New drivers spend almost 5% of their annual income on car insurance
New drivers buying their first car are spending a higher proportion of their annual income on car insurance than more experienced drivers, according to recent analysis from MoneySuperMarket.
The comparison site analysed almost 12 million car insurance quotes run on the site over the course of a year. It found both new and more experienced motorists spend 15 per cent of their annual income on running their car, £2,866 and £3,967 respectively. However, a breakdown of their respective motoring costs shows new drivers buying their first car spend 30 per cent of that money on car insurance while more experienced drivers spend 9 per cent on car cover.
The MoneySuperMarket analysis is based on the typical annual wage of a new driver being around £19,000 per annum versus a more experienced driver typically earning around £26,000. Relating these figures to the average cost of car insurance for both types of driver shows that an average spend of £849 on car insurance for new drivers amounts to 4.46 per cent of their average annual wage. This compares to just £339, 1.29 per cent, being paid on average by those who are more experienced behind the wheel.
The analysis also found over three years new drivers are spending a staggering 95 per cent of the initial cost of their first car on insurance, compared to only 16 per cent for more experienced drivers.
Kevin Pratt, car insurance expert at MoneySuperMarket, said: “It is well documented that the cost of car insurance for younger drivers is high, but what’s shocking is that the cost of car insurance for new drivers accounts for a third of their total annual motoring spend – over three times the amount more experienced drivers pay.
“It might be surprising to see that both types of driver spend the same proportion of their annual income on paying to run their car, especially considering first time drivers tend to have a lower value car and they drive fewer miles, meaning a smaller spend on fuel. However, the bulk of the money they pay out is on car insurance, accounting for 4.46 per cent of their typical annual salary.
“When looking at the motoring spend of more experienced drivers, we found more than half of their motoring spend goes on paying for a higher value car whereas the cost of their insurance is the equivalent to just 1.29 per cent of their typical annual salary.
“Finding legitimate ways to cut the cost of their car insurance benefits every driver, whatever their age. Examples include buying a car in a low insurance category, boosting security measures, and driving fewer miles each year. Telematics based policies are another option for drivers who are keen to reduce the cost of cover, especially for younger age groups and those who tend to do low mileage. If a newer or younger driver can show they drive safely and responsibly the reward is often lower premiums.
“The overarching message for all motorists wanting the best value deal on their car cover is to shop around and compare car insurance when searching for a policy. Repeating the search process at each renewal means drivers of any age should be on the road to the best value car insurance. Those who shop around for cheaper premiums using MoneySuperMarket save £309 on average.”