Young drivers have been hit hard by a steep rise in car insurance premiums over the last few months, new research has found.
The information was released by MoneySupermarket in their quarterly report.
Young drivers (aged 17-19) on a fully comprehensive policy saw an increase of 6 per cent, from £1,321.53 to £1,405.00, while those on a third party (TP) policy saw an increase of 2 per cent, from £2,606.56 to £2,664.56.
Changes to the discount rate applied to claims pay-outs and the increase in June to insurance premium tax (IPT), are said to be the leading causes of the inflated prices.
The discount rate was changed in March, moving from 2.5 per cent to minus 0.75 per cent, which massively increased the amount insurers would have to pay in compensation to somebody injured in a car accident.
IPT grew by 20 per cent in June, rising from 10 per cent of premiums to 12 per cent. Young drivers have the most costly premiums across motoring, so the applied percentage rise was the biggest across all insurance types.
Kevin Pratt, consumer affairs expert at MoneySuperMarket commented: “Young drivers are in despair about the spiralling cost of car insurance, with policies often costing more than the car they are driving. One potential money-saving option is to investigate ‘black box’ insurance, where insurers track driving behaviour via satellite and reward safer drivers with lower premiums.
“Everyone, regardless of age, should refuse to settle for the quote they get from their existing insurer, since firms usually reserve their best prices for new customers. Those who haven’t changed insurer for a number of years are likely to find a much cheaper quote if they shop around at renewal.”