Get £100 cashback for good driving

One insurer will give you cashback for driving safely and legally.

Young drivers can get cashback for good driving through Co-operative Insurance. Using smartbox technology, the insurer will record your speed, cornering, braking and acceleration. If you get top scores in every category, you'll get a refund on some of your premium. You also get cashback for reducing your driving between 11pm and 6am.

In a recent report, the insurer claims that its policies are now an average £505 cheaper for the majority of drivers, even before the cashback is rewarded. Cashback has so far averaged £102 or 8.5% of the initial premium.

Those pesky statistics again

If you read The dangers of surveys, you might already be cynical about such statistics. In this case, your cynicism is not entirely unfounded.

A footnote to Co-operative Insurance's research states that 51% of under 25s can save an average of £505. That means that the other half (well, 49%) can't save £505, on average. There is no explanation of what the savings are compared against; for example, whether it is against the most expensive insurers for young drivers only, or against average-priced insurers, or against other cheap insurers.

The cashback figure of an average £102 is also fishy. The insurer states that “88% of young motorists” have achieved this. It's easy to miss the significance of that, but it means the other 12% are excluded, presumably because they didn't earn any cashback.

Bad drivers are penalised

The cashback you can earn will make your annual policy up to 11% cheaper, but if you drive badly the insurer will add up to 20% to your initial policy. If those 12% of drivers all drove reasonably then the average cashback among all drivers is probably just under 90%. If many of them drove badly, it could be a lot less.

Co-operative Insurance describes bad driving as “for example repeatedly breaking speed limits or taking corners too sharply”. Your insurance policy will be cancelled if you drive at a speed that would have resulted in a driving ban. Co-operative Insurance has cancelled three policies since March 2011.

A quick price test

I did a quick test of a young driver with a Fiat Seicento and compared car insurance prices through lovemoney.com's service.

Co-operative Insurance's policy for the same driver and vehicle was about £1,800 for a driver rating his confidence as average and not driving much at night time. The insurer writes that it is about £500 cheaper than other insurers for 17-22 year-olds – before the good driving cashback is applied. (Another footnote reveals this is against average insurers as measured by the AA Insurance Premium Index, not against the other cheaper ones.)

However, in my test there are several insurers far cheaper even than that offering a similar level of cover. Quotes through lovemoney.com were around £1,300 or approaching £500 less than Co-operative insurance, which presumably means that those insurers are about £1,000 cheaper than the average.

Those huge differences in quotes are not unusual. In the same test there were policies costing £7,500 for a worse level of insurance. That huge differential was common when I worked in the insurance industry and it remains so today.

If that young Fiat driver managed to get his 11% cashback, he'd still be paying hundreds of pounds more than if he had gone with one of several cheaper insurers.

But we're all different

I should make it clear that the quick test I just did doesn't mean Co-operative Insurance is always more expensive for young drivers. Each quote with a different car or personal circumstances can produce remarkably different results and can lead to insurers shuffling positions dramatically in your personalised results table.

More about the cashback scheme

The cashback is awarded after 90 days, but it could be adjusted upwards again throughout the policy depending on how you drive. Presumably some of the 88% who earned cashback in the first quarter of this year will have it taken away from them again. The smartbox is free, but it may cost you if you switch cars during the policy.

Compare overall prices

There's a great deal to be said for a policy that rewards good driving, but you should compare prices to see if you'll save overall, because it looks like some, if not most, would pay more even if they win the cashback.

As more insurers introduce this technology we may see prices come down for the better drivers. Until then, the best way to keep your insurance costs down might be to drive safely and stay out of trouble, thus avoiding driving convictions, accidents and claims. Before you turn on the ignition, think about the four things that Co-operative Insurance would reward you for: keeping to speed limits, avoiding excessive harsh braking and acceleration, and taking corners carefully.

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