Teenagers face £3,000 bill for car insurance

CAR insurance for young drivers could rise to more than £3,000 a year because of changes to how compensation is paid to crash victims.

Insurers are set to increase prices by up to 15 per cent a year – and could impose a similar rise next year, experts warned yesterday.

Hardest hit will be drivers under the age of 22, who are statistically most likely to be involved in a serious crash.

They already pay an average £2,537 a year, according to the AA. But the two rises will push this to more than £3,300.

Other motorists could have between £40 and £120 added to premiums. The average driver currently pays £1,219 a year.

Parents who insure teenagers under their own policies face paying on the upper side of this bracket because insurers may view them as riskier.

The rises will be a double blow to young female drivers who have already seen the price of their insurance jump by an average £300 a year because of European gender equality rules introduced in December.

The latest increases are because insurers are passing on to drivers the extra costs from sweeping changes in the way

‘Double blow to female drivers’

compensation settlements are paid to serious accident victims.

In the past two years courts have increasingly awarded annual payouts to people who have suffered serious injuries such as brain damage or paralysis in car accidents.

Judges have opted for regular payments because victims who received lump sums have been left struggling to pay for care when their cash ran out.

Another advantage of annual instalments is that they can increase with inflation or if the victim’s condition deteriorates.

The insurance industry claims such awards mean they end up paying more to run their businesses and have to hand on the rising costs to drivers.

Malcolm Tarling, from the Association of British Insurers, said: ‘It is little surprise motor premiums are rising because insurers have been hit with a mixture of extraordinary conditions such as increased cases of fraud and whiplash claims. When these costs come under control, the cost to drivers will fall.’