Young drivers spend almost 10% of their salary on insuring their car
- One age group of young drivers has seen insurance costs rise 23% in 12 months
Young drivers are spending as much as 10 per cent of their full-time income on their car insurance costs, new data reveals.
Drivers as young as 18-years-old are facing annual car insurance costs of almost £2,000, as premiums jump massively year-on-year.
This comes as one in five motorists say they are driving less because of high costs of living.
It costs young people in 2024 a ginormous 135 per cent above the rate of inflation over the last 35 years, comparative to 1989 when it cost £3,234 (adjusted for inflation)
The average cost of car insurance quotes for drivers aged 18 to 21 is now £2,350 after premiums have continued to rise over the last year, latest figures from Confused.com show.
The most recent car insurance price index from the comparison site puts the average insurance price up 17 per cent (£335) for this hard-hit age group.
When you compare that to their average earnings of £23,668, that is a massive chunk (9.9 per cent) of their salary going towards insuring their car.
Similarly, drivers in their 20s are feeling the pinch from high premiums, having to part with a fair amount of their salary to cover insurance costs.
The latest data shows the average premium quoted for motorists aged 22 to 29 is £1,484 – an annual increase in the last 12 months of 11 per cent (£151).
The average full-time salary is £32,172, which would leave drivers forking out 5 per cent of their yearly pay on insurance.
The latest data shows the average premium for motorists aged between 22 and 29 is £1,484 – an annual increase in the last 12 months of 11 per cent (£151). The average full-time salary is £32,172, which would leave drivers forking out 5 per cent of their yearly pay on insurance.
| Insurer | Average APR | |
|---|---|---|
| 1. | The Co-operative Insurance | 29.89% |
| 2. | AA Insurance | 26.9% |
| 3. | Hastings Direct | 26.9% |
| 4. | InsurePink | 26.9% |
| 5. | People’s Choice | 26.9% |
| 6. | The Green Insurer | 26.6% |
| 7. | Santander | 26.5% |
| 8. | Churchill, Darwin, Direct Line, Privilege | 23.3%-28.9% |
| 9. | Bank of Scotland | 23.5% |
| 10. | Halifax | 23.5% |
| Source: Which? survey of car insurers | ||
The young driver insurance sting comes as it’s revealed paying monthly for insurance could cost you nearly 50 per cent more.
This is Money reported that drivers who pay in monthly installments are being slapped with massive interest rates – as much as 45 per cent APR, consumer group Which? revealed.
The consumer watchdog’s research found that, while the average APR for car is 22.33 per cent, some providers were charging far higher rates.
One car insurance firm, iG04, was slapping on 41.5 per cent: a 40-year-old in South London was quoted £999.65 if they paid upfront, which rose to an astronomical £1,158.11 to pay monthly.
While iG04 didn’t reveal its average APRs to Which?, other big names, including Swinton, Hastings Direct, and the AA, charge APRs between 26.9 per cent and 33.8 per cent.
The broker Co-operative Insurance has the highest average APRs for both home and car insurance. at 29.989 per cent.
High car insurance costs and living costs are changing driving habits
A July pole of 2,000 UK drivers found two in five (39 per cent) of motorists say their car insurance is more expensive than ever, while another one in three say it’s close.
The impact of high car insurance costs can’t be overlooked, especially within the tough financial climate.
One in five (22 per cent) say they’re driving less because of the cost of living, while more than two in five (42 per cent) say insurers need to do more to keep their prices lower.
Around one in three (28 per cent) also think the government needs to be stricter on insurers so that pricing remains affordable.
Which? wants the FCA to introduce an action plan that forces insurers to disclose their profit margins between monthly and annual payers, with deadlines to reduce APRs and consequences for those that don’t comply.
Director of policy and advocacy at the consumer group, Rocio Concha, said: ‘Many customers who pay monthly don’t do so out of choice, but financial necessity.
‘That these same customers can end up paying over the odds compared to those who pay annually is blatantly unfair.’
The biggest reason for the cost increase of young people getting on the road came from the massive hike in insurance premiums
What insurance hikes are young drivers facing?
Overall, the latest data reveals how those aged 38 and under are likely to have annual prices of £1,000 or more.
It’s 17–year-olds who are seeing the biggest overall average increase, up a third (33 per cent) – hitting the youngest of newly-qualified drivers hardest across all age groups.
18-year-olds though are still paying the most for their car insurance, with average prices now a whooping £2,960, with prices increasing by 23 per cent in 12 months.
That leaves 18-year-olds having to pay £556 extra this year compared to last.
Confused.com puts the average car insurance price now at £822, following a 14 per cent (£106) annual increase.
The astronomical expense of getting on the road
Nearly half of young people saying they couldn’t afford to get driving without financial help from their parents
This was based on data taken from MoneySupermarket’s Household Money Index.
In 1989, the average young motorist had to pay £1,285 (£3,234 adjusted for inflation) to get on the road, meaning a rise of 135 per cent in 35 years.
Consequently, the struggle to afford these soaring and unaffordable costs has left nearly half of young people saying they couldn’t afford to get driving without financial help from their parents.
Unfortunately the majority of parents said they could only contribute £990 – 13 per cent of the amount needed.
MoneySupermarket found that a 17-year-old would need to work 1,188 hours on minimum wage of £6.40 an hour to cover the cost of their first year on the road.
And the majority of under-25s (53 per cent) who’d put off learning to drive said they’d avoided it because it was too expensive.
