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.