The cost of car insurance for young drivers has jumped by £644 on average in the past year, according to new Young Drivers research from Compare the Market.
Car insurance premiums for motorists aged under 25 have reached £2,009 in January 2024, compared to £1,365 in the same month last year.
Car insurance now represents 66% of the total car running costs for young drivers. Young drivers are currently facing higher car insurance premiums which may in part be due to repair cost inflation. The total annual car running cost is now £3,043 on average for a young driver. This is a 25% increase from last year when the average running cost was £2,436.
There are concerns that driving is becoming unaffordable for many young people. A separate Compare the Market survey found more than three in ten drivers (31%) found it difficult to cover the cost of driving and nearly eight in ten drivers (78%) are worried about the cost of their car insurance policy. More than four in ten drivers (43%) expect they will need to take on additional debt, such as loans or credit card borrowing, to keep driving.
Young motorists who only have UK driving licences for cars with automatic gearboxes are facing the steepest rises in the cost of car insurance. Car insurance premiums for drivers aged under 25 with licences to only drive automatics have surged to £2,803 on average – a £916 increase year-on-year. These drivers now typically pay £760 more for insurance, compared to motorists with licences to drive both manual and automatic cars.
The premium increase for automatics will impact a growing number of young motorists as figures from the DVLA show that in 2022-23, 138,354 people passed their driving test in an automatic, compared to 34,749 people in 2012-13.
The increasing number of young drivers only learning to drive automatics may be partly due to the rise in the popularity of electric vehicles as some car manufacturers are set to stop producing new manual car models.
Young drivers could reduce their car running costs by shopping around for a cheaper deal on their car insurance, either when they first take out insurance as a new driver or when their policy is up for renewal.
Compare the Market customers aged under 35 could save up to £970 on their car insurance. Young drivers could also try and lower their car insurance premium by adding an experienced named driver to their policy as a legitimate way to bring down the cost of insurance as long as the more experienced motorist also drives the car.
However, it is essential that all information provided to your insurer is accurate. Finally, it may be worthwhile for a young driver to consider a telematics policy, also known as black box insurance. Telematics policies allow insurers to provide more accurate risk pricing and therefore may reduce premiums for those who demonstrate that they are safe drivers.