When it comes to buying an insurance policy, the group having to fork out the most dosh is the same group unlikely to have cash to spare: young drivers. Now a petition has been submitted to the UK government, urging them to cap the cost of policies for 18 to 25 year olds at a maximum of £1200 a year.
While drivers in their 40s may only need to spend a couple of hundred pounds a year on insurance, younger people are usually quoted their premium price in the thousands. The BBC recently reported that the average policy for a 17 to 20 year old costs a whopping £3,878, whilst the average earnings in that age bracket are just £14,900*. Car insurance can therefore eat up 26% of a young person’s salary.
Insurance is all calculated on risk and as young drivers are a high-risk category, they are charged more to reflect the more frequent pay-outs.
However, some insurers are coming round to the idea that it can be unfair on young, safe drivers to penalise them for the mistakes of their peer group; it’s becoming more common for young drivers to be offered a ‘black box’ to record driving data for the insurance company, in order to prove responsible driving and reduce the premium. Introducing a cap would be an additional way of levelling the playing field.
But at what cost? If the number of accidents and insurance pay-outs remain the same, then that big money has to come from somewhere, and there’s the rub: if this change is approved (at the moment, it is simply subject to a debate in the House of Commons), the higher premium costs are likely to be passed on to other drivers, which also seems unfair.
Potentially, it could mean the system becoming skewed, with a young, risky driver in a souped-up motor never having to pay more than £1200 for protection, and a safer driver in a more modest car having to pick up the bill.
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One of the major costs associated with the motor trade, insurance is already a sticky topic, especially as premiums are currently on the rise. There have been amendments to rules about injury compensation this year which means people are already facing bumped up charges (on average, around £75, but as high as £1000 for younger drivers).
The debate is simply that: a discussion of ideas, but it’s the first step towards creating a more equal system. Insurance needs to be affordable, because regardless of age, ownership, trade plates, the number of passengers or whether driving a new and used car, motor insurance is essential.