Running a car is never cheap, but our latest Young Drivers report shows that 17-24 year olds are spending a whopping £2,379.03 per year to run a car. This represents a dip of 0.75% on the previous six months, but a rise of 3.74% over the past year. This is primarily due to fluctuations in petrol costs in line with global oil prices over the past year. Of the overall outlay, car insurance accounts for over half (56%) of young drivers’ annual costs. In fact, the average 17-24 year old spends more on insurance each year than petrol.

The cost of car insurance for young drivers

This latest report shows that the average premium for 17-24 year olds currently stands at £1,354.27, up 7.7% on last year, and up 3.6% over the last six months, the equivalent of £48 extra on the premium. That’s £623 more than the average premium for the whole adult population (according to our recent Premium Drivers report).

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. Initial estimates have shown that young driver premiums could rise by £107 due to the Ogden rate changes alone.

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.

car running costs chart

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 fact that fuel prices have dropped 2% in the last six months, petrol or diesel are still a big expense for anybody looking to run a car. According to estimates from the AA, the average price of unleaded petrol was as much as £1.14 per litre in July 2017. This means that the average 17-24 year old is now spending a staggering £811 per year on fuel, down £70 on the previous six months, but only down £17 in the last year. This makes petrol, 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 £43.60, one of the few costs to have gone down. So, with annual car-running costs coming in at a massive £2,379.03 a year, it begs the question of how 17-24 year olds are ever meant to afford to run a car.

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 reported earlier this year, telematics policies are on the rise and can help to reduce premiums for young drivers as well as shopping around to get the right deal.

We did some additional research and found that for drivers under the age of 25, age doesn’t make much difference when it comes to the cost of insurance. Drivers aged 17-20 pay on average £1,848.44 for their first year on the road while drivers aged 21-24 pay more, with average premiums reaching £1,865.56. Luckily though, it seems it’s all about experience. We found that after your first year behind the wheel, the cost of insurance drops by 22% to an average annual cost of £1,433.65 for those under the age of 20 and by 26% for drivers 21-24 so it does pay to hit the road and demonstrate your safe driving when you get your licence.

How much are young drivers spending on buying a car?

The most popular car quoted for by 17-24 year olds on our site remains the Vauxhall Corsa. While the average value of the Corsa sits at £3,139.02, the average premium presented to 17-24 year olds to insure it is £1,358.63, up versus our last report

The second most popular model with that age group is the Ford Fiesta. With this model, the average premium comes in slightly lower at £1,316.41, despite the significantly higher average car value of £4,032.47. At number eight on our list is the Fiat 500. Insuring one of these will set the average young driver back £964.98, despite the fact that the average value for the car is the highest on the most popular list at £5,766.99.

Most popular cars table
cheapest cars to insure table

Save on car insurance for young drivers by choosing a cheaper car

Young drivers also stand to save some money on their car insurance by being a little wiser with their motor purchases. The report highlights that the only car on the most popular list that also makes it on to the top ten cheapest cars to insure list is the Fiat 500, which comes in at number two. Yet the rest seem to remain less popular despite the fact that the average price for the cheapest cars to insure comes in at £951.22 – that’s £407.41 less than the average price for the most popular car (£1,358.02).

As you can see, the VW Up! heads up the cheapest cars to insure list once again, coming in at just £951.22 to insure. Other cheap models to insure include the Fiat Panda (£978.26), Vauxhall ADAM (£988.48), and the Peugeot 107 (£994.63).

You can read more on how to find the best car for your budget here.

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 £290** 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 the August edition of the Young Drivers report – August 2017

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