The fall over the last six months counteracts a period of steady growth in the costs for younger drivers, with the annual amount 17–24-year-olds pay to get on the road at its lowest level in two years. Two years ago, the cost of running a car for this age group stood at £2,397.
Insurance costs for young drivers have begun to decrease after a long period of rising premiums. Over the past six months, the average premium for a 17–24-year-old dropped by 3.3% to £1,281. Over the past year, premiums for the age group have fallen by 5%, which equates to £67. The fall in insurance costs over the last year is down to lower competition in the car cover market, as insurers are now offering more competitive renewal rates to try and retain customers.
However, even though premiums have fallen slightly, there is still a significant difference between the price motorists pay by sticking with their insurer versus shopping around, providing an opportunity for savvy motorists to save money. On average, the cheapest premium available for 17–24-year-olds stands at £1,018 – over £260 lower than the average premium paid.
The drop in the cost of fuel has been a major driver in the reduction of overall motoring costs for young drivers. In the past six months, the annual cost of fuel for an average young driver plummeted by over £106 (11.9%) from £891 to £785. The analysis of fuel costs, which is based on average annual mileage, average fuel efficiency of cars in the UK and the cost of premium unleaded petrol, shows that prices have fluctuated significantly in recent years, reaching a low of £739 in the latter half of 2016 and a high of £891 in the first half of 2018.
Dan Hutson, Head of Motor Insurance at comparethemarket.com, said: “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 significantly 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 clear 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 that they would risk losing their job if they could no longer afford to drive.
“We have been calling for a long time for the government to reassess Insurance Premium Tax, so the Chancellor’s announcement at the Spring Statement of an operational review is a step in the right direction. To operate “fairly and efficiently”, the government should scrap or cap IPT for younger drivers which would help ease the financial burden of car ownership.”
There are a number of options for young drivers looking to reduce insurance costs. According to recent comparethemarket.com research, telematics policies can save drivers an average of £482 on premiums. However, there are a number of barriers to further adoption of telematics technology with only 14% of drivers saying they would be likely to choose a telematics policy when their insurance comes up for renewal.
Drivers have two main concerns around telematics policies. 34% would be more likely to choose a telematics insurance policy if they could transfer the black box between providers and over half (56£) are not comfortable sharing data.
Dan Hutson added: “Our research suggests that if drivers were able to take their black box with them, over a third more people would consider purchasing telematics and would potentially save a lot of money in the process. For drivers to truly embrace the benefits of telematics policies, the industry must work to fix this interoperability issue and make switching black box providers as easy as possible. These policies offer significant savings, particularly to young drivers, and finding resolutions to these issues could result in a large increase in telematics take up.”
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