Car insurance for young drivers

Young Marmalade, which specialises in car insurance for younger drivers, has cut premiums by 17% during the four months to the end of July, bucking the trend of soaring premiums.

AA Insurance said premiums for drivers between 17 and 22 have risen, on average, by 80% over the past two years, while the latest Confused.com/Towers Watson car insurance index, which tracks more than 4m quotes, shows the average 17- to 20-year-old male now paying £4,006 a year for comprehensive cover, compared with an average premium cost of £858.

Simon Douglas, director of AA Insurance, says: "Most young people can't get their heads round why their first car insurance premium should be 10 times greater than what they might pay for an old banger. But it's got everything to do with the potential damage their irresponsible use can inflict. Entirely preventable car crash injury claims of £5m or more are becoming increasingly common."

Young Marmalade uses telematics or "black box" satellite technology, which it calls Intelligent Marmalade. It monitors driving behaviour such as braking and acceleration, speed and at what time of day the car is driven. The data is used to calculate premiums; the better the car is driven, the lower the premium and vice-versa.

Nigel Lacy of Young Marmalade, said a young man using Intelligent Marmalade will pay on average £2,601 for comprehensive cover, while a young woman will pay £1,642 a year. After the black box has been fitted, initial premiums are subject to £250 and £500 increases should the technology indicate the insured is a bad driver. If that continues, Young Marmalade will cancel the policy.

Lacy added: "Young drivers are notoriously the sector that suffers the most in insurance costs. This is part of our ongoing commitment to get more young people driving – and driving safely. Intelligent Marmalade has had a very positive impact on safety; drivers are far more vigilant and careful with the 'black box' on board."

In 2006 Norwich Union, now Aviva, launched two policies using black box technology but they were withdrawn within two years because of low take-up. This was partly because the technology was very expensive at the time and partly because insurance for younger people cost less then.

Co-operative Insurance claims its Young Driver policy results in premiums that are, on average, £328 below competitors' quotes, and 82% of 17- to 25-year-olds could save money. Policyholders have their driving assessed every 90 days and are given a discount worth up to 11% of the premium if they drive sensibly.