Car premiums at record lows but under-25s locked out of savings

While premiums are falling, younger drivers found theirs had risen by £64 in August

Car insurance premiums fell for the fourth consecutive month in August to the lowest levels since 2016.

The cost of the average policy fell by £6 between July and August to £695, according to data from comparethemarket.com, a price comparison site.

But these cost savings have not been equally shared across society. Those under the age of 25 saw premiums become more expensive in August, with the average policy price rising by £64.

Car insurers have come under pressure to reduce premiums as the number of claims being made has dramatically fallen in 2020, due to lockdown and fewer people taking to the roads.

Figures from the Association of British Insurers, a trade body, showed the number of claims had halved between April and June this year when compared with January to March. There were 324,000 claims in the second quarter versus 678,000 in the first.

Despite this, younger drivers are still facing higher costs. The average policy for those aged under 25 now costs £1,472, which is £777 more than that paid by car owners who are over 65. However, this is still 7pc lower than the price level last year, as overall premiums have been falling.

Dan Hutson of comparethemarket.com said: “Higher prices for younger drivers are to be expected due to the increased statistical likelihood of an accident, but this difference in cost is considerable.”

Jack Cousens of the AA, the consumer body, said the increase in cost could be due to younger people driving more than their older peers during lockdown as they had to get to work or because they are more likely to have been made unemployed, which can affect premiums. 

Another potential reason is that quieter roads had led to higher value claims due to speeding.

In May, Co-Op Insurance found the number of young drivers speeding on Britain's empty roads soared during lockdown. Data from telematics boxes, which track driving habits and affect premiums, showed the number of drivers breaking the speed limit had risen by more than 15pc.

Car insurer Rooster said there were a number of ways drivers could lower premiums, such as paying upfront and not in monthly instalments.

Registering accurate mileage will also bring down premiums. Drivers typically overestimate annual mileage by 15pc, which can equate to paying for over 1,000 extra miles, analysts at the firm said.

A better credit score can also help, while those not on the electoral roll could pay 10pc more than those that are registered.