Drivers aged under 25 tend to pay more for car insurance than older drivers, but that doesn’t mean finding affordable cover is impossible. By following a few steps and making sure you know what’s in your insurance policy and the cheapest way of paying for it, getting cover that fits your budget becomes a lot more manageable.
This guide explains how to make it happen, what kind of car insurance options are available to you and everything you need to know about finding car insurance if you’re under 25, no matter what car you’re driving.
Young drivers need cheaper car insurance
Being strapped for cash is a problem young drivers know all too well. It’s understandable that when you’ve got a bit of extra cash, you don’t want it to go on things like insurance.
Unfortunately, car insurance costs more for drivers aged under 25 because, statistically, you’re a lot more likely to be involved in an incident and therefore make a claim on your insurance.
What affects the cost of under-25s car insurance?
How much you have to fork out on insurance depends entirely on your circumstances. There are key factors that will affect your premium: where you live, the type of car you drive, and (you guessed it) your age.
Statistically, young drivers are much more likely to be involved in an accident than many other road users. UK figures show that almost a quarter (23%) of 18-24 year olds have some sort of crash within two years of passing their driving test.
Other factors that affect how much your car insurance costs include:
Driving experience and history. If you’ve been driving safely for years, expect to pay less. For new drivers, it’s a little more difficult to prove you’re a safe driver without a record to speak of and providers will typically class you as high-risk pushing your premiums up.
Where you live. Where you live can affect your premiums especially if you live in a high-crime urban area, where the risk is greater compared to rural areas.
Claims history. If you’ve made several claims in the past, this can push your car insurance premiums up.
The sum insured. The greater the amount you insure your car for, the more you will have to pay for the cover.
Make and model of your car. If you drive a sporty and powerful car, expect to pay more while driving a smaller and safer car is likely to work in your favour.
Security. If your car doesn’t have an alarm fitted and is parked on a busy street at night, the risk of it being damaged or stolen is greater so premiums will typically increase.
Car use. If you have a daily commute in “rush hours” through busy roads, you’re more likely to see higher premiums than if you only use your car for leisure.
Your pay frequency. Some insurers will charge you extra if you choose to pay monthly as opposed to annually.
Your chosen excess. If you opt for a higher excess, you can expect cheaper premiums. Just make sure you can afford it if you do need to make a claim.
What level of cover can I get?
No matter how old you are, there are three different levels of car insurance available.
Third party car insurance.The most basic form of car insurance available and also the minimum legal level of cover required in the UK. Third party insurance covers you if you damage someone else’s property or injure them while driving, and will also cover your passengers too.
Third party, fire and theft car insurance. This type of policy offers mid-level cover, combining a number of benefits at a lower cost. It includes third-party liability cover when you damage someone else’s vehicle or property in an accident, plus it also covers loss or damage as a result of fire, theft or attempted theft.
Comprehensive car insurance. Comprehensive is designed to offer a high level of protection for you and your vehicle against an extensive range of risks. It provides cover for loss of or damage to your vehicle caused by collision, vandalism, theft or attempted theft, fire, hail, storm, flood, explosion and earthquake. This type of policy ensures that your vehicle is repaired or replaced following an insured event. It also includes legal liability cover for if you are ever responsible for damaging someone else’s vehicle or property in an accident.
See how the different policies protect your needs:
With third party cover, you:
can make a claim for any damage or injury caused to other people and their vehicles when an accident is your fault
can’t make a claim for any repairs needed for your car or for any injuries you sustain
With third party fire and theft cover, you:
can make a claim for any damage or injury caused to other people and their vehicles when an accident is your fault
can make a claim to replace your car if it’s stolen
can make a claim on damage from an attempted theft such as a smashed window and stolen car radio
can make a claim on an arson attack or fire damage to your car
can’t make a claim for any repairs needed for your car or for any injuries you sustain
With comprehensive cover, you:
can make a claim for any damage or injury caused to you and/or other people and their vehicles when an accident is your fault
can make a claim if it’s unclear who is to blame for an accident. For instance, if you return to your car after a day trip and see that someone else has obviously reversed into your car in the car park and driven off
can rest easier knowing that you have an added level of protection and won’t have to shell out for expensive repairs, just the excess, if any, agreed on the policy when making a claim
What other options do I have?
As well as standard car insurance, there may be other policies that suit your needs better, especially if you’re under 25. Some of these include:
Telematics car insurance.Having a “black box” policy can help you save on your car insurance if you’re a safe driver. A black box is fitted into your car to measure how well you drive. This data is then assessed by your insurance provider to calculate your premiums, based on your driving habits. Be careful however, as black box technology monitors how well or how badly you drive. If your driving is far from perfect, your premiums could go up.
Temporary car insurance.It is possible to get car insurance cover for a short period of time, usually between 1 and 28 days. This may suit young drivers home from university or if you’re visiting friends or family and need to borrow their car.
Add yourself to your parents’ policy. You could be added as a named driver onto your parents’ policy if you’re not the main driver of a car. However, be aware that a young driver added as a named driver when they’re really the main driver is known as ‘fronting’ and is illegal in the UK.
Add a parent to your policy. If you’re the owner of your car, adding an older and more experienced driver to your policy such as your mum or dad could help to lower the premium.
