Young Drivers Budget Less for Car Insurance

It's a fact that young drivers are spurning cheaper car insurance in their quest to drive a cooler car in a higher risk bracket.

Now, new research from the RAC suggests that young drivers may not be budgeting enough for car insurance at all.

Under-estimating the costs

According to their report, more than half of young motorists under-estimate the cost of insurance in their first year of driving. The average first-year cost for under 25s is around £810, but 56% of drivers expect to pay less than £750. For 18-20 year-olds, the actual cost in the first year is even more, an average of £972.

While the cost of claims for under 25s remains so high, car insurance premiums for young drivers are likely to remain an obstacle.

But are young drivers doing all they can to minimise the costs of getting on the road in that crucial first year?

Financial commitments to car-leases chews up motorists' budgets

There’s a growing trend among young drivers to lease a newer, more expensive car rather than spend cash on buying a cheaper car outright. According to research, 19% of 18 to 24 year olds lease a car. That’s more than double any other age group. Around 50% of cars leased in the younger age group are valued at between £11,000 and £20,000.

In addition to this, as we reported ourselves last month, many drivers deliberately bypass cars in cheaper insurance groups in favour of trendier models which cost more to insure.

Growing danger of uninsured drivers?

The significant financial commitment to leasing and for choosing higher risk cars means that young drivers often don’t budget enough to pay for car insurance. Is there a danger that drivers in this situation may choose to join the swelling ranks of uninsured drivers on Britain’s roads?

After several years of declining figures, the Motor Insurers Bureau gave the unwelcome news in September that uninsured drivers were again on the rise. Their advertising campaign, Gone in Seconds, hopes to tackle the issue.

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Released On 10th Dec 2015