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Young drivers spend £2,231 a year running their cars

Running a car is never cheap, but our latest Young Drivers report shows that the cost of running a car for young drivers has dropped over the past six months. On average, Compare the Market data shows a 17-24-year-old driver will now pay £2,231 to run his or her car in the first year.

The cost of car insurance for young drivers

Our latest report shows that the cost of running a car for young drivers has fallen by almost 8% in the past year, primarily driven by a decrease in the cost of fuel and motor insurance. Today the average young driver pays out £2,231 on their car in the first year. Insurance for young drivers now costs an average of £1,220, a decrease of 2.6% over the past six months. This means that car insurance makes up over half of young drivers’ first year running costs.

The high cost of insurance premiums are primarily due to increases in Insurance Premium Tax (IPT) and changes to the personal injury discount rate (Ogden rate) that have forced insurance providers to put up their prices. Furthermore over the past two years, fuel prices have shown to be inconsistent. In the past six months, the annual cost of fuel for an average young driver increased very slightly by £3 (0.4%) from £785 to £788.

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Why is young driver insurance so expensive?

Young drivers face expensive insurance premiums because they’re far more likely to be involved in a car accident than older drivers. Another big factor in high insurance premiums for young drivers is the three hikes to Insurance Premium Tax (IPT). IPT now stands at 12% after doubling in the past three years and is costed into the overall premium that drivers are charged.  

Our Tank of Mum and Dad report last year found that over half of young drivers are now reliant on their parents to subsidise the cost of running a car, parting with an average of £762 per child. Our research showed that parents contribute most towards the cost of their child’s motor insurance – paying out an average of £288 each year.

Dan Hutson

Head of Motor Insurance
Compare the Market

“After years of relentless rises in the cost of motoring, young drivers are finally seeing some relief. While insurance still makes up over half of the cost of getting on the road, the overall expense has reduced slightly over the past six months. However, with the majority of the reductions resulting from fuel costs which are subject to significant volatility, costs may not remain on their downward trajectory for long.

“While we have seen some further reductions, the cost of getting on the road for a young driver is still disproportionately high and likely to be prohibitive to many. The unaffordability of running a car can have a significant impact on young people’s ability to get to and from work, and ultimately hold down a job. Our recent research found that 27% of young people fear they would risk losing their job if they could no longer afford to drive.

“The Government needs to tackle these issues head on, which is why Compare the Market has called on the Government to scrap or cap Insurance Premium Tax for young people to help ease the financial burden of car ownership.”

How to cut the cost of young driver insurance

The cost of running a car may have decreased over the past six months, but there are ways to cut the cost of young driver insurance:

  • Choose a cheaper car to insure - the car you drive can have a big impact on your insurance, with some models offering lower premiums. 
  • Consider a black box policy - telematics policies are on the rise and can help to reduce premiums for sensible young 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.
  • Shop around to get a great deal by comparing quotes with our comparison tool.

What’s the best car for your budget?

The car you drive can have a big impact on your insurance, with some models offering lower premiums. Young drivers could save £303 by choosing a different car to some of the most popular models on the market.

The average premium of the top ten cheapest cars to insure stands at £885, compared to an average of £1,220 for the top ten most popular cars. However, you will need to have more money saved upfront as the savings in insurance tend to be offset by the cost of the car itself.

The average cost of the most popular cars stands at £4,308 compared to an average of £4,133 for the cheapest car to insure for 17-24-year-olds – the first time since the Young Drivers Index has been produced that the cost of the car is lower for the cheapest cars to insure over the most popular.

The Volkswagen Up! is now the cheapest car to insure, costing an average of £818 per year for a young driver, but with an average value of £5,357. The regular Fiat 500 is significantly more expensive to insure, at an average of £870, but with a lower average value of £4,970. Meanwhile The Vauxhall Corsa retains the top spot as the most popular car for young drivers, accounting for 11.7% of enquiries and costing an average of £3,182.

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If you’re a young driver, or you have one in your household, don’t let the costs deter you. There is still a significant difference between the cheapest and average premiums for young drivers, providing an opportunity for savvy motorists to save money. 

Choosing the right car and finding the right insurance are two easy ways to reduce your costs. You can compare car insurance now and make sure that you’re getting a great deal for you.

All research from July 2019 Young Drivers report.

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