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Parents spend more than £2bn a year to support young drivers

Parents spend more than £2bn a year to support young drivers

Daniel Hutson
From the Motor team
4
minute read
posted 03 AUGUST 2020

New report gives fuel for thought

The Tank of Mum and Dad, a new annual report from Compare the Market, shows the level of financial assistance needed to keep young drivers on the road. Parents are finding that they are contributing to the cost of insurance, repairs, taxes and even petrol.

Counting the cost for parents

Young people have faced serious financial difficulty as a result of the pandemic Compare the Market's research shows that 37% of young people expect to be made redundant or take a pay cut due to the coronavirus – higher than the average across all age groups**.  
 
Not being able to afford to drive can have significant consequences on jobs and social lives. Over half of young drivers (54%) believe that not being able to afford to run their car will negatively impact their ability to get a job, while almost 60% say that it will negatively impact their ability to get to work**.  

The cost of insuring a car has decreased by £80** over the past six months, according to new data from Compare the Market. It now costs an average of £1,182 to insure a car for those aged between 17-24**. 

**Compare the Market's Young Drivers research from July 2020.

Young drivers and the Insurance Premium Tax

Compare the Market calls for Insurance Premium Tax for drivers aged under 25 to be capped, or scrapped, to halt the spiralling cost of insurance for young motorists. Insurance Premium Tax has increased from 6% to 12% in the past two years. Recent changes to the ‘Ogden’ personal injury discount rate – used to calculate compensation for large pay-outs to those with life-changing injuries – have also helped to push premiums higher.


Commerical Director

Compare the Market

“We’ve calculated that Insurance Premium Tax has added, on average, £161 to the annual premium for a young driver. We urge the government to introduce a limit on IPT for drivers under the age of 25, or remove it all together. Not enough is being done to ensure that driving is kept affordable for young people. The unintended consequence of IPT is that it hits young drivers the hardest, making it more and more difficult for them to take jobs, move jobs, and contribute to the wider economy.

Salaries and savings for those in their late teens and early twenties are simply not enough for many people to keep a car on the road and with insurance costs rising and the price of petrol creeping up, there is currently no light at the end of the tunnel for young drivers or their parents.”

How to cut the cost of young driver insurance

The Insurance Premium Tax and other factors are increasing the price of car insurance for young drivers, but there are steps you can take to reduce your premium including:

  • Choose a cheaper car to insure - The car you drive can have a big impact on your insurance, with some models offering lower premiums. Look at different cars before you buy, by comparing quotes with our comparison tool.
  • Consider a black box policy - Also referred to as telematics policies, these can reward sensible drivers. The device is installed into your car and it monitors factors such as your speed, acceleration and braking.
  • Reducing your mileage - Consider the possibility of reducing your mileage, as providers will use this to calculate your insurance premium.
  • Avoid modifications to your car - You can reduce your premium by avoiding any modifications to your car and improving your car security, such as with the use of a dash-cam.
  • Add a (responsible) named driver - You can cut the cost of your premium by adding an experienced driver, or someone with a low risk occupation, as a second named driver if they share your car. Be aware that it is illegal to state that someone is a main driver when that isn’t in fact true.

Other ways to cut overall costs could include increasing your voluntary excess and paying your yearly premium in one go, which can be a worthwhile investment if you have the capabilities to do so. You should always shop around when your renewal comes up – typically, some of the cheapest prices can be found three weeks ahead of your policy’s start date.

How to find our cheapest car insurance quotes

Choosing the right car and finding the right insurance are two easy ways to reduce your costs as a young driver.  

Compare car insurance now and make sure that you’re getting a great deal for you. 

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