'I was quoted £2,000 for annual cover': are young people being priced out of car insurance?

The average cost of car insurance for young drivers has gone up by 50% in the last year, according to new research by Compare the Market.

Premiums for motorists aged under 25 now reach up to £1,792 in August 2023 compared to £1,198 in the same period last year. These figures come after the Association of British Insurers revealed the overall price of car insurance shot up by 21% in the past 12 months.

Here, Which? reveals how the surge in prices is affecting young drivers and explores if there is anything you can do to reduce your premium.

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Driving becoming unaffordable for young people

Insurance has always been pricier for young, inexperienced drivers, who are considered more likely to be involved in a car accident. They also tend to make more expensive claims. According to data from Confused.com, the average claim value for under 25s is £2,300. For over 65s it’s £1,800.

Car insurance now accounts for 63% of vehicle expenses, Compare the Market's study found. The total annual cost of running a car is now £2,863 on average, up from £2,400 last August. That is a 19% year-on-year increase and also includes the cost of fuel, road tax and MOT.

A rise in the price of repairs due to inflation is the main reason providers are hiking the price of car cover for this demographic.

Julie Daniels, motor insurance expert at Compare the Market, worries that the surge in premiums will mean car insurance becomes 'prohibitively expensive' for many young drivers.

Which? spoke to a university student who claimed the cost of insurance means she's unable to drive at all.

'I was quoted £2,000 for annual cover'

Susannah Roman is in her last year of studying for a music degree in Manchester. The 21-year-old passed her driving test in June, but the soaring cost of insurance has meant she's been unable to get behind the wheel since, let alone even think about buying her own car.

After receiving quotes between £1,300 and £2,000 for annual cover, she tried to get added to her mum's policy instead. But again, she was told it would cost around £2,000. It's left her having to rely on public transport to get around the city, adding hours to her journey time.

Roman says she was shocked by the price and as much as she wanted to drive, taking out cover would have left her with no savings to fall back on - something which she needs as a musician.

'It was upsetting after putting all that money and time into learning to drive and passing my test,' she says. 

She adds: 'As well as going to university, I teach music lessons around the city. There are not really any trains, so I have to rely heavily on buses, which can easily get delayed. A journey that could take 20 minutes in a car, now takes two hours.'

• Find out more: how to find cheap car insurance

6 ways young drivers can cut the cost of insurance

Unfortunately, age and experience will always affect the price of cover, but there are some ways young drivers can reduce costs.

1. Shop around

This should always be the starting point when looking for the best price and cover to meet your needs. 

Price comparison sites such as Compare the Market, Confused.com, GoCompare and MoneySuperMarket allow you to view multiple car insurance quotes at a glance. Just remember, not all insurers are on price comparison websites: Which? Recommended Providers Direct Line and NFU Mutual are examples of this.

• Find out more: best car insurance companies

2. Take out black box cover

 Young drivers can potentially cut the cost of their insurance by taking out black box insurance, also known as telematics. It uses technology to track your car and calculate how safe a driver you are.

Metrics used by providers include braking, steering, speed and mileage. The insurer uses that data to decide whether to reward you for your driving skills. Benefits can include money off your premium and bonuses such as retail vouchers. 

The technology can also help you identify ways to improve your driving and even help trace your car if it's stolen.

3. Add a named driver

Adding an older, more experienced driver to your policy can sometimes reduce your annual premium.

But be warned: it's illegal to put someone down as the main driver if this is not the case and can lead to an insurer refusing to pay a claim, cancelling the policy altogether or even taking legal action against you for fraud. 

Usually, the cost of getting added to your parents' insurance should be cheaper than taking out a separate policy for yourself. However, in Roman's case, it didn't work out to be any more affordable. It also means you can only drive your parents’ car and they must use it more than you. 

4. Keep mileage down

Less mileage equals lower risk to insurers and therefore cheaper cover. So try to limit the miles you clock up over the year if you can.

But be honest about it. Lying could lead to your policy being invalidated.

5. Pay annually rather than monthly

Choosing an annual policy could save you hundreds of pounds. Insurers tend to charge monthly payers interest, which means the policy will be more expensive overall compared to paying upfront.

6. Haggle for a better price

You might be able to get the price down by haggling.

Do your research first and come to the negotiation table armed with any cheaper quotes for the same level of coverage. You may find they are happy to give you a discount rather than lose a customer to a rival company.

• Find out more: our car insurance haggling script

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