Young drivers pay more than twice for insurance

Young drivers are paying more than twice (115%) than other motorists to insure their cars, according research from uSwitch.com. In some cases, age may even prevent motorists from getting cover altogether.

The new Equalities Bill, being introduced by the Government to tackle age-based prejudice, could have far reaching consequences for the car insurance industry, says uSwitch.com. Currently, although young drivers (aged 17-25) make up only 7% of the car insurance market, they are paying 22% of all premiums across the industry. This is because of the higher risk associated with their age, but it means they pay £940 million more than other motorists.

Because age plays such a large factor in the cost of car insurance, there are some very expensive mistakes to be made by young drivers if they fail to do their research before buying a car. Opting for a ‘go faster' GTI could see them forced to fork out an additional £1,333 per letter - pushing the cost of their insurance up by £4,000. What's more, some young drivers in high-risk areas could be paying up to £14,600 to get comprehensive cover for a sporty second hand car, such as a Golf GTI, which costs less than £5,000 to buy.

While a young driver can expect to pay £989 for comprehensive insurance, the average shoparound comprehensive car insurance premium in the UK is £459. Over the past ten years, the cost of car insurance has gone up by 122%, from an average premium of £307 in 1998. If premiums continue to increase at this rate, by 2018 the average young driver can expect to pay £2,196 to insure their car.

Further analysis reveals that an 18 year old could buy a Volkswagen Golf E for £4,295, but fully comprehensive insurance for this age group could add an additional 55% (£2,357) taking the total cost of the car up to £6,652. Even if a young driver opts for lesser cover of third party, fire and theft to reduce their insurance costs, they will still need to fork out £1,336.

Young drivers represent just 7% of the car insurance market. However, they account for 16% of motoring offences and, under 21 year olds, are responsible for 34% of dangerous driving offences. This, combined with the fact that young male drivers are ten times more likely to be involved in a motoring accident, goes some way to explain why young drivers are charged such high premiums.

Although the premiums seem hefty, the good news is that for those who do not make any claims, the cost can fall rapidly. Between the ages of 17 - 25, after building up eight years worth of no claims discount, a young driver can expect to see their premium fall by 90% or £2,090.

Ashton Berkhauer, insurance expert at uSwitch.com, comments: "In theory, the Equalities Bill could mean the end of the road for higher premiums for young drivers. However, insurers have to price by risk and there is clear evidence that younger drivers are more of a hazard on the roads. If the Bill calls for pricing to be equal across age groups this could lead to a rise in premiums for lower risk, safer drivers, who would effectively be subsidising their higher risk counterparts. There is also a danger that many more ‘boy racers' will find that they can afford to insure faster, flashier cars - we could see accidents increase as a result. This would be wrong and we urge the Government to seriously consider all the implications before implementing any change.

"Whether the Equalities Bill impacts young driver premiums or not, the most important thing is to research the cost of insurance before you buy a car. Young drivers must do their homework first and shop around to make sure they find the best cover and policy features to suit their needs and budget."

There are steps that can be taken to keep premiums as low as possible. Look for providers such as Endsleigh and Swinton who specialise in younger drivers. Swinton has recently started offering a special six-month policy aimed at those who have just passed their test. If drivers can get through the six months without making a claim, they are rewarded with the chance to renew for a whole year - with a 30%discount. After 18 months without any claims, the discount rises to45%.

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There are steps that can be taken to keep premiums as low as possible. Look for providers such as Endsleigh and Swinton who specialise in younger drivers. Swinton has recently started offering a special six-month policy aimed at those who have just passed their test. If drivers can get through the six months without making a claim, they are rewarded with the chance to renew for a whole year - with a 30% discount. After 18 months without any claims, the discount rises to 45%.