Running a car is never cheap, but our latest Young Drivers report shows that 17-24 year olds are spending a whopping £2,381.55 per year to run a car. While the overall cost of running a car for a young driver has remained flat over one year, it has risen 8.17% over a two-year period. The fall in fuel prices, after sharp rises the previous year, is cancelled out by a continued rise in car insurance prices. In fact, the average 17-24 year old spends more on insurance each year than petrol!

The cost of car insurance for young drivers

Our latest report shows that the average insurance for 17-24 year olds over the past year has increased to £1,348.37. Premiums for this age group have risen by 3.2%, adding £42 to bills. This follows a period of faster hikes in premiums, with car insurance costs rising by 8.2% in the past two years.

Young drivers currently pay around £820 more per year for their car insurance than the average motor insurance premium for people aged over 25. On average, the cheapest premiums for 17- 24 year olds stand at £1,069.76 – almost £280 higher than the average premium.

These rises 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 up their prices.

Unfortunately, these changes hit young drivers the most – those who can least afford to pay it. Car insurance costs for young drivers have increased by over £200 since January 2015, to an average of £1,349 over the past six months.

Young drivers index

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. This is supported by research from Brake, the road safety charity, which shows that 23% of 18-24 year olds crash within two years of passing their driving test, while drivers between the ages of 16 and 19 are a third more likely to have a fatal accident than those aged 40 to 49.

According to Brake, this increased risk is due to a mix of inexperience, overconfidence and risky behaviour. They found that young people were more likely to speed, overtake on blind bends, not wear a seat belt and drive while under the influence of drugs.

Other factors include peer pressure – it’s tempting to show off in front of a car full of friends or become easily distracted by antics. Young people tend to socialise at night and this is when many accidents happen, especially between 2am and 5am.

As a consequence, insurance providers see young drivers as particularly high risk, and therefore more likely to claim against their insurance. All this means these premiums are higher than average.

The cost of running a car

But while insurance contributes to the overall outlay, young drivers have other high costs to consider to keep their car on the road.

Despite the more recent drop in fuel prices, the overall cost is still significantly higher than it was two years ago, with fuel costs rising by 10.7% in the same period. In the past two years, the annual cost of fuel for an average driver increased by almost £80 (10.68%). This means that the average 17-24 year old is now spending a staggering £818.69 per year on fuel, up from last year’s £811. This makes fuel, unsurprisingly, the second biggest annual outlay for young people running a car.

But that’s not it – there are, of course, further expenses we’ll all be familiar with. Other compulsory car-related costs include road tax (on average £115) and MOT (on average £54.85). And, for peace of mind, breakdown cover will set young drivers back an average of £44.65, one of the few costs to have gone down. So, with annual car-running costs coming in at a massive £2,381.55 a year, it begs the question of how 17-24 year olds are ever meant to afford to run a car.

car running costs chart

How to cut the cost of young driver insurance

So, young people seem fated to pay a lot to get their car on the road. But it’s not all doom and gloom, though, and there are definitely ways to cut the cost of young driver insurance. As we previously reported, telematics policies are on the rise and can help to reduce premiums for young drivers, as can shopping around to get the right deal.

Consider the possibility of reducing your mileage, as providers will use this to calculate your insurance premium. Other ways you can reduce your premium include improving your car security and avoiding any modifications to your car.

How to find cheap car insurance for young drivers

If you’re a young driver, or you have one in your household, don’t let the costs deter you. While it’s inevitably going to be more expensive for 17-24 year olds to get a car on the road, there are savings to be had if you’re prepared to shop around and get the right deal. For example, those switch-savvy youngsters among you could save nearly £280** on average per year just by comparing premiums. This is up from £223 two years ago, so it does pay to switch.

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.

 
**The average saving is based on the difference between the cheapest click-through price presented and the mean average of the top five cheapest prices presented to a customer, where a consumer has clicked through to buy.

All research from February 2018 Young Drivers report.

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