Car insurance for younger drivers hits £1,350 a year

cAR insurance costs for young drivers have rocketed over the past year as a result of controversial government tax and policy changes.

Drivers aged between 17 and 24 typically pay £2,379 to run a car in the first year of driving – up 3.4 per cent on a year ago, according to the comparethemarket.com website.

car insurance accounts for more than half of the cost, with youngsters forking out on average £1,354 for cover, up 8 per cent.

A change to the Ogden discount rate – used to calculate personal injury compensation payouts – and a hike in Insurance premium Tax (IpT) from 10 to 12 per cent have had a ‘significant impact on insurance premiums’, the report found.

John Miles, of comparethemarket.com, said: ‘The price of insurance remains the single biggest cost for young drivers by far and the cost of cover continues to rise rapidly.’

But despite the year-on-year rise, young drivers’ costs have actually dipped in the past six months for the first time in two years. Vehicle running costs between February and July fell by 0.75 per cent, on the back of cheaper fuel.

Mr Miles added: ‘Because the fall is due to lower fuel prices, there is no guarantee that this trend will last over the longer term.’

The RAc has predicted that the price of unleaded petrol will hit its highest level in more than two years due to Hurricane Harvey. The motoring group says prices could rise by up to 4p a litre in the coming days.