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YOUNG DRIVERS INDEXSEPTEMBER 2018
A bi-annual vehicle maintenance index for young people by
Key Statistics
Annual cost of running a car for 17-24-year-old drivers hits £2,442, up by nearly 2.7% over the past year
Annual fuel costs up by nearly 10% to £891 in the same period
Car insurance makes up over half of young drivers’ first year running costs
Average insurance for 17–24-year-olds has increased by £67 (5.4%) over the past two years, reaching £1,324
Young Drivers: The annual cost of running a car
2
The cost of running a car for young
drivers has risen by 2.7% over the past
year, primarily driven by an increase in
the cost of fuel and motor insurance.
On average, a 17-24-year-old driver will
now pay £2,442 to run his or her car in
the first year, of which more than half
(£1,324) is the cost of insurance.
The majority of the increases over the
past year have come in the last six
months, with costs increasing by 2.5%
since the latest Young Drivers report in
February of this year. Over a two-year
period, the cost of running a car has
increased by over £140 (6.2%) following
large hikes in the cost of insurance.
The increase in the cost of fuel has also
been a major driver of the rise in overall
motoring costs for young drivers. In the
past year, the annual cost of fuel for an
average young driver increased by over
£80 (9.9%) to £891. 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 costs
dramatically increased in 2018.
Another important factor in the increase
in motoring costs over the past two
years has been the rise in insurance
premiums. Whilst insurance costs for
young drivers have slightly decreased
by 1.76% to £1,324 over the past six
months, they have risen by £67 over a
two-year period and the average young
driver now spends an eye-watering
£1,324 a year for their car insurance.
COST OF RUNNING A CAR (17-24 YEAR OLDS); LAST SIX MONTHSCost Name Cost % of total cost
Insurance £1,324.69 54.24%
Fuel £891.41 36.50%
Est. VED (Road Tax) £115 4.71%
MOT £54.85 2.25%
Breakdown cover £56.41 2.31%
Total cost per year £2,442.36
3
The cost for young drivers to get on the road has increased by nearly 10% over the past
year to an average of £891. Fuel costs have always been volatile but the significant rise
in price over the past six months will have a large impact on the affordability of driving,
especially for young people.
“Driving costs for young people are becoming worryingly high. Each quarter, our Young
Drivers Report shows an increase in the cost of getting on the road for 17 – 24 year-olds.
This potentially has significant ramifications on young people’s ability to drive to work
and hold down jobs, especially when a large proportion of their salary may be spent on
travel alone. 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.
“Not all parts of the country benefit from strong enough public transport and for
those that rely on a car, these figures will be a worrying development. As a result,
Compare the Market has called on the Government to abolish Insurance Premium Tax
for young people.
Dan Hutson, Head of Motor Insurance at comparethemarket.com
£54.85
£115
£56.41
£1324.69
£891.41
Insurance Fuel Est. VED (Road Tax) MoT Breakdown cover
Insurance costs for young drivers has
significantly increased over the two
years, growing by 5.4%, or £67, to an
average of £1,324 today. However, over
the past six months, there has been a
slight reduction in premiums after a
long period of hikes. Compared to the
last Young Drivers report in February
2018, the average premium has fallen
by 1.76% or £24.
There is still a significant difference
between the cheapest and average
premiums available to young drivers on
the market, providing an opportunity
for savvy motorists to save money. On
average, the cheapest premiums for
17 – 24 year olds stands at £1,066 –
almost £260 lower than the average
premium.
The hikes in insurance costs over recent
years have primarily been driven by
changes to the ‘Ogden’ personal injury
discount rate and insurance premium
tax, which has led to insurers upping
their prices.
Changes to the ‘Ogden’ personal
injury discount rate – used to calculate
compensation for large payouts to
those with life-changing injuries –
announced in February 2017 had a
big impact on premiums. However,
4
The cost of insurance to young drivers
Key Statistics
Average insurance for 17 – 24-year-olds stands at £1,324 – accounting for over half (54%)
of a young driver’s first year running costs
Premiums for this age group slightly fell by 1.76% over the past six months, reducing bills by £24.
Young drivers could reduce insurance costs by nearly £257 on average by shopping around
the main factor in increasing insurance
premiums for young drivers is the three
hikes to Insurance Premium Tax, which
has doubled in recent years on the back
of announcements from successive
Chancellors.
IPT, which stands at 12% after doubling
in the past three years, is priced into
the overall premium that drivers are
charged. This means that young drivers
who face higher car insurance bills face
disproportionate increases to the policy
that they pay.
Previous research by Compare the
Market found that young drivers are
being disproportionately punished by
the high level of insurance premium
tax (IPT), making the cost of getting on
the road prohibitive for many 17 – 24
year olds. The tax added an average
of £165.27 to the cost of insurance for
young drivers compared to an average of
£66.70 for all other age groups.
