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The great car insurance confusion

A lack of information means parents are overpaying to add children to their policies.

Parents of teenagers and young adults keen to take the family car for a spin in the holidays are routinely paying hundreds of pounds more than they need to, with insurers accused of obscuring the cheapest deals and making it difficult to compare options.

Reluctant to insure teenagers and twentysomethings who are statistically a greater risk, the companies won’t make clear how much customers have to pay to add a younger driver to their policy for the summer months.

One Times reader from London says he was told he would have to fork out more than 1,300 for adding his two sons, aged 19 and 20, as named drivers on his Privilege car insurance policy while they are home for the holidays. He later discovered he could pay as little as 35 a week, as necessary, saving up to 900.

“This must be a dilemma facing tens of thousands of parents with children away studying most of the time, but who occasionally need to drive the family car while on holiday; a lot of money is at stake,” he says. “My wife and I were quoted 552 for [the two of] us on the policy and 1,862 for us plus the two boys. So would we be better off just adding them for the occasional day, week or month when they are around? Unbelievably, the industry makes it impossible to tell. Privilege, part of Direct Line, refused to give me quotes for adding the boys for a week, unless I renewed my policy first. I could always then cancel, I was told. What a faff.”

After much prodding, Privilege agreed to do a one-off rough calculation on how much it would cost to add the boys on an ad hoc basis. Our reader says Privilege did not mention this cheaper option when he put his sons on his policy permanently last year. “Maddeningly, none of the information on the system for temporary drivers is on the Privilege website,” he says.

The issue has arisen again because our reader recently received his renewal invitation and wants to find out how much he will have to pay to add his sons before he accepts. A spokeswoman for Privilege says that insurers cannot provide a quote for additions to a policy that doesn’t yet exist on the system, so customers have to accept their renewal quotes to find out.

She explains: “We can tell an existing customer how much it will cost to add a temporary named driver or a permanent named driver to their existing policy. We can also provide a quote for how much a new insurance policy will be with a main driver and a number of named drivers. But we can’t say how much it will be to add temporary named drivers to a policy which does not yet exist in our system in order to go through the rating factors that make up the cost.”

Many insurers charge an administration fee for adding offspring to a policy on a temporary basis, which can add up if you do so several times a year. Privilege and Churchill, for example, levy 26.28 to “amend a policy”, although Direct Line doesn’t charge administration fees.

They also limit the number of days you can add a temporary named driver, in Privilege’s case it’s 90 days each year. Other insurers may have minimum age requirements for temporary drivers, usually 21 or 25.

I was quoted an extra 1,300 to add my kids to my cover

Price comparison sites such as Moneysupermarket.com allow you to view quotes for adding up to three additional drivers on your car insurance, but only for a full year – which, as our reader found, works out much more expensive.

“Parents have three options when it comes to insuring their children on their car: add them permanently to the existing policy as ‘named’ drivers, add them to that policy as and when required during the course of the year or take out separate temporary car insurance for them on top of the main policy,” says Kevin Pratt, of Moneysupermarket.

“There are different calculations in each case. With a permanent addition to the main policy, the cost could be high, depending on the age and driving experience of the children and the type of car,” Mr Pratt says. Arranging temporary cover via the main policy could work out cheaper, but it depends on the number of times you do it in the year. This is because, in addition to the cost of insurance, you’ll be slapped with an admin fee each time – and this could be 25 or even more. There might also be a limit on the number of times you can add someone temporarily in any given year.”

“With a standalone policy, you tell the insurer how many days you want to cover for, usually between one and 28 days. You can buy such policies as many times as you want, but you’d need to work out whether buying a sequence of these would be better than going for one of the other options. Parents wanting to insure more than one child will need a separate stand-alone policy for each driver.”

A spokesman for the Association of British Insurers says there are no hard and fast rules about how to get the best deal, and “all insurers will be conscious of the higher risk that young drivers present, less to do with the value of the vehicle. So much so that some insurers will be less likely to want to cover them. However, there would be many insurance providers (one sure insurance, for one) out there, who are ready to insure even young drivers at affordable costs.

“Where possible, adding your offspring as and when they are likely to drive your car can be cheaper because, to be frank, the less time they are behind the wheel, the lower the risk to the insurer.”

Insurers are also cracking down on “fronting”, the illegal practice of a lower-risk driver taking out cover and listing themselves as the main driver, even though they are not.

Mr Pratt says it is not uncommon for parents to try to cut costs by insuring a car in their name for their child to use while at university. “They probably don’t know they’re doing anything wrong, but if the child is the main driver, this is against the law and it doesn’t matter who owns the car. What’s pertinent is who drives the most miles. If you’re found guilty of fronting – this usually comes to light in the wake of a claim – then there’s a chance the insurer won’t pay up. And you’d certainly face higher premiums in future.”