Car Insurance Premiums for Under 25s: What to Expect

Car insurance costs in the UK have changed a lot in recent years. Many drivers have seen their insurance premiums go down. But car insurance premiums for under 25s are still very high. Young drivers often have to pay more than twice what older people do for car insurance cover.

This article looks at why young drivers under 25 pay higher prices. It also talks about how, even though prices seem to be going down for most, they stay high for this age group. The article shares some ways these drivers can save money.

What is the average car insurance cost in the UK?

The latest data says the average cost of car insurance in the UK is getting lower now after going up a lot in 2022 and 2023. The Association of British Insurers has said the average cost of car insurance was about £561 at the start of 2025. This is less than £629, which was the cost in the previous year.

Averages might not always show the full picture. Right now, older drivers are seeing lower costs because the car insurance market is getting better. But, car insurance premiums for people under 25 are still going up.

How much do under-25s pay compared to other drivers?

Here is a table that shows the average car insurance premiums for each age group in the UK.

This means the motor insurance premiums for people under 25 are more than three times what people over 50 pay. The insurance premiums have gone down for most, but young drivers still get higher motor insurance premiums.

Why are car insurance premiums so high for under 25s?

Higher risk of accidents

Statistics show that young people who drive often pay higher car insurance rates. People under 25 are, as data says, more likely to have an accident. Drivers who are between 17 and 24 years old hold just 7% of all driver’s licenses in the UK. But they take part in nearly 20% of big, serious crashes. This makes car insurance for this age group more expensive.

Cost of claims

When younger drivers get into a crash, the cost of insurance usually goes up. This is because there can be a large payout for personal injury and sometimes the car is badly damaged or written off. Repair bills also add to the high costs that insurance companies have to pay.

Lack of driving history

Older drivers often have a longer claims bonus or no claims discount. These come from having more years behind the wheel with no accident claims. New drivers usually have only one or two years on record. That means the cost of car insurance goes up a lot for them.

Perceived higher risk behaviour

Insurers look at how you drive. If you are younger, they say you may speed more, drive at night, or get into risky situations. Even when you drive safe, they see your age and think you might be a higher risk.

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What are real examples of premiums for under-25 drivers?

• A 21-year-old who wants to insure a small hatchback can expect to pay about £1,400–£1,800 each year.
• Drivers who are in their first year and are 17–18 years old might get quotes that are over £2,500, even if the car they pick costs less.
• A 23-year-old with two years’ driving experience will usually pay between £1,200–£1,500.

A person who is 40 years old and drives the same car may get a quote of between £500 and £600.

Why are overall car insurance costs falling while under-25s pay more?

The car insurance industry has been going through many changes in the last couple of years. Now, most drivers can see that motor insurance premiums are lower. This is because:

• There are fewer motor insurance claims now than at the peak they reached in 2022.
• Labour costs for repairs have gone down since the supply chain started to get better.
• The FCA has fair value rules for renewal pricing to help people get a fair deal.
• There are bigger cost savings when fixing regular cars.

But these changes have not reached younger drivers yet. Male drivers who are under 25 are still more likely to make costly claims. Insurers still see male drivers in this age group as a high-risk group in the motor insurance market.

What role does industry data play in explaining car insurance premium changes?

The insurance industry uses a lot of data to decide how much you have to pay. Insurance companies look at things like how often claims happen, repair costs, and risk models. These models use the age and experience of the driver. The latest figures from the ABI and some other groups show why young drivers get higher prices than others.

Over the last couple of years, insurers have gone through many changes.

• There are higher labour costs that come from a shortage of skilled technicians.
• The repair costs for newer cars be much higher. These cars have more electronics and sensors that make fixing them more expensive.
• Electric vehicles can cost a lot to fix. A battery for one of these cars could be several thousand.
• Car insurance claims happen a lot. They often be about paying for personal injury after an accident.

This data shows why the cost of car insurance stays high for people under 25. The premium does not go down for them, even when the average cost of car insurance for most people gets lower.

Can I expect my car insurance premium to keep rising, or will it fall?

For people under 25, the cost of car insurance will likely stay high for now. In the last year, their bills went up, even though the average cost of car insurance came down for other groups.

• Short term: You may see higher prices. This is because claim rates are high, and repair costs keep going up.
• Next couple of years: Premiums could stop changing so much. The focus will be on financial services. Regulators want people to get fair value.
• Longer term: People will get more electric vehicles, and telematics will get better. Safer cars will help, too. All this may help create cost savings and could mean a lower premium for us.

Another thing that raises the cost of insurance is the insurance premium tax. This tax adds 12% to what you pay for motor premiums. If part of the government does not lower this tax, younger drivers will keep paying more for their motor premiums.

What factors can make car insurance cheaper for under-25s?

Even though the high costs of cover can be a problem, young drivers can do some things to lower what they pay.

• Pick the right type of car: A small hatchback will cost you much less than sports models or expensive newer cars.
• Add a named driver: A family member who has experience with cars can cut down the chances of having to claim on insurance.
• Raise voluntary excess: You agree to pay more if there is a claim, and your motor premiums will drop.
• Think about black box insurance: With this, telematics show how you drive the car, and safe driving may help you get a better deal.
• Pay each year in one go: This stops extra costs that you get with premium finance. Those fees can raise the cost of your insurance by 10–15%.
• Make your car more secure: If you park in a garage or driveway, you lower the risk of theft.

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Why do under-25s face high renewal premiums?

Even after you pay a lot in the first year, many people under 25 see the renewal premiums go up even more. This is what happens because:

• Discounts that are given to new customers do not stay when you renew your car insurance.
• If you do not have a long record of motor insurance claims, you may not get extra discounts from your car insurance.
• Big changes in the car insurance industry, like repair costs and inflation, still hit young drivers more than other people.

Shopping around is important. The motor insurance market is big and has many options. A new quote will often be less money than letting your policy go on to the next year without looking for a better deal.

FAQs about car insurance premiums for under 25s