to check your score - Courtesy car while yours is repaired - Dedicated UK claim line available 24/7 Autosaint - Free telematics device and free installation - Curfew and non-curfew policies available - Locate your car if it's stolen

Co-op Young Driver Insurance

- Free box and installation

- Online dashboard to check your driving

Hastings smartmiles - Telematics box to measure your driving style - Comprehensive insurance policy including windscreen repair - Theft tracking - Courtesy car while yours is being repaired Bell from Admiral - Free tracker with 24/7 theft hotline - Access to personalised online driver dashboard - 24/7 accident and glass repair helpline - Courtesy car while yours is at an approved garage Insurethebox - Premium fixed for the year with no curfews and no fines - Acts as theft tracking device - Dedicated UK claims line available 24/7 - Courtesy car while yours is being repaired Coverbox - Free telematics box/theft tracker installed - Driving profile saved on your personal online portal - Comprehensive policies

Blackboxes - Pay how you drive

If you are a good driver, and are happy to prove it, you could get money off by installing a telematics device, or ‘black box’, which monitors how you drive. 

As an example, The Co-op's young driver insurance policy includes fitting a box into 17-25-year-olds' cars to monitor acceleration, braking, cornering and time of driving.

It then charges for insurance every 90 days, taking into account any discounts or loadings.

Although bad driving could see your insurance cancelled, research carried out on behalf of the Co-op claims the service benefits young drivers who drive well, with 82 per cent of young drivers saving claiming a safer driver discount.

Pay when you drive

The system is simple: A tracking device is fitted to your car and the less you drive, the less you pay - another option for young drivers looking at ways to keep costs to a minimum.

iKube is aimed specifically at 17-25 year-olds, who don't often drive between 11pm and 5am, with fees charged for driving outside of hours.

Those that choose Insure The Box pick either a 6,000 or 8,000 mile per year policy, but earn extra miles by driving safely - or buy more online.

Coverbox also offers a 'pay as you drive' scheme. Although not specifically aimed at young drivers, it does offer some under 30s £50 cashback.

For low mileage drivers these schemes can cut costs, especially if you don’t drive at night (11pm - 5am), when the price per mile is bumped up.

Dos and Don'ts

DO compare prices for third party and fully comp. Although third party insurance should be cheapest for young drivers as it offers a lower level of cover, this isn't always the rule.

Check BOTH using our comparison table (below).

DO think about adding a second or even third driver to your insurance, especially an older more experienced one. This can even out the average risk - which could mean cheaper insurance of up to £1,000.

Although the obvious people to add are those with a long track record of good driving, you may be surprised - anyone that's in a lower risk category than you can help. Younger drivers with a job perceived by insurance firms to be lower-risk can shave off pounds from your premium - strangely, some claim adding younger siblings, on a provisional license, helped to cut costs.

DON'T confuse this with 'fronting', which is illegal - see below.

DO see if you can get cashback via a cashback website to reduce the cost.

DO, once you’ve tried our comparison site, check specialist young driver policies to see if they undercut them. And:

DO try a specific young driver broker. Swinton's Young Driver Insurance is worth checking out, as are A Plan, Thames City, Only Young Drivers, Adrian Flux and Endsleigh.

DO check your occupation. When you are asked to give your job title in the application process, there may be a number of options that apply to you so try them all to see if it makes a difference. But bear in mind that if you choose an occupation that couldn’t reasonably apply to you and is likely to be considered fraudulent, your cover could be invalidated.

Can I pimp my ride or drive a fast car?

The more powerful your engine, and the more changes you make to your car (unless they are for security), the more you'll be charged.

But, if you are under 25 and you just can’t imagine life without your high-powered SUV, or a sporty little number,here are some suggestions to avoid insurance premiums high enough to make Donald Trump weep.

•    Shop around - comparison sites can be good for standard risks, but a young driver with a powerful car will not tend to do as well on these sites, compared to a specialist broker who has negotiated a scheme specifically for this market (examples below).

•    Will you only drive a few thousand miles a year? Try a limited mileage policy.

•    If you've passed your test recently, get yourself a PassPlus, IAM or Max Driver qualification and then insurance firms, such as Adrian Flux could knock off up to 25% - which means hundreds of pounds for teenage drivers. Many councils offer discounts of up to 50 per cent on the price of the course. Visit Direct Gov for more information.

•    Got mods? Make sure you tell your insurance firm about all modifications to your vehicle, and check how they would affect your price before you do them, even if they don't enhance performance. If you don't, your insurance could be invalidated. Some mods might even reduce your premium.

•    If you've been riding a moped, scooter or other motorcycle, ask if you can transfer your no claims bonus to your car policy.

•    Are you in an owners club or online forum? If not, think about joining one. From an insurer's perspective, people who are enthusiastic about their car and learn all they can about it will take better care of it. Even better, discounts can be as much as 15 per cent.

•    Keep your car garaged if you can. Fitting a security device such as an alarm or an immobiliser will also lower your insurance bill, sometimes substantially.

•    Don't be a teen racer The more points you have on your license, the higher the cost of your insurance. One speeding conviction could bump up your premium by around 10 per cent, but two may cost you up to 25 per cent more. If you have a conviction for using a mobile phone while driving, it can increase your premium by a whopping 50 per cent.

•    Don't go for a modern car if you want something a bit less ordinary Insurance premiums for 'classic cars' are often discounted, although running costs may be higher.

For example, managing director at insurance consultants Osborne & Sons David Button, recently charged £677 for a young driver's two-litre Westfield sports car.

The driver, a 23-year-old from Norfolk, was prepared to drive no more than 3,000 miles a year. He could also have been entitled to a 10 per cent discount for being an owners club member.

However, Button was keen to make clear all circumstances are different.

Classic car insurer Footman James has recently launched its young enthusiasts policy. If you can prove you are not just looking for a cheap policy and you have a genuine interest, those as young as 17 can get a cheap insurance policy on their classic.

So, despite the challenges, reasonable prices for modified or powerful vehicles are achievable; quotes provided to this Is Money by specialist car insurer Adrian Flux also demonstrate that investing in your street cred doesn't have to decimate your bank balance.

Parents and fronting:  Remember the small print

- Unsuspecting mums and dads looking for cheap deals could find themselves facing court proceedings for ‘fronting’ –  WHICH IS ILLEGAL - if they falsely declare to insurance companies that they drive their car more than their son or daughter.

The consequences can be serious as fronting invalidates insurance and can lead to prosecution.

Insurance companies may even refuse point blank to add a youngster to a policy if they believe he or she is intended as the main driver. It could also cause huge headaches if a claim is made - with some firms refusing to pay out.

- One option for parents looking to cut costs is to add under 25s to insurance policies on a temporary basis - from one day to a few months - if they are visiting or at home from university. Short Term Car Insurance Under 25, offer tailored policies for young drivers, but the AA and eCar Insurance also offer good short-term options.