Business clinic: Take care when insuring young drivers

This month, Farmers Weekly’s experts give advice on appealing against RPA penalties, insuring young drivers, managing cashflow and farm developments with minimal impact.

Read more from our Business Clinic experts

Q Our 17-year-old son wants to start driving. What is the best approach on insurance?

A As a farmer’s son or daughter approaches the age of 17, both child and parents look forward to the fact that the young person will be able to drive farm cars and small commercial vehicles on the road as well as perhaps their own vehicle.

But beware of the minefield that awaits in terms of insuring cars and commercial vehicles for young drivers. Statistics that all insurers have access to show quite clearly that drivers aged 17-25 are many times more likely to have a major accident than drivers older than 25.

Because of this greatly increased level of risk, young driver premiums are much higher. Statistics also show that the cost of young driver claims (because they often involve personal injury to passengers) is also much higher.

Nigel Wellings
Founder director
Farmers and
Mercantile

Against this backdrop it is essential that you discuss with your insurance broker prior to purchasing a vehicle for your children the best way to insure them and the potential costs.

The most crucial point is that you must disclose to insurers which vehicles you wish your children to drive and whether they are main, regular or occasional drivers. Do not in any way be tempted to withhold this information, even on a fleet policy with Any Licensed Driver cover.

Insurers would be quite within their rights to turn down a claim for an undisclosed 18-year-old driver. Claiming mother or father is the main driver of a vehicle when it is really a son or daughter will also result in a claim being turned down.

You will also need to be realistic about the type of vehicle insurers will be willing to permit young drivers to drive. High grouped performance cars and luxury four- wheel drive vehicles are a complete no-go.

One of the most common discussions we have with farming parents is whether to insure children’s vehicles on the farm fleet policy or, as soon as they get their first vehicle, to have a standalone policy in their own name. There are pros and cons to both approaches:

• If insuring a young driver’s car on the farm fleet and it is involved in a major accident it could increase the cost of the overall farm fleet cover.
• If the young driver insures a vehicle separately they will build up their own no claims discount.
• Farm fleet insurers will limit the usage of a vehicle by a young driver. For instance, if the young person is going away to college/university and takes the car with them, insurers will not necessarily want to cover this alteration to the risk.

The golden rules, therefore, for insuring young drivers are:

• Disclose young drivers and discuss in advance with your broker. Do the research and obtain alternative young driver quotes.
• Be realistic – farm insurers do not want to insure 18-year-olds on a new Range Rover or Porsche 911.
• Be prepared – premiums are considerable but will come down with age and a good driving record.
• Don’t cut corners and try to hide young drivers. The cost of this could be very high.

The information provided in these articles does not constitute definitive professional advice and is provided for general information purposes only.