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

Running a car is rarely cheap, and this is borne out in our new ‘Tank of Mum and Dad’ report showing that more than half of 17-24 year olds in the UK have received financial support from their parents to help with the cost of keeping their car on the road. In fact parents have contributed an average of £762 to the running cost of their child’s car.

Kelly Whybrow Content Writer
minute read

Counting the cost for parents

Parents across the UK spent an average of £762 on their child’s motoring costs in the past twelve months. This means that the amount parents are subsidising adds up to around £2 billion a year nationwide.

Almost a third of parents said that they paid some or all the costs of their child’s first year of driving, while nearly a fifth contributed for the first two years; one in ten kept up contributions for three years. Our figures show how young drivers are burdened with higher prices – and how often it’s their parents who are footing the bill.

The average annual insurance premium for 17-24 year old drivers reached £1,324 in November 2018, and parents are paying for a fifth (21%) of this annual cost working out at £278. Petrol was the second most common financial contribution (costing £169 a year), followed by vehicle repairs (£178) and vehicle tax (£125).

According to our research, young drivers pay on average £600 more on their premium than the national average, with Insurance Premium Tax adding £161 to their premium.

Counting the cost for parents

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.

Simon McCulloch

Simon McCulloch

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:

  1. 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.
  2. 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.
  3. Reducing your mileage - Consider the possibility of reducing your mileage, as providers will use this to calculate your insurance premium.
  4. 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.
  5. 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. Young drivers could save nearly £230** on average per year just by comparing premiums. Compare car insurance now and make sure that you’re getting a great deal for you.

**Based on the Young drivers Report in July 2019.  

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