1 in 3 young drivers pay more for insurance than their car is worth

More than a third of young drivers spend more on their car insurance than the vehicle is worth, according to new data.

Most drivers aged 18-23 bought their first car second-hand and a new survey has found that 34 per cent ended up paying more to insure it than they did purchasing it, with the average premium £324 more than the average purchase price.

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The poll, by comparison site Quotezone, revealed that two-thirds of “Generation Z” motorists opted for a used car, while 24 bought brand new and 11 per cent were gifted a car.

Among those who forked out for a second-hand model themselves, the average price they paid was £1,050. Of those, 34 per cent said that their insurance costs were higher than that, with an average premium of £1,374.96.

High-risk group

Young drivers pay more for their insurance than any other age group due to their relatively high risk profile. Around a quarter of drivers aged 17-24 are involved in a crash during their first two years of driving, a statistic which sees them pay far more for their insurance than older, more experienced motorists. They are often hit hardest by increases as inflation and other factors force up insurance cost across the board. There have been calls to freeze or even reduce insurance premium tax (IPT) which hits younger motorists harder than most others.

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Responding to the findings, Greg Wilson, founder of Quotezone, said: “Many motorists are already well aware of the fact that young, inexperienced drivers often have to pay eye-wateringly high insurance premiums during their first year or two behind the wheel. However, some drivers who are required to pay more for their annual car insurance than the car itself is worth could be left wondering why their premium is so high.

“There’s actually a very sensible, data-driven reason for those high quotes, though. Insurance claims data reveals that young drivers are much more likely to be involved in an at-fault accident than older, more seasoned motorists – and those accidents can obviously do a lot of damage to other vehicles and property, which is why the premium can sometimes exceed the value of the car.”

The study also found that the majority of young drivers admitted running a car cost more than they had expected. Ninety-one per cent said they were surprised by how much it cost to keep a car running, citing insurance costs (79 per cent), fuel costs (67 per cent) and the cost of repairs (63 per cent) as the most expensive car-related expenses.

Ways to save money

While their risk profile means younger drivers are always likely to face higher premiums there are certain steps they can take to try to secure a better deal.

Greg Wilson suggests: “There are some steps young drivers can take to improve their odds of finding cheaper car insurance quotes, such as opting for a telematics insurance policy, shopping around for the best insurance deals, parking the car off the road, and keeping annual mileage as low as possible. But even after taking those steps Gen Z drivers are still going pay higher premiums, which is why it’s vital that they drive safely, obey the rules of the road and build up a no claims bonus.”