Additional research found that 45% of
young drivers who don’t own a car say it
is because they can’t afford the running
costs, while 27% feared that if they could
no longer afford to drive, they would risk
losing their job. These statistics highlight
the ramifications of rising costs of driving
for young people.
5
The cost of insurance has always been problematic for young people. As they tend to
be involved in more accidents, this risk factor means that insurance premiums will be
higher. However, recent changes to Insurance Premium Tax have had a disproportionate
and unfair impact on this cost. A flat tax rate has meant that the increases in premiums
have been larger for those that can afford it the least.
“Scrapping IPT for younger people would go a long way to levelling the playing field for
young drivers for whom driving is often essential to get to work or places of education.
“For those paying unaffordable premiums, it is essential that young people shop
around for the best deal to minimise the cost. Switching to the cheapest premium on
the market would save a young driver an average of over £250 which could well be the
difference that makes driving possible. There are other options to potentially reduce
premiums, such as a telematics or ‘black box’ policy, which your driving habits with the
view to reducing your premium if you are deemed a safe driver. These sorts of policies
should certainly be considered for those struggling with the cost of insurance.
Dan Hutson, Head of Motor Insurance at comparethemarket.com
Changes in motor insurance premiums for 17-24 year old drivers since September 2012
P1 Average P1-P5 Average
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0
Sep
12
Dec
12
Mar
13
Jun
13
Sep
13
Dec
13
Mar
14
Jun
14
Sep
14
Dec
14
Mar
15
Jun
15
Sep
15
Dec
15
Mar
16
Jun
16
Sep
16
Dec
16
Mar
17
Jun
17
Sep
17
Dec
17
Mar
18
Jun
18
Motor insurance premiums for 17-24 year old drivers (Six months to January 2018)
Shop around price (P1 Average) Average price (P1-P5 Average) Saving
£1,066.88 £1,324.69 £257.81
6
What is the best car for your budget?
Compare the Market analyses the most cost-effective cars for young drivers.
17-24 year olds could save an average of £376 on insurance by choosing different cars instead of
some of the most popular models.
Vauxhall Corsa remains the most popular car for drivers aged 17 – 24 years old
Fiat 500 is still the only car to make both the list of most popular cars and the cheapest cars to insure
For young drivers struggling
with the cost of insurance,
the savings on offer show
that choosing a different
model could help save them
hundreds of pounds, whilst
not breaking the bank with
the car purchase. For example,
the Dacia Sandero and the
Seat Mii both cost under £900
to insure per year and cost
£3,225 or less to buy. The most
popular car amongst young
drivers is the Vauxhall Corsa,
but this costs an average of
£435 more to insure which
could make a big difference
to a young person’s budget.
We would remind all would-
be drivers and parents out
there to do a bit of research on
the cost of insurance prior to
buying any vehicle
Dan Hutson, Head of Motor Insurance at comparethemarket.com
Young drivers could save over £375 by
choosing a different car to the most
popular on the market. Research
from Compare the Market found that
the average premium of the top ten
cheapest cars to insure stood at £908
compared to an average of £1,284 for
the top ten most popular cars.
However, the savings in insurance
are offset by the cost of the car itself.
The average cost of the most popular
cars stands at £3,973 compared to an
average of £5,176 for the cheapest car
to insure. The Vauxhall Corsa retains
the top spot as the most popular car
for young drivers, accounting for 12.3%
of enquiries and costing an average
of £3,828. The Ford Fiesta and the
Volkswagen Polo took second and
third spots for the most popular cars
accounting for 11.12% and 6.35% of
enquiries respectively.
The Dacia Sandero has taken the top
spot as the cheapest car to insure,
costing an average of £882 per year for a
young driver. The car itself doesn’t break
the bank, costing an average of £3,196.
The Fiat 500 was second on the list of
cheapest cars to insure with an average
annual cost of £898 making it both
one of the cheapest as well as the
most popular models amongst young
drivers, with around 3% of all enquiries
from young drivers being for this
model. It is the only car to make both
lists. However, the Fiat 500 was more
expensive to buy than a number of the
other cars on list, costing an average of
£4,264 to take buy.
7
Methodology
All data on insurance and breakdown
cover, as well as insight on car models,
has been sourced through Compare the
Market. All other data has been sourced
through Gov.uk.
A young driver is defined in this research
as drivers aged between 17 and 24 years
old.
When the average price is referred to,
this is the mean average of the top five
cheapest prices presented to a customer,
where a consumer has clicked through to
buy. Buying from the top five cheapest
prices presented, represents 90% of all
car insurance sales.
When the cheapest price is referred
to, this is the average cheapest price
presented, where a customer has clicked
through to buy.
All premium data refers to motor
insurance products featuring
comprehensive, third party fire and theft
or third party cover.
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