Why is car insurance for young drivers so expensive?

, Apr 04 2013 at 1:18 pm

Oscar Wilde once said: “Experience is one thing you can’t get for nothing”, and when it comes to experience behind the wheel, young drivers certainly pay for it.

With perhaps the highest car insurance premiums of any group of motorists, teenage and young drivers might feel a little hard done to when it comes to the cost of cover. In fact, recent research said young drivers think the insurance industry is “greedy and corrupt”.

But there’s a reason young drivers’ car insurance is so expensive. You won’t get cheap car insurance if you have little experience, and you can’t get more experience unless you get on the roads – forcing young drivers to pay up.

Things could change in the future as the government takes steps to bring young drivers’ insurance costs down (more on that later) but in the meantime, here’s a closer look at why car insurance for young drivers is so expensive.

Vital statistics

In 2011, almost a fifth of people killed or seriously injured on the UK’s roads were aged between 17 and 24-year-old, according to the Department for Transport (DfT).

Other research conducted by the DfT in 2011 found that an 18-year-old driver is three times as likely to be involved in a crash as a 48-year-old.

Five years ago, research by the Driving Standards Agency found that one in five new drivers have a crash within their first six months of driving.

Statistics like this go on and on, continuing to support the idea that young drivers are more at risk than older and more experienced motorists.

It stands to reason, then, that insurers charge younger drivers more for cover because there’s a greater chance they’ll have to pay out for a claim.

The times they are a-changing

The car insurance industry is going through a pretty big transitional period at the moment, with changes in the law and technology potentially making the cost of cover for teenagers fairer in the future.

First of all was the European Gender Directive which came in last year and told insurers they could no longer take your sex into account when setting your premiums. Teenage girls always used to get cheaper cover than teenage boys because, statistically, they were safer drivers.

When it comes to safety, that’s still the case, but the Gender Directive is closing the disparity between the price of cover for men and women, with women’s cost increasing slightly and men’s costs falling.

Then there’s the emergence of telematics insurance, which uses actual data about your driving to give you a bespoke car insurance quote, rather than setting your premiums on assumptions about your driving based on your age, gender, experience and so forth.

A small, GPS-enabled device is installed in your car (it plugs directly into your car’s diagnostic port) which records and transmits data about your acceleration, braking, cornering and such to the insurer.

This means that safer drivers benefit from cheaper cover – which is why it may become particularly popular with conscientious teenage drivers. In fact, 15% of all car insurance quotes run at MoneySupermarket are now for telematics policies.

Les Roberts has written a series of articles about telematics, which you can read here, here and here.

Finally, the government is looking at doing something about the high cost of teenage motoring too. As I explained in this article, the Department for Transport has put together a Green Paper report looking at solutions to the problem.

It mainly talks about putting new drivers through more rigorous training and testing before letting them loose on the roads, and even restrictions of the number of passengers new drivers could carry, and curfews.

17 thoughts on “Why is car insurance for young drivers so expensive?

  1. Danny

    Hello, This article is pathetic, there is no way you can just say, may feel a little hard done by… Car insurance is absolute daylight robbery! In my opinion it should be optional, and if you don’t have insurance and are involved in an accident, then you must pay up or face court. What is wrong with that?

    I have been driving for almost 3 years and have never had an accident, but have seen my insurance premiums increase by £2,000 ! That’s almost £4,000 a year to drive to work and back?!?!?! Hard done by??? Put that together with the actual car and petrol and it’s around £700 a month! I could get a motgage on a 4 bedroom detatched house for that! And what am I actually paying for considering I have never had a crash? cannot be the only person who is not happy paying for something that does absolutely nothing for me apart from stop the police taking my car away for not having it! It should be our option to take up car insurance or not, and if we are involved in an accident, we can use the money we saved whilst not being mugged, to pay for the damage, which would most probably be a tiny scratch and a false whiplash claim! This country is far too soft and is totally brainwashed into the “security” it provides.

    The whole system needs revising or it is going to shut down, and the wolves will take off their sheep suits and fight for their freedom. The greed generated by this worthless paper which is soon to be nothing but 0′s and 1′s is disgusting, and in my opinion one of the worst diseases spread among the human race, it is a plague that needs to be stopped before it kills the world and everything good about it.

    To live is the rarest thing in the world, most people exist, that is all. That quote could never be more appropriate. I work 40 hours a week and only get 1 day of my weekend off, I pay for car insurance, a car, petrol, my house, my food and my bills, my wage is 1100 a month after tax, have a guess how much money I have to spend on what I want to do at the end of the month? Absolutely nothing! So my invisible savings for my future when i’m too old to work are non – existent. And I will probably be forced to work till my death, What a lovely life we have . . .

    Yours to contemplate.

    Danny Blaney.

    Reply
    1. Rob Dudley-Jones

      I’m in a similar situation with insurance to Danny on this one!

      answer me this…

      I am 20 years old and have been driving for 3 years now. I recently thought considering the fact I have been driving for three years it would surely be reasonable enough to get my own insurance policy by now?

