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Last updated: 21 January 2021
Car insurance for young drivers is notoriously expensive, but there are ways a new driver under the age of 25 can cut the cost of insuring their first car.
As a young driver you're likely to have to pay a high premium for your car insurance, even if your vehicle is small and inexpensive. That's because data shows that first-time drivers are more likely to have accidents and make expensive claims.
So even if you're a careful new driver, you're likely to have to pay a great deal more for your insurance than your parents, for example, even if you are driving the same make and model of car.
The average premium for a young driver under the age of 25 is £1,795, according to the Consumer Intelligence car insurance price index for March 2020. This compares with an overall average annual premium of £829 and an average of just £402 for the over 50s.
Under-25s premiums have stopped rising in the past 12 months, partly because there were fewer cars on the road during the Covid-19 pandemic, and partly because more drivers are choosing telematics policies.
Even so, £1,795 is a hefty sum to find if you want car cover. But it is the price young drivers will typically face because they are considered high risk customers.
Statistics show that young drivers are more likely to be involved in accidents than drivers over the age of 25, and the resulting claims are more expensive. This means that even if you're a careful driver of an inexpensive car, your insurance quote is likely to be high.
AA research shows that one in eight British drivers is aged 25 or under, but one in four of all drivers involved in serious traffic collisions are within this age group.
On top of that, young drivers tend to have more expensive claims. They often drive with other young people in their car or crash with other young drivers. Insurers have to pay for injuries drivers cause, including to their own passengers.
As well as being more likely to have a more expensive accident, young and new drivers often have to pay more for their car insurance because they haven’t had the chance to build up a no claims bonus over time.
Young drivers often have other young people in the car with them when they have accidents. The passengers are third parties and the driver’s insurer has to pay damages if any passengers are injured, and must also pay out on any other vehicles and people involved in the crash.
Young drivers injure more young people than older drivers, and life-changing injuries to young people cost the insurance industry more than similar injuries to older people. The insurer may be compelled to pay for care for the injured person for the rest of their lives.
It's not just young drivers that are faced with sky-high premiums, new driver insurance is similarly expensive. New drivers of any age are often cited in statistics that show them being more likely to have an accident than those with more experience.
So even if you're older but are new to driving you may find your premiums will be more expensive than what your peers pay and may be more akin to what young drivers pay.
There are several ways in which young or new drivers can save money on their car insurance. If you’ve already bought your car, some of the following points will be irrelevant, but are worth considering in the future.
Many factors can impact the cost of young driver insurance, including the make and model of the car.
Insurers place cars into individual insurance groups from 1 to 50. Typically, if the car is in group 1 it will be amongst the cheapest to insure and 50 will be the most expensive. While you can’t change your age, you can choose a car which is less expensive to insure in order to cut down on the cost of young driver motor insurance.
Cars are rated on the following factors:
Rate of acceleration and its top speed
Book value – insurers, car sales and government agencies use National Auto Research’s Black Book to assess the worth of motor vehicles
How much it will cost and how long it will take to fix if it is broken
How much the individual parts cost
Car modifications, such as alloy wheels and body kits often appeal to young drivers wanting to personalise simple-looking hatchbacks or medium-sized cars.
Avoid them if you want to save money on your car insurance — modifications are known to increase premiums by hundreds of pounds because the extras you add to your car can make them more attractive to thieves and can add to the cost of claims.
Similarly, go-faster modifications such as sports exhausts and engine tunings should also be avoided, as insurers will see these as signs of intent to drive more quickly and recklessly.
If your car has been modified, run a car insurance quote with the modifications included, and again without. If the difference is significant, think about reversing the modification, if possible.
Choosing to pay a higher voluntary excess – the amount you pay upfront if you make a claim – could significantly lower the cost of young driver insurance.
However, think realistically about whether you could afford to pay that lump sum if you end up needing to make a claim. The excesses on new and inexperienced driver insurance policies can be several hundred pounds.
Although it can be a way to lower the cost, it could also leave you out of pocket in the event of an accident, when you’ll probably need all the cash you can get hold of to buy a new car.
Surprisingly young drivers can get comprehensive insurance just as cheaper as lower levels of cover.
