Sunday, 20 November 2011

Car Insurance - Unaffordable for new Drivers

As many of you probably know, car insurance has always been one of those things that is a bit of a pain but is a requirement to drive. It's like a toasted sandwich maker - you'll be wandering around the gadget section of a big store and you'll see a toasted sandwich maker and you think to yourself "Yes! this is the answer to all of my dinner problems!" you then swap a lovely crisp (or mangled) tenner for a toastie maker and you're off!

Just like your car insurance documents, the toasted sandwich maker will inevitably end up in the dank recesses of some cupboard and not emerge for 26 years, until it's really needed which is probably going to be never.

Unlike a toasted sandwich maker however, car insurance is needed if you want to actually own and drive a car. Think of it if you will as like hiring a body guard when you visit a dangerous country in Africa. Sure you could try and skip out on hiring a body guard but then, you're likely to get mugged, kidnapped and paraded around on television much like in Big Brother, except you might actually get shot in the face. You have to buy car insurance or the police will come around your house and kick your door in, this is inconvenient as it may interrupt your thoughts as you're debating with yourself as to whether you should make a toasted sandwich.

This brings me to my real point here though, new drivers are charged exorbitant sums of money to even consider driving a car, I'm talking sums close to the value of David Camerons pay cheque, or at least the final 4 digits of it.
I went on the internet today and found that as a new driver I will be charged the lovely sum of £2400 ($ 3,778 for the Americans here) if I decide to buy a 1.3 litre engined, Suzuki Swift GLX 5 door hatchback with 58,000 miles on the clock. Let me put that into perspective, that's like going out and purchasing 240 toasted sandwich makers. The only difference is you probably have room in your desk drawer for the insurance papers, assuming of course your insurance policy isn't the height of Mount Everest. I suspect the insurance papers will be closer to the height of 240 toasted sandwich makers stacked on end however.

So a 24 year old newly minted driver can't afford insurance for a car worth £450 (For the Americans here that's $700) "So what?" I hear you say! Well it's not just newly minted motorists who are facing these exorbitant fees, it's also Joe Bloggs and wife who have lived at ye olde village lane for the last 35 years. People who have never had an accident, never claimed on insurance and are responsible motorists are suffering this as much as new drivers, hm.

A typical twenty something driver will more than likely be a student, and if not is quite likely to be just starting out in the career world or job hunt, so this puts them immediately at the point in life where they're quite likely going to need to drive to get to a job. This is an issue as most people in this age bracket are economically disadvantaged or will be if they have to fork out thousands for insurance.

Buying a second hand car isn't really an issue, a second hand car can be acquired from the tin'ternet for about £500 to £1000 which is about $800 to $1600 respectively. A student can forego their typical alcohol allowance to get a cheap runabout car for next to nothing, a person out of work can save £20 a week from their job seekers allowance and potentially buy a cheap car within about 5 to 6 months. All is well in the world I hear some people thinking! Well that's not quite right...

To insure such a vehicle you're going to need to pay very close to five times what the vehicle is actually worth. So let me get this straight, do the insurance companies believe that new drivers will completely destroy their car FIVE times in a year?! Is that even possible? I suppose it is if you keep welding it back together after it's been smashed to smithereens. I know, I know, insurance is primarily to protect other peoples assets, if a new driver gets the brake pedal confused with the gas pedal and plows through someones Gazebo the insurance will cough up. The issue according to those in insurance is that people are driving without insurance which is driving the cost of it up, although I can see circular logic here; if people can't afford insurance but need to drive, they'll drive without it.

Insurance companies are assuring us that their prices are going up to match the dramatic rise in insurance claims that have been occurring in the last year or so. I can understand that, but considering that they're claiming record profits such as here I think it's safe to say this isn't really the case.

If something isn't done soon, there will be record numbers of jobless twenty something graduates who can't get jobs because they can't physically commute to job interviews and/or their places of work.
Maybe we'll get lucky enough that we'll only need to buy a more realistic 90 or 100 toasted sandwich makers a year instead? Who knows!