Dramatic increase in car insurance costs for under-25s

The cost of car insurance for younger drivers has rocketed during the past four years, according to newly released data.

An analysis of premiums by comparison website MoneySuperMarket shows the price paid for insurance by those aged under 25 has risen by 34 percent since 2022. 

The average annual car insurance premium for drivers aged 24 or under is now £1,463. For comparison, younger drivers typically paid £1,093 four years ago. 

The figures show those under 25 now pay an average of £831 more each year for insurance than drivers who are older than this threshold.

Location matters for car insurance

Such is the high cost of car insurance for new drivers, 80 percent of those newly qualified to hit the road factor it in when budgeting for a new car. 

More than half (54 percent) assume they will need around £20,000 to afford their first car, along with being able to insure it. 

Unsurprisingly, location plays a significant part in the insurance premium paid by new drivers, with a massive variation between cities across the UK.

According to MoneySuperMarket research, Shrewsbury is the cheapest place for new drivers to hit the road, with an average premium of £1,090.53.

Cambridge takes the silver medal position, with a typical figure of £1,113.21, followed by Bath at £1,127.19.

Young drivers must be insurance-savvy

At the other end of the scale, east London was the most expensive location for young drivers to insure a car, with an eye-watering average of £2,413.49.

South-east and north London completed the podium for priciest premiums, with typical costs of £2,087.72 and £2,084.98 respectively.

Busier roads and a higher likelihood of car crime are cited as reasons for those in urban areas enduring higher premiums.

Alicia Hempsted, car insurance expert at MoneySuperMarket, said: “With insurance premiums for young drivers now averaging over £1,400 a year, it’s more important than ever for young motorists to be savvy when budgeting for their first car and any associated costs. 

“It’s always worth getting a sense of likely costs ahead of time, so we’ve got a quick car insurance tool online to help young drivers cut through the confusion and get a clearer picture of what they can expect to pay. By using real-time data and skipping lengthy forms, it gives users a super-quick and accurate starting point to plan with confidence.” 

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