How your age can cut your car insurance. (But don't lie about it)

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The Independent Online

Getting the best deal on your car insurance is predominately about shopping around, but there are subtle ways to make a big difference on your premium rates. One of the best is to play The Generation Game. Play it right and it is possible to bring down your premium considerably, but lose and you could end up paying up to 280 per cent more.

Getting the best deal on your car insurance is predominately about shopping around, but there are subtle ways to make a big difference on your premium rates. One of the best is to play The Generation Game. Play it right and it is possible to bring down your premium considerably, but lose and you could end up paying up to 280 per cent more.

And adding your son or daughter to your car insurance policy can send premiums soaring by nearly 300 per cent. Take a male driver of a 2,000cc Vectra who is 66, married, retired, and with more than 10 years of a no-claim track record. If he adds as second driver to his comprehensive insurance policy with a £100 excess, his 18-year-old son, who has held his licence for a year, on a policy with the RAC, the increase may be 280 per cent, or £303.26 to £1,152.31.

Others are less punishing. At Egg, the 66-year-old named driver pays £172.20, but by adding his young son he can expect to pay £615.30.

These Generation Game rules are less than surprising. RAC spokesperson Nina Arnott says: "Most older drivers would accept that if they add a younger driver they will pay more. Younger drivers are likely to increase the premium because they are statistically more likely to be prosecuted for speeding and are more likely to have an accident. The premium will reflect this."

But by adding an older driver, say over 40, younger drivers in their mid-twenties can chop their premiums considerably, simply by adding this more mature driver to their policy. If a young driver bought their policy from Axa they could reduce their costs by 12 per cent in some cases.

For example, a single employed female, aged 25, with two years of no-claim history, adds her father as a second driver on to the policy for her 1,400cc Polo. He is 66 and has more than 10 years of no-claim history and the policy offers comprehensive insurance with £100 excess. By using financial comparison website, Moneysupermarket.com, buying from Axa and adding Dad would bring the £428.07 annual premium to £376.17. At Nationwide £546 for the one named young driver would be cut to £513.45 by using paternal influence.

On this basis it looks easy to play to win, but the problem for generation gamers looking for the best deal is that not all providers operate the same rules as the likes of Axa and Nationwide.

Some insurers still increase premiums for added drivers, regardless of their experience or years of no claims. For example, budget provider Direct Choice ups premiums by almost 18 per cent in some cases for the privilege of naming another driver. Egg and Direct Line will also bump up premiums by about £50.

There is not much you can do about your age, gender or your postcode, short of moving house. These are the most important factors insurance companies use to determine your premiums. Your claims history is also vitally important.

But you can save up to 35 per cent on premiums simply by comparing quotes from different insurers, and the Association of British Insurers recommends that you compare at least five different companies to get the best deal.

Most insurers will hike their premiums from the second year you have your policy with them, so it pays to shop around when you are renewing it. About 60 per cent of us keep our policies with same insurer when we renew, meaning we accept higher premiums without looking for something cheaper.

The AA, which also acts as an insurance broker, recommends keeping your mileage down, which can make a difference. Drivers who cover less than 10,000 miles will pay far less than those who cover 30,000 a year.

Another major factor is the excess you agree to pay before the insurer kicks in to pick up the tab. The standard excess is £100, meaning you pay the first £100 of any claim, but increasing this to £300 or higher can knock hundreds of pounds off your rate. Your car does not does have to be powerful and sporty for premiums to rise; if you have an unusual or rare car, insurers will charge more because it will be more expensive to repair.

For younger drivers hit by high premiums there will always be the temptation by well-meaning parents to take out a policy in their names and have their child on the policy as a named driver when in they are the main driver. But parents who do this could be caught. Richard Mason, head of marketing at Moneysupermarket.com, warns: "We would always urge consumers to be honest with insurers. If your child is down on the policy as an occasional driver and the insurer finds out they are the main driver they will not pay out in the event of a claim."

Far better for the policy to be in the younger driver's name, enabling them to build their own no-claims track record which will bring down premiums substantially in a few years.

And if you are still faced with high premium, do not be tempted to take the offer of paying it in monthly instalments. "The typical interest rate charged on monthly instalments is 15 to 20 per cent," Mr Mason says. "If you don't have the money up front, there are cheaper ways of financing it. You could take out a credit card that offers 0 per cent interest for six months, and interest-free purchases, such as Morgan Stanley card. Or you could take out a loan; Cahoot, the online bank, offers 5.9 per cent on a loan of as low as £1,000."

'I had no idea I could save'

Jenny Smith is a 24-year-old student who saved herself £130 by adding her 44-year-old mother to the policy for her Mondeo estate.

Jenny, who lives in Eccles, Manchester, says: "I had no idea that I could save money this way until I chanced on it. On my own, the policy was much more expensive, but by adding mum, the price came right down. No one seems to realise this is how it can work, so I have been telling everyone.

The car Jenny drives was given to her by her mother, but when they investigated adding Jenny to her mother's policy, the premium soared by £240.

Jenny's policy was purchased online from Axa and she has enjoyed six years without a claim and her mother five years without a claim.

TOP TIPS TO TRIM YOUR CAR INSURANCE

* Try adding an older driver to your policy;

* Pay your premium in one lump sum. The interest rates insurers charge on monthly installments can be very high;

* Get a good-quality alarm. Any Thatcham-approved system will score points with your insurer;

* Compare at least five insurers to make sure you get the best deal on the market. A broker, or a website such as Moneysupermarket, will help;

* Restrict your mileage;

* Shop around every time you renew your policy;

* Store your car in a garage or under cover, if possible.

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