- 30
- Jun
Younger drivers pay more than double the average car insurance premium to keep their vehicle protected, according to price comparison firm uSwitch.
Research from the group has suggested that the average cost of a policy for a youthful motorist now totals 989 pounds, more than twice the nationwide average of 459 pounds. In total, younger generations of drivers may be paying as much as 980 million in additional costs as a result of current risk evaluation practices enforced by insurance providers. For those who are struggling to keep up with the costs of keeping their car on the road as fuel prices escalate, taking out a car loan may be advisable.
And with the average premium equalling 69 per cent of the total value of younger people’s cars, taking out a loan may also be of use for those who are looking to purchase their first automobile without having to cut corners.
The group advised younger consumers to opt for more secure cars in an effort to lower cover costs, with insurers traditionally viewing less powerful vehicles as a lower risk. It explained that opting for the GTI version of a Peugeot 206 could add up to 4,000 pounds to a policy compared to the standard model, a figure which the firm used to highlight the need to carry out research before purchasing a car. Furthermore, older sporty models can also incur hefty insurance costs for young drivers. While a model such as a second-hand Volkswagen Golf GTI might cost around 5,000 pounds to buy, younger motorists living in high-risk areas could spend as much as 14,600 pounds in comprehensive insurance costs - nearly three times the worth of the vehicle.
Figures from the firm suggest that average car insurance costs for young people have increased by 122 per cent in the past ten years, with the firm noting that if current trends continue, younger drivers may be spending as much as 2,196 pounds to keep their car covered in 2018.
However, the firm noted that new proposals being drawn up by the government could lead to a change in the ways that insurance providers evaluate risk, with the planned equalities bill potentially putting an end to the practice of setting policy prices based on the age of the driver.
Ashton Berkhauer, insurance expert at uSwitch, commented: “In theory, the equalities bill could mean the end of the road for higher premiums for young drivers. However, insurers have to price by risk and there is clear evidence that younger drivers are more of a hazard on the roads. If the bill calls for pricing to be equal across age groups this could lead to a rise in premiums for lower risk, safer drivers, who would effectively be subsidising their higher risk counterparts. There is also a danger that many more ‘boy racers’ will find that they can afford to insure faster, flashier cars - we could see accidents increase as a result.”
For those looking to get on the road after passing their test, taking out a low-rate loan may prove an effective way to cover the growing costs of motoring. Doing so may be of particular interest to older generations after a survey from Tesco Personal Finance suggested that Porsches are most likely to be owned by those on the verge of a mid-life crisis.
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