‘They quoted £7,000-£8,000’: young drivers face huge car insurance rises

Photograph: Sturti/Getty Images

Young drivers have always faced the highest premiums for getting behind the wheel, but with figures showing that the average price of car insurance for motorists aged 18 is now more than £3,000 for the first time, this traditional rite of passage is becoming unaffordable.

Premiums are going up for drivers of all ages – the average annual cost of insurance is now at a record high of close to £1,000 – but drivers aged 17-20 are bearing the brunt of the increases. Their premiums have increased more than £1,000 year on year, according to the comparison website Confused.com.

Quotes of £7,000-£8,000

The cost of cover is a wake-up call for teenagers who thought passing their test would be the biggest obstacle they faced to getting on the road. Lancashire-based Charlie Michael Baker, for example, was over the moon when he passed his test this month and was looking forward to driving his first car, a secondhand Kia.

The 17-year-old, who has 1 million online followers after gaining attention with his memoir about autism, has more money than his peers because of the payments he receives for social media posts. However, he balked at quotes of £7,000-£8,000 to cover the car he had bought for just over £4,000.

“I passed my test two weeks ago now and I am still unable to drive my car,” says Baker, who is still weighing up his options. “I didn’t think the insurance would be a horrendous amount but it turned out it was. I can afford it because I do Instagram as a job but most 17-year-olds are not going to be able to, are they?”

Louise Thomas, a motor expert at Confused.com, says younger drivers are seeing some of the biggest increases in costs. The website analysed the price of standalone policies for young drivers using their own cars.

“For 17-year-olds, average prices are now £2,877, after a 98% (£1,423) increase. But it’s 18-year-old drivers who are taking the biggest financial hit,” she says. “Premiums are now 84% (£1,447) more expensive, with average costs now £3,162.”

The prices are all for fully comprehensive insurance, which is now typically cheaper than taking out a third-party policy.

When confronted with figures such as this, the system appears rigged against teenage drivers but, unfortunately, there is a lot of evidence suggesting that younger and less experienced drivers carry a higher risk.

For example, drivers aged 17 to 19 make up 1.5% of licence holders but are involved in almost 12% of fatal and serious crashes. They are also more likely to be involved in crashes with multiple injuries and which involve a greater number of people, and insurers’ costs of dealing with associated claims can be very high.

“Insurers appreciate the independence that a car can bring to young people,” a spokesperson for the Association of British Insurers (ABI) says. “Insurance is always based on risk, and our data shows that the average cost and frequency of claims are higher for younger drivers, which can impact premiums.

“Paying premiums by monthly instalments is one option motorists have to manage their budgets. Premium Finance is one of a number of topics we continue to discuss with our members and the FCA [Financial Conduct Authority] when considering possible measures that could help customers best manage their insurance costs.”

While it may be tempting to make a few tweaks to your application to save on your car insurance, adding a more experienced driver as the main driver when you will be using the car more is known as “fronting” and can constitute fraud. “If you lie to your insurer, you risk invalidating your insurance and a criminal prosecution. You may also struggle to get cheaper insurance in the future,” the ABI spokesperson warns.

The options

There are, however, legal things you can do to reduce the cost of your motor insurance, including increasing your voluntary excess (the amount you pay or that is held back by your insurance company in the event of any claim) or going on an approved driving course.

If you have not yet bought a car, it is worth having a look at the cost of cover before you do. According to Confused.com, between October and December last year the cheapest cars for a 17-year-old to insure were the Fiat 500 Lounge, followed by the Mini Cooper and then the Fiat 500 Abarth 595.

Jenny Ross, the editor of Which? Money, says if you are on the hunt for a policy “shop around and haggle for cheaper quotes. Insurers may be happier to offer a discounted price than to lose your custom altogether.”

A telematics policy could also help bring the cost down. This technology tracks how safely you are driving. It involves either having your insurer fit a device in your car or, as is increasingly common these days, being sent a gadget to mount on the windscreen yourself that works in tandem with a smartphone app. In both cases, your driving is monitored and data transmitted back to your insurer.

Duncan Sutcliffe, a Worcester-based insurance broker at Sutcliffe & Co, took his work home with him when his teenage son George started learning to drive last year. His own policy did not allow him to add anyone under 21.

“When he was learning to drive we took out a separate policy for him through a company called Marmalade, which covered him while he was driving my car, so my car effectively had two policies,” he says.

Marmalade’s telematics policies require you to stick a small box to your car windscreen and download an app. “Every time George got in he switched on his Bluetooth and the app would record his driving,” says Sutcliffe, who paid about £200 to cover the four-month period his son was a provisional driver.

Once George passed his test, that policy was replaced with a pay-per-mile policy, still with Marmalade. “We bought him 500 miles worth of driving, which cost about £380, and when he gets close to that we have the option to top it up,” Sutcliffe says. “We looked at him purchasing an annual policy for a basic 10-year-old hatchback, the sort of thing an 18-year-old would drive, and it was around the £2,000 mark, which is a big outlay. For his lifestyle, the pay-per-mile thing is probably more economical.”

Rewarding safe driving

The insurer Aviva is targeting drivers under 30 with its app-based car insurance Quotemehappy Connect, which rewards safe driving. Again, it requires the use of a small windscreen-mounted device and phone app to record driving behaviour.

Customers pair their mobile with the device when they set off and the app provides a weekly driver rating: red, amber, green or gold. The app records information, including the speed and smoothness of the drive as well as distractions such as mobile phone use. Users are given regular advice on how they can improve their driving and unlike some of telematics policies there is no evening curfew.

Green and gold-rated drivers earn reward points, which can be exchanged for vouchers to spend with big brands including Amazon, Costa Coffee and Just Eat. At the end of the policy the holder receives a personalised renewal price based on their driving behaviour, which could allow young drivers to save money on their car insurance in their second year. Aviva says those with a gold rating could get up to 30% off their renewal premium.

Even with motor insurance premiums at unprecedented highs, Catherine Carey, the head of marketing at the data company Consumer Intelligence, says insurers are not raking in profits. “The motor insurance market is not a profitable one and a lot of brands are struggling to balance the cost of settling claims,” she says.

The good news for consumers is that its analysis shows the rate of price growth has started to slow.

“We think that over the next year, at the very least, we’ll see some stability coming to the market, so we’ll see a flattening-out of these increases,” she says. “If we’re lucky, we’ll see some competition come back into the market but we would need to see new brands that have money behind them to allow them to have that competitive edge, and that is yet to be seen.”