The minimum level of cover to legally drive in the UK is third-party car insurance. This will cover costs in car repairs or injuries to any third party affected by an accident you cause.
With a third-party car insurance policy you will also not be compensated if your car is stolen or damaged. If you live in an area where theft and vandalism is common then you might want to consider getting third party, fire and theft cover.
As with regular third-party insurance however, third party, fire and theft won’t cover any injury costs or repair costs to your vehicle in the event of an accident. To get this level of cover, opt for a fully comprehensive insurance policy.
Many people assume that because comprehensive car insurance provides more cover, it will be more expensive.
In fact, according to the Association of British Insurers, the average third-party, fire and theft premium is more expensive than comprehensive cover because it is often chosen by younger drivers with a tendency to make larger claims.
It therefore pays to compare quotes with different levels of cover before you buy.
Whatever car you drive, make sure you find insurance that covers everything you need as cheaply as possible by comparing policies.
Adding an experienced and older named driver to the policy is another effective way to bring down the cost. This way the insurer is reassured that the young person will not be the only one driving the car, which reduces the chances of an accident occurring.
However, be careful of ‘fronting’ – declaring to the insurer that the additional, older driver is the main driver. Car insurance must be in the name of the main driver of the vehicle, otherwise you are breaking the law, and any claims you make will be rejected and your insurance invalidated.
If you don’t need a car all year round – perhaps if you are at university – you could consider taking out temporary car insurance rather than paying for annual cover when you only drive in the holidays. This could save you a small fortune.
Find a short term car insurance policy by comparing temporary cover options with these providers.
It’s usually much cheaper to pay for the whole year in advance rather than paying monthly. You’ll avoid the monthly interest charges and could save a substantial amount.
It may not be possible for many young drivers to pay the cost of car insurance in one go, but if this option is open to you, it's one to consider.
Another option to consider is black box insurance. A small telematics device will be installed in your car (or an app installed on your phone) that monitors how and when you drive.
The technology measures factors like speed, cornering, mileage and braking and paints a picture of how careful a driver you are. If you stay within the speed limits and don’t drive too far and often, you could get cheaper car insurance.
Having a black box fitted is a simple process and some black box policies work more like pay-as-you-go mobile phone plans, where you can top up the number of miles you plan to cover. Some black box polices restrict your driving at night – a notorious time for accidents.
View quotes for black box car insurance that could make your insurance cheaper.
There are now a growing number of insurance companies that offer insurance by the mile – mainly useful for motorists who don’t drive much. If you total less than a couple of thousand miles a year, these are worth considering.
You’ll be sent two quotes – one for just having the vehicle standing for the year, and the second is a per-mile valuation. So, for example, for your modest seven-year-old 1.2 hatchback, you might get a standing quote of £700 per year and a per-mile quote of 6p. Thus:
If you drive 500 miles a year – £700 + (500 x £0.06 = £30) – you will pay £730 a year
If you drive 1,000 m/y – £700 + (1,000 x £0.06 = £60) – you’ll pay £760 a year
Make your car more secure by adding security features such as an alarm and immobiliser. If you can park your car off the street, or even better – in a garage – your young person’s car insurance premiums may be lower.
Young drivers are more likely to be involved in accidents and make insurance claims and those claims are more likely to involve injuries to other young people, so car insurers charge them more.
No, it is a legal requirement to have at least third party car insurance cover to drive in the UK. There is a minimum fine of £300 and six penalty points on your licence. Your car may be seized and scrapped and you may be prosecuted and fined further. You will then find it harder and more expensive to get car insurance in future.
Yes, you must be insured if learning in your car or someone else's. Find out how to get learner driver's cover here. If the only driving you do as a learner is in a qualified instructor’s car, you don’t need your own insurance.
It can cover damage to your and another driver's car after an accident. It can also cover theft, vandalism, fire and more.
It is the amount you have to pay towards any claim you make. Find out how car insurance excess works here.
You must buy insurance in the name of the main driver. You can add another named driver to a policy but pretending an older, cheaper-to-insure driver is the main driver when really it is a younger, more-risky driver is called ‘fronting’ and is illegal. The main driver must be the person who drives most, but you can add a named driver to your policy