Why is car insurance for young drivers so expensive?

Group of young drivers in a car

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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-years-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 and here. Finally, the government is looking at doing something about the high cost of teenage motoring too. 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.

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