Young Drivers Index. A bi-annual vehicle maintenance index for young people by comparethemarket.com. April 2016

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1 Young Drivers Index A bi-annual vehicle maintenance index for young people by comparethemarket.com April 2016

2 Young drivers: the annual cost of running a car Running a car costs young drivers almost 2,200 per year Insurance accounts for nearly half of young drivers annual vehicle costs or a third of their car s value year olds spend more on insurance than petrol each year Insurance is the highest expense for young motorists, accounting for, on average, 56% of their annual vehicle costs, as insurers treat under 25 year olds as a particularly high risk category due to their lack of experience on the road. The falling price of oil over the last year has meant that insurance premiums have replaced fuel as the single most expensive cost for young drivers. With unleaded petrol costing pence per litre, according to most recent estimates, young drivers can expect to spend around 740 per year on fuel depending on how far they travel; the average annual distance travelled by car is driven by year olds is 7,000 miles a year. The average annual premium for comprehensive motor insurance now costs year olds 1,246.54, having risen even further following the Chancellor s recent hike in the insurance premium tax which has added 73 to household costs over the past nine months. Annual car costs for year olds Insurance Fuel Est. VED (road tax) MOT Breakdown cover Total cost per year Simon McCulloch, Director of Insurance at comparethemarket.com, said: The annual costs of owning and maintaining a car can be particularly steep for young drivers. The low price of oil has pushed down fuel costs for now, but the rising cost of premiums, and another increase in the IPT tax, suggest that young drivers could well see their annual vehicle costs increase even further in the coming years. 2

3 The cost of insurance to young drivers year olds pay on average 1, for motor insurance each year Cheapest premiums for under 25 year olds have risen nearly 115 in the past year Young drivers could save by shopping around Young drivers still pay the highest price when it comes to motor insurance premiums. The average annual premium for comprehensive insurance for 17 to 24 year olds is 1,246.54, compared to for drivers aged 25 and above, a huge difference of Motor insurance premiums for year old drivers (Feb 2016) Shop around price Average price Saving Age group Average premium Difference Even the cheapest shop around motor premiums on the market have leapt up for year olds, rising or 12.8% over the past twelve months. The high cost of premiums may be slightly offset for savvy shoppers, as young drivers currently stand to save an average of by shopping around; by switching provider, customers would pay an average of 1, for their annual insurance policy. For those who do not switch providers, prices have risen 10.4% from 1, in February 2015 to 1, a year later. Changes in motor insurance premiums over the past 12 months for year old drivers Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Shop around price Average price Simon McCulloch, observed: Insurance makes the biggest hole in young drivers pockets as providers protect themselves against the likelihood of paying out for this statistically higher risk age group. Shopping around for the most competitive policies is often an effective way to knock hundreds of pounds off your annual premium. Drivers can stand to save even more money if they opt to switch their car insurance provider three weeks prior to the renewal date, when the cost of the average policy is significantly cheaper. There are other ways you could further reduce your annual insurance payments such as taking a government approved course to improve your skills on the road. 3

4 What is the best car for your budget? Young drivers spend an average 2, on their first car year olds could save an average of 320 on insurance by choosing different cars Vauxhall Corsa is the most popular model amongst young drivers Volkswagen Up! is the cheapest car to insure at per year Fiat 500 is the most cost-effective model for drivers who keep a car for 10 years The upfront cost of a car is inevitably a major consideration when choosing your first vehicle. The average value of the top ten most popular cars amongst young drivers is 2,564.12, according to data from comparethemarket.com. The Vauxhall Corsa is the most popular car amongst young drivers, accounting for nearly a quarter of the top ten car inquiries and costing on average 1,979. The Peugeot 206 ranks as the cheapest popular model to buy at 659. The choice of vehicle can make a big difference to the cost of motor insurance for young drivers. The majority of the most popular cars cost over 1,000 to insure each year, at an average of 1, By comparison, the average premium across the top ten cheapest cars for young drivers to insure is , a difference of The Volkswagen Up! is the cheapest car for year olds to insure at per year. For drivers with a bigger budget, choosing a car with a slightly higher price tag may mean you save significant amounts on your premiums most popular cars Car Average Average Enquiries (%) Average age premium value of car of car (Yrs) Vauxhall Corsa 1, , % 4 Ford Fiesta 1, , % 5 Renault Clio 1, , % 6 VW Polo 1, , % 7 Vauxhall Astra 1, , % 7 Ford Ka , % 5 VW Golf 1, , % 10 Fiat Punto 1, , % 7 Ford Focus 1, , % 8 Peugeot 206 1, % 8 Average 1, , % cheapest cars to insure Car Average Average premium value of car VW Up! ,238 Hyundai i ,027 Fiat ,113 Vauxhall Adam ,791 Hyunda i ,750 VW Fox ,945 Fiat Panda ,537 Mazda ,986 Peugeot ,060 Toyota Aygo ,709 Average , Simon McCulloch, commented: Before even putting a foot on the pedal, young drivers have probably already paid thousands of pounds to simply own a car. Newer models can come with hefty price tags but older cars tend to have higher premiums and maintenance costs as there is a greater chance of them breaking down and causing an accident. Young drivers should also consider the amount by which their car will depreciate, as new cars tend to lose a significant percentage of their value within their first three years. 4

5 Telematics savings Telematics policies can save 49% of young drivers an average of 608 on their annual motor premiums Telematics made up nearly a third of all car insurance sales for young drivers over the past year Telematics, or black box, insurance is now firmly in the mainstream. It can save young drivers around on their annual motor premiums and accounts for 49% of the cheapest policies on the market, according to data from comparethemarket.com. According to the research, the percentage of telematics sales amongst year old motorists rose from 24.93% in February 2015 to 51.99% twelve months later. Telematics accounted for nearly a third (32.7%) of the total number of car insurance sales to young drivers in Telematics insurance tracks an individual s driving habits and feeds this information back to your insurer. Your premiums are then based on where, when and, most importantly, how safely you drive. Percentage of sales that included telematics 60% 50% 40% 30% 20% 10% 0% Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 Aug 15 Sep 15 Oct 15 Nov 15 Dec 15 Jan 16 Feb 16 Simon McCulloch, added: As the cost of renewing insurance seems set to continue through 2016, telematics insurance can offer a great way to avoid expensive premiums. Telematics monitors your driving throughout the year so should encourage you to become a better driver as well as save money when you come to renew your annual policy. But remember, if you drive unsafely or too fast you may find your premiums increase. 5

6 Methodology All data, other than that referenced in the footnotes, is sourced from comparethemarket.com. Young drivers is defined in this research as drivers aged between 17 and 24 years old. When the average price is referred to, this is the mean average of the top five cheapest prices presented to a customer, where a consumer has clicked through to buy. Buying from the top five cheapest prices presented represents 90% of all car insurance sales. When the cheapest price is referred to, this is the average cheapest price presented, where a customer has clicked through to buy. All premium data refers to motor insurance products featuring comprehensive, third party fire and theft or third party cover. 6