How to Insure a Young Driver
Contributors: Orit Touson & Danny Newman
Congratulations! Your child has just passed their driving test.
Now that they will want to drive and gain experience, you’ll need to ask to have your new driver added to your car insurance policy.
It shouldn’t come as a surprise that young and new drivers are expensive to insure. Compared to those for older and experienced drivers, insurance rates for young drivers can double and in some cases can even triple.
Many insurance companies offer “special plans” for insuring young drivers, in an effort to reduce some of the extra cost. That said, despite these reduced rates, the increased premium to cover a young driver can still be significant. Since some insurance companies can charge an exorbitant amount to insure a young driver, it may be worthwhile checking policy options for young drivers when your car insurance policy is up for renewal, even if your child has yet to pass their driving test. Moving over to an appropriate policy in advance of a young driver passing, could lead to a significant saving on the premium, when it is time to add them.
What is the definition of a young driver (Nahag Tza’ir)?
A driver under the age of 24 is considered a young driver by the insurance companies.
Within this young driver category, there are different age brackets which may vary from company to company. Generally, the most expensive age bracket is from 16 years and 9 months until age 21. Between the ages of 21 to 24, the premiums reduce slightly, before becoming more palatable at age 24.
What is the definition of a new driver (Nahag Chadash)?
A driver is considered a new driver by the licensing authority (Misrad haRishu’i) for the first 24 months after passing the driving test.
From an insurance perspective, a driver is considered a new driver for the first 12 months after passing the driving test. During this first year, the insurance premiums will be higher, irrespective of the age of the new driver and irrespective of them being a young driver or not.
What are the solutions for insuring a young driver?
1. Pay the full cost to add a young driver to your regular comprehensive car insurance policy without any limitations. It is important to be aware that this option is usually the most expensive.
2. Some insurance companies will allow parents to add their young driver to their policy for a low fee for a specific number of days. In addition to being limited in the number of days which a young driver can be added, there is usually a limitation on the number of times during the insurance year that one can add drivers. In many instances, if the young driver is going to be added numerous times during the insurance year, this can become quite costly.
3. Currently, the Phoenix Insurance Company offers a unique policy specifically for young drivers called ‘Phoenix Tza’ir’. As a cheaper solution for insuring young drivers who may drive on a frequent and spontaneous basis, this has become an attractive option for many.
What is the ‘Phoenix Tza’ir’ plan?
The Phoenix Tza’ir plan, is a limited kilometer (km) policy for young drivers, which must be added on to an existing Phoenix comprehensive car insurance policy under one of their parent’s names. Phoenix Tza’ir is not available to young drivers if their parents are insured with a different insurance company.
The policy uses a smartphone app which tracks the young driver’s location while driving to determine how many km s/he has travelled. Activating Phoenix Tza’ir is dependent on the young driver using a smartphone.
The Phoenix Tza’ir policy is purchased as a package limited to 1,500 km. Although its activation is dependent on it, the policy is separate to the parent’s policy. As such, it has its own policy number and is listed under the young driver’s name.
Should the family have more than one car insured with the Phoenix, it may be possible to link both cars to the Phoenix Tza’ir policy, meaning that your child may be able to drive each car within the same package of 1,500 km at no extra cost. The Phoenix Tza’ir policy is an individual policy for each young driver and can not be extended to more than one person.
Should the young driver not utilize the full 1,500 km within the insurance period, the unused km can be rolled over to the next insurance year. For young drivers who do not driving frequently, this is advantageous as the cost of insurance for the following year is lowered by the ability roll over the unused km from the previous insurance year.
Should the young driver use up their full quota of km, there is the ability to purchase packages of extra km during the course of the insurance year.
What happens in the event of an accident?
When insuring a young driver, most insurance companies have an increased deductible of 50% from the standard deductible. The increased deductible applies to all the options mentioned earlier when insuring young drivers and not just the Phoenix Tza’ir policy. It should be noted that when insuring young drivers on other insurance policies, the deductible with some insurance companies may be increased by 50% for all drivers on the policy, even if the driver is above the age of 24.
On the Phoenix Tza’ir policy, in the event of a claim where the young driver is at fault, the claim will impact the young driver’s claim record only. Due to the fact that the young driver is issued with a separate policy number to the parents, the claim will not be listed on the parent’s claim record unlike other policies.
What if I have more than one young driver?
In this scenario, it may be worthwhile weighing up the cost of an unlimited all driver policy covering any driver over the age of your youngest child and above. Since the Phoenix Tza’ir policy is per individual, it may not be the most cost efficient option if there are several young drivers in the family in need of insurance.
With the young driver’s eagerness to get behind the wheel, it is important to check all the options ahead of time. Researching the best options in advance can lead to significant savings and will put both the parent and the young driver at ease when they are handed the keys to the car.
For more information on car insurance, contact us today!