Young get cheaper car insurance 'at expense of over-50s'
Younger drivers are getting cheaper car insurance, research has shown, while the over-50s are paying more.
According to Consumer Intelligence, drivers under 25 are now paying premiums up to 10.3% less than a year ago - and 23.7% less than in October 2013, compared with a fall of just 2.9% for all drivers.
Meanwhile, the average cheapest premium for all motorists has remained steady over the last 12 months, rising by just 0.3% to £677. It's the over-50s that are making up the shortfall, with the average cheapest insurance up by 5.2%.
"To some degree, these increases for under-25s seem to be at the expense of older motorists," Consumer Intelligence chief executive Ian Hughes tells the Press Association.
The reason for the fall, says Consumer Intelligence, is probably the advent of telematics - the black boxes that monitor drivers' behaviour to make sure they're driving safely, cutting annual premiums by as much as £1,000.
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Such policies are popular with younger drivers, who are responsible for 25% of all road deaths, despite making up only 12% of the driving population.
According to the British Insurance Brokers' Association (BIBA), here are now 323,000 telematics policies in force - up 9% over the last 18 months - and 22% of younger male drivers and 14% of females now have one.
Under a telematics policy, a hard-wired 'black box' is installed in the car, monitoring factors such as speed, cornering, acceleration, braking and familiarity of route. These are used to calculate a risk profile – with the safest drivers enjoying the biggest discount. BIBA says its research shows that young drivers with a telematics policy are 40% less likely to have a crash.
And it's worth remembering that younger drivers are still paying dearly for their insurance, with the cheapest annual premium an eye-watering £1,628. The average for motorists aged 25-49 was £457, while for those 50 and over it's £247.
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As always, it's a good idea to shop around - particularly since the introduction of new rules in 2011 forcing insurance companies to automatically renew policies unless the customer opts out. And under new proposals the Financial Conduct Authority (FCA) yesterday, this would become much easier to do.
It's looking at creating a set of 'value for money' benchmarks, comparing insurance companies on the basis of frequency of claims, acceptance rates and average payouts.
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