Insurance

Young Drivers Face Record High Car Insurance Costs Amid Post Covid Surge

Young drivers, particularly those aged 17-20, are grappling with the highest car insurance costs on record, with premiums soaring by an average of £1,000 in the past year, according to data from Confused.com, a leading price comparison firm. The surge is attributed to a post-Covid increase in insurance claims and rising costs in the automotive sector.

Rising Costs and Post-Covid Impact: Confused.com’s data reveals that, on average, all drivers are now facing a 58% increase in car insurance costs compared to the same period last year. Steve Dukes, CEO of Confused.com, highlighted on BBC Radio 4’s Today programme that the frequency and costs of insurance claims have risen since the pandemic. Factors contributing to this surge include increased claims frequency, higher costs of second-hand cars, and elevated expenses for car repairs, all of which are being passed on to consumers.

Impact on Young Drivers: Young drivers are disproportionately affected by these rising costs, with some facing premiums nearing £3,000. For 17-year-olds, premiums surged by an average of £1,423, reaching £2,877, while 18-year-olds are now facing an average policy price of £3,162. The data, based on the best five quotes received on Confused.com, underscores the financial strain on young motorists.

Market Volatility and Used Car Prices: The volatility in second-hand car prices, exacerbated by the global shortage of computer chips and other manufacturing materials during the Covid pandemic, has contributed to the challenges faced by young drivers. Demand for used cars surged as production of new vehicles declined. Although prices in the used car market spiked by 31% in March 2022, they have since fallen, providing some relief to consumers.

Mitigating Strategies: Steve Dukes suggests that young drivers explore strategies to reduce premiums, such as sharing driving with an older, more experienced driver and adding them as a named driver. Additionally, he recommends considering telematics or “pay how you drive” insurance, where driving behavior is shared with the insurance provider. While these options may offer cost savings, many young drivers are now questioning the affordability of driving altogether.

Conclusion: As young drivers grapple with unprecedented car insurance costs, industry stakeholders, including insurers and policymakers, must address the challenges faced by this demographic. The impact of rising premiums on the ability of young individuals to afford and access essential transportation highlights the need for comprehensive solutions and a careful examination of the factors contributing to these record-high costs.

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