News : Young drivers paying fifth of wages on car insurance

Carole Nash Classic Insurance Specialists

It is a well-known fact that younger drivers, who are seen as the biggest risk on the roads, have to pay considerably higher insurance premiums than more experienced drivers. However, in recent years this situation has become considerably worse and many young drivers are now having to spend up to a fifth of their wages on their car insurance.

The Figures

Recent research has revealed some frightening figures. For a fully comprehensive insurance policy, for example, young drivers are being quoted an average of £2500 for a year’s cover. This gets even worse if you happen to be male because then the average goes up to almost £3500 a year.

If we take into account that the average wage for the 18-21 age group is around £14,000, then this means many are spending at least one fifth of their wages on car insurance alone. For some it can be as much as a quarter.

These figures are in stark contrast to the group that generally enjoys the lowest premiums, which is older drivers. Over 70s pay an average of just £450 a year for comprehensive cover, while the figure is just slightly higher for those in the 66-70-year-old bracket.

The Reasons

Unfortunately, it all comes down to statistics. The cost of the premium for each age group is calculated according to the statistics which are said to determine the exact risk each group is likely to pose.

While the premium may be affected by the value of the car, the level of experience the driver has in addition to their previous driving history are the most influential factors. Unfortunately, if a driver has no history of safe driving – even if this is because they have only just started to drive – then they are likely to be hit with the highest premium possible.

The Solutions

Fortunately, there is now an option available which could have a serious effect on younger drivers’ insurance premiums. This involves what is known as a ‘Black Box’. In simple terms, this is a device that is installed somewhere on the car (usually under the bonnet), which records various aspects of a driver’s performance such as the average speed, how hard they accelerate or brake and how they handle the car as a whole.

This information is then automatically sent to the insurers, where it is kept on the driver’s file. Every 90 days the data will be accessed and drivers will be rewarded with a premium discount if they are driving correctly. Of course, should the data show that the driver is driving badly then their premium is likely to increase.

Many are touting this system as a great idea. It will encourage younger drivers to drive more carefully as they can actually access their data through a special online account, which also offers advice on how to improve performance. It will ultimately also lead to relatively cheap car insurance for young drivers, ensuring that they are not priced out of the market altogether.

Keith Adams

Keith Adams

Editor and creator AROnline at AROnline
Created www.austin-rover.co.uk in 2001 and built it up to become the world's foremost reference source for all things BMC, Leyland and Rover Group, before renaming it AROnline in 2007.

Is the Editor of the Parkers website and price guide, formerly editor of Classic Car Weekly, and launch editor/creator of Modern Classics magazine. Has contributed to various motoring titles including Octane, Practical Classics, Evo, Honest John, CAR magazine, Autocar, Pistonheads, Diesel Car, Practical Performance Car, Performance French Car, Car Mechanics, Jaguar World Monthly, MG Enthusiast, Modern MINI, Practical Classics, Fifth Gear Website, Radio 4, and the the Motoring Independent...

Likes 'conditionally challenged' motors and taking them on unfeasible adventures all across Europe.
Keith Adams

5 Comments

  1. In ’91 I earn almost £5000 a year and my insurance cost £900… so nothing changes really…

  2. It is costing my mate in Leeds £2,500 to insure a 1.4 litre Corsa van worth £400. His premium per month is roughly a weeks wages! They wonder why so many chavs are driving round uninsured

  3. I think you are missing one other factor.. If you are more likley to hit smothing you are more likley to have a PI claim. It’s about time we did to these what germany has, and removed the posiblity of a PI claim form a low speed impact

  4. Something needs to happen for sure. Record youth unemployment and massive insurance premiums suggests a growing number will consider driving with no insurance at all.

    I like the idea of a black box (for everyone actually) or add it onto fuel prices..?

    I could only afford, at 21 with my first policy, TPF&T. Even that cost more than my £450 Austin Metro. Thankfully not a fifth of my wages though!

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