      WRONG

      after looking on multiple sights and companies I am still being quoted £4300 on my own policy, fully comp on a 2005 1.4 Vauxhall corsa!!!

      I Have a younger sister who has been driving for 18 months now, she managed to get her own policy 12 months into passing her test for just £82 pound a month fully comp with the total policy accumulating to around the £1000 mark… this is without a box and after the rulings changed on gender!

      I also got quotes as a named driver on my car (again from multiple companies) and yet still the cheapest i have found so far is £1457 one off payment! if i were to pay monthly it changes to over £1600 total!!!

      Insurance companies are just money grabbing bastards because even with my driving credentials and pass plus, i still cannot get reasonable insurance quotes for my own policy after 3 years! it is absolutely ridiculous to be charging people especially younger drivers who pay for their own policies, such extortionate amounts of money!

      Reply
  2. Neil Chuma

    DANNY BLANEY i have never had a tear of joy in my eye until i read your comment. You hit the nail on the head with the hammer! “To live is the rarest thing in the world, most people exist, that is all.” Your words are awe inspiring and if you were prime minister i guarantee the world would start to change for the better. Capitalism is a disease in itself. There are too many gullible mind that believe a piece of paper can make you a safer driver and to top it all off you are being extorted in every direction by greedy companies and the government. I’ve reached a point where i feel that capitalism has to go or the people themselves have to go

    Reply
  3. Robin

    Australia have a system which is excellent, the government provides third person insurance which covers the costs of injury to a person. this costs roughly 275 pounds per year this is mandatory and you cannot drive a vehicle on public roads without this. You then have the option of buying third party or comprehensive insurance from an insurance provider which will cover you for damage to property (Cars etc) essentially this means that the insurance companies cannot overcharge as people will simply not buy the product. my insurance costs me 360 pounds a year as a 26 year old 65% no claims discount, the car is insured for any driver with no age restrictions

    Reply
  4. Muhammad Omer Ahmed

    I jus personally think insurance companies are money making scams expecting individuals young people like us paying such huge amounts I do agree with the first comment above that car insurance should be optional especially for the young. The government need to re change the laws and policies to make insurance more affordable

    Reply
  5. Les Roberts

    The fact that car insurance is a legal requirement yet there is no real legislation around pricing has been a bugbear of mine for as long as I can remember.

    It does seem insurers can charge what they like and I feel this has created an ‘us’ and ‘them’ situation between insurers and customers – and I do feel that’s why many people feel ‘entitled’ to make a personal injury claim after they’ve had a crash, it’s a way of clawing some of the money back that you’ve been putting in.

    However, I don’t think optional insurance would be the answer as, given the choice, how many people would actually take on car insurance if they didn’t have to? Most would probably take their chances. And then it wouldn’t be insurers making money, it would be solicitors as damage claims would have to be settled by the courts – and no matter what you think of insurers, they’re a lot cheaper than solicitors.

    There is already an ‘optional’ system in place, that is whether you take out third party, third party fire and theft, or fully comprehensive – however, many insurance companies are now charging more for a lesser level of cover or doing away with basic third party cover altogether. The explanation they will give is that people who take out third party and TPFT are a bigger insurance risk than those who take out fully comp – which is always the justification for any crazy pricing.

    The answer is probably in telematics, but that opens a whole other can of worms.

    Reply
  6. tom west

    Danny and others who agree are a little bit thick im afraid although i agree the pricing for young drivers is completely unfair i also know if he had a crash and put someone in a position where they needed medical help and treatment for life you could not afford to pay for that unless you have over a million in your bank so coming up with unrealistic solutions like yours is a bit dumb and immature. If you want to make a difference you need to get on fb or other platforms and unite all the under 25s to lobby the government to maybe do the aussi thing or something else dont go with your first idea you will just get laughed at.

    Reply
  7. Julia

    Has it not occurred to some people that it is illogical to make young drivers pay extremely high insurance premiums? As young people the only jobs they are likely have in order to finance this insurance are low wage jobs so even if they are able to find a job in this time of redundancies and cuts to everything, they work all the hours God sends, they still may not be able to afford the extortionate rates of insurance. As a result these young, inexperienced drivers will be forced to not drive and therefore by the time they are 25 and officially no longer a ‘young’ driver, they will still have little experience on top of the fact that they will have had no practice and thus there is no benefit of attacking just the young drivers. Do not forget that not everyone learns to drive at the age of 17 and there are many elderly people on the roads who are far less capable and responsible in their old age as these ‘young drivers’. It is also a bit of a slap in the face for a driver to pass their test to discover that they cannot drive at all now because they can’t drive as a learner or as a free citizen because insurance is too high even though the examiner deemed them capable of driving on their own. These young people are adults. They deserve to be treated as adults. And taking away their freedom to drive is insulting and upsetting and only angers them at the injustice of this world.

    Reply
  8. Les Roberts

    I agree that it’s unfair how young drivers are charged such a high premium for insurance, particularly at a time when they can least afford it – but the stats do show they’re more of a risk and this is the argument insurers will always fall back on.

    That said, car insurance prices are currently at the lowest level for three years, so now’s a good time to renew.

