Car insurance customers 'should consider their bonuses'

Car insurance customers should consider their no claim bonuses when considering the type of vehicle they are driving, one industry expert has advised.

According to the British Insurance brokers' Association (Biba), low performance cars are great for new drivers are they offer a high level of safety, meaning motorists have a greater chance of avoiding having an accident.

Motorists that have accidents may need to claim on their insurance policies, hence ruining their no claims bonuses and driving up the cost of their cover.

Biba's comments follow a warning by Co-Operative Insurance that a rise in young driver premiums could force those on low incomes under the age of 25 off the road.

Research by the insurance broker found that over the past 12 months the average cost of motor insurance for young drivers has risen by four times the rate of inflation.

It reported that industry figures show that in 2008, young drivers suffered a 11.5 per cent increase in their insurance premiums, compared with an inflation rate of 3.1 per cent. The average cost of insurance for drivers under 25 now stands at £1,463.

Furthermore, the Motor Insurance Bureau, an organisation set up to compensate victims of uninsured drivers, estimates that at least two million, or five per cent, of the UK's drivers are uninsured, which costs the industry more than £500 million a year.

Research published in the latest edition of Advanced Driving, the Institute of Advanced Motorists members’ magazine, on November 12th 2008 found that uninsured drivers are typically young males living in urban areas. What is more, 60 per cent of those convicted of uninsured driving are under 25 and half are under 20.

David Neave, director of general insurance at the Co-operative Insurance warned that if the problem persisted an entire generation of drivers could become "uninsurable"

Peter Staddon head of technical services at Biba, said that the Co-Operative's worst fears were unlikely to be realised and credited the industry with the ability to find away around the problem.

He said: "We have so many innovators in the industry that I think new ideas will come out and new ways of paying. Lower performance cars will have an effect as well."

The motoring expert explained how opting for a sensible car could have knock-on effect financially for motorists.

Mr Staddon said: "If you're learning to drive you don't need a powerful car, you need to understand the road.

"If you have a smaller car it could help to build up your no claims bonus and that is something we try and encourage young drivers to do."