London – Car insurance costs for young drivers have rocketed over the past year as a result of controversial UK government tax and policy changes.
Figures compiled by comparethemarket show that on average, a 17-24-year-old driver now pays £2,379 to run a car in the first year of driving, up 3.4% year on year.
Of that figure, car insurance accounts for more than half of the cost, with youngsters forking out on average £1,354 for cover, an increase of 8%.
The rise can be partly attributed to a range of Tory policy changes forcing insurers to hike prices.A change to the Ogden discount rate – used to calculate personal injury compensation payouts – alongside a hike in Insurance Premium Tax from 10% to 12% has had a “significant impact on Car insurance premiums”, the report said.
John Miles, head of motor at comparethemarket.com, said: “The price of Car insurance remains the single biggest cost for young drivers by far and the cost of cover continues to rise rapidly.”
In better news, despite the year-on-year rise, young drivers’ costs have dipped in the past six months. The first time this has happened in two years.
Vehicle running costs for 17-24 year olds between February and July fell by 0.75%, with a reduction in the cost of fuel the primary driver, dropping by almost £70 to an average annual spend of £811.
The analysis of fuel costs, which is based on average annual mileage and the cost of premium unleaded petrol, found that in the past year the average cost of fuel fell by £47.
Miles added: “These past six months have seen the first positive change for young drivers in a long time.
“However, because the fall is due to lower fuel prices, there is no guarantee that this trend will last over the longer term.”