    I don’t agree with the new ideas around curfews – no one should be told by the state when they can and can’t go out (unless they’re a criminal of course) but I do think it may be a good idea to limit the number of passengers a new driver can carry to just one. An exception to this could be if there’s an older driver (say 30+) in the car with them as it’d be absurd if a young driver couldn’t take their mum and dad out in the car.

    If any new legislation does come in to make the roads safer for young drivers, it’ll be interesting to see if the insurance companies play ball and lower insurance prices.

    Reply
    1. Grant

      Yes young drivers are more at risk – but a good friend of mine is a statistician for an insurance company – and they way overcompensate for the risk of young drivers. To the point they do it is a travesty.

      Example: 50 yr old pays 400/yr – 18 yr old pays 3500/yr for the same car. According to my friend if you actually weigh the risk correctly the 3500/yr should be about 950/yr.

      They do it because they can get away with it – partly this is because older people actually like the being screwed over because they were when they were younger.

      Reply
  9. Dane

    My personal opinion is that something needs to be done to regulate the industry. I am a young driver (26) with an advanced drivers licence and 7 years no claim bonus yet my insurance premium is still sky high. Its quite annoying considering when I 30, my insurance premium will suddenly drop. I can guarantee that my driving style isn’t suddenly overnight going to change because I’m now 30. The two claims I did have when I just started driving were for a stolen vehicle and someone running a red light t-boning me. Not exactly accidents that screem ‘young reckless’ driver.

    Also, the stat above is 1/5 involved in accidents are young drivers. That also means 4/5′s aren’t. Which is greater and why are we paying more?? Lastly, I find it extremely even more frustrating since because of this stupid system, I’m forced to buy a rubbish underpowered car to keep premium ‘reasonable’ (I use that term very loosely) and it’s just ridiculous.

    Logic: 30 year old can have 4.2 V8 and pay less than £500 per annum. 26 year old who hasn’t had an a claim in 7 years won’t be insured for tat because it’s ‘too powerful’. Joke!

    Reply
  10. Disgruntled Pete

    UK Car insurance is just a massive scam. Insurers are nothing more than a cartel, joining forces to con us all.
    I’m 25, have 7 years no claims, and my cheapest insurance quote has gone up over two hundred pounds from last years cheapest. I’m a year older (and wiser (more experienced)) and have another years no claims, yet it goes up.
    I pay so much because I was involved in a NON-FAULT accident. Some stupid **** t-boned me out of nowhere, and my insurance doubles in price. Why am I being penalised for something that could have happened to anyone. They’ll find ANY little reason they can to label you with a HIGH RISK stigma for the next 3 years, oh wait, 5 years. Do I hear someone say 10 years!?
    The problem of uninsured drivers and dodgy injury claims pushing prices up is a vicious circle that will only get worse until something is done to control the UK insurance cartel.

    Danny Blaney- SPOT ON!
    Robin- From speaking with australians living with this car insurance system I gather they like it the way it is. Probably because they can afford to eat after paying their premiums…

    Reply
  11. Kevin Nash

    You are absolutely right. This IS daylight robbery. Its immoral to charge people this much , especially as even if you did become involved in an accident, they will do everything they can not to pay.

    Reply
  12. Ryan Van Den Haag

    Ignore the name! Im a brit!

    Im 17 just passed my test and im being charged £1200 for insurance on a polo! Don’t think the insurance companies realise that ill just go on my dads insurance as a second driver! So im not paying with 90% of my weeks wages, at the end of the day there is no point whatsoever in charging young people the earth because unless your like me, they won’t pay it and risk lives.

    Just wanted to vent my frustrations guys :)

    Ryan

    Reply
  13. Pam

    With the recent increase in insurance prices for women due to equality legislation (despite having less accidents statistically) why are insurance companies still allowed to charge extortionist prices for young drivers. I’m sure you could use the same argument for equal pricing under the legislation covering age but the greedy insurance companies can charge what they like. I’m sick of the double standards used by them to make even more money – don’t our kids have it hard enough!

    Reply
  14. Charles Tennant

    How can we allow insurance companies to brush all young people with the same brush? I am 19 years old and earn in excess of £25,000 from a secure job and behave very sensibly. I do not binge drink, nor do I smoke or hang around on street corners. So why do I come under the same bracket as the few people who go joy-riding? All because of stats. *sigh*

    This is discrimination. Insurers wouldn’t be able to say ‘oh, well, someone of a certain descent are more likely to die at the wheel when compared with someone else of another descent. And, for that reason you will be paying quite a bit more than them’. Why are they allowed to do this with young people.

    It makes me incredibly annoyed that we are treated so unfairly. We even have lower minimum wage rates. I could, legally, be paid less than someone purely because of my age, which I have no control over.

    My apologies if what I have said above seems to deviate from the issue being discussed here. But, I feel very strongly about the unfair treatment of young people in our society, even those of us that work hard and behave ourselves.

    I understand that the Government wishes to cut this country’s carbon omissions and so, in turn, will welcome less drivers on Britain’s roads but people should not be discriminated against.

    Reply

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