What should I look for in a car insurance policy?
Now that you know what you’re looking for, you need to know how to find the policy that’s best for you. Here are the important things to look for and what they mean.
Level of cover. This refers to what is covered by a particular insurance policy, or, in other words, what the insurance policy will pay out for or provide. For example, a third party policy will only provide you with financial compensation if you have to pay for the repairs of someone else’s property, while a comprehensive policy will do this as well as pay out in the event of certain damage to your own car.
Limits. Limits are the maximum sum something is covered for. For example, you might get car insurance that covers you for up to £5,000 worth of accidental damage. This means the insurance company will pay for up to £5,000 of repairs.
Exclusions. These are the conditions under which the insurance company won’t pay out. For example, you might be covered for car theft, with an exclusion for unlocked vehicles. This means you can make a claim if your car is stolen, but if it was unlocked at the time of theft the insurance company won’t pay out.
Excess. This is your contribution towards the cost of any claim. Compulsory excess is applied to your policy no matter what, and could increase if the insurer views you as being in a higher-risk category. You get to set the amount of voluntary excess but the higher the excess, the lower the premium. So just remember to set your excess at a level that won’t leave you shocked and out of pocket if you do need to make a claim.
Premium. This is the main cost of your car insurance policy. The premium is the amount you pay to have an active policy. It can usually be paid in monthly instalments or one, annual payment.
Discounts. There are many discounts available for most car insurance policies. Some of the most common are pay-as-you-drive, which cuts prices if you don’t use your car a lot; multi-policy discounts, which could usually cut 10-15% off premiums if you’ve taken out multiple insurance policies with the same provider; discounts of up to 20% for buying car insurance online; and no claims discounts, which gradually reduce premiums for each year you go without making a claim.
Choosing a car insurance policy
After finding several policies that suit you, it’s time to compare prices by getting quotes. Remember that your goal is to find the car insurance that’s right for you. This might not always be the cheapest.
Use our online comparison tool above to compare quotes from a number of different insurers. Use these quotes to establish a ballpark price range for your insurance needs. If you receive a quote offering you a suspiciously good price, try to find out why and make sure it’s not missing something important.
Always read the small print and understand the terms and conditions. Know what is included in and what is excluded from your coverage.
Compare insurers as well as the policies on offer. Research an insurer’s reputation, claims record and customer service on websites and social media platforms.
When you buy your vehicle from a car dealer, the car insurance you take out will depend on the value of the vehicle and the factors mentioned above.
Under-25 car insurance for expensive cars
If you drive a newer model car with a higher market value, or a classic or modified car, then comprehensive insurance may be worthwhile, although in some cases prices may be very steep.
If you took out a loan to purchase the car, many lenders — including car dealer finance companies — will require that drivers aged under 25 years old take out comprehensive car insurance as a condition of the loan. This can be expensive, but your lender may insist on it. While it can require you to get comprehensive insurance, it can’t tell you which insurer to get it from, so you should always shop around for a deal, and haggle.
One of the most effective ways to keep the cost of car insurance down is to drive an inexpensive vehicle, or drive your current car as long as safely possible.
Under-25 car insurance for cheap cars
A cheaper car might not need as much cover as a more expensive or newer car.
If you have a used car or an older model and your car’s market value is low, you could choose to only take out third party cover. That way you’re financially covered in case you cause a major accident, but you’re not paying more in annual insurance premiums than your car’s worth.
You might not need comprehensive cover, which covers events like theft, natural disasters, especially if the excess is higher than your car is worth. However, it’s always worth comparing the cost of comprehensive cover with third party cover, as in some cases, comprehensive can cost less.
10 hacks to help you pay less for your policy
While insurance for under-25s can be more expensive than it is for older drivers, there are ways you can reduce the cost of your premiums. These include:
If you have the choice, buy a smaller, cheaper and safer car, rather than a sports model or highly modified vehicle. If finding the cheapest car insurance is your number one priority, then this will be a huge contributing factor.
Resist the urge to make claims just because you can. It might save you money in the short term, but it will wipe out any no claims bonus you may have and mark you as a risky driver, which increases your premiums. You do have an obligation, though, to tell your insurer about an accident.
Package all your insurance with one provider to receive a multi-policy discount.
Consider increasing your excess to reduce your premium, but make sure it is not higher than you can afford if you do have to make a claim.
Park in a garage, not on the street, and add security such as an alarm, tracking device or engine immobiliser for lower premiums.
Take a safe driving or defensive driving course. Insurers are willing to extend discounts to those who have completed them.
If you don’t plan to drive a lot, look for a pay-as-you-drive insurance policy.
Buy your insurance online, as most insurers will give you a discount.
Consider pay-as-you-drive insurance if you don’t use your car a lot – it could work out a lot cheaper.
Some insurers offer a “black box” policy (also known as telematics). This involves having a box installed in the car which will monitor your driving. If you’re a good driver, you’ll be rewarded with lower premiums – but if you’re not, you’ll see them rise, and your policy could even be cancelled.
Regardless of which car you’re learning to drive in, you’ll need to get a learner driver insurance policy. Depending on how long you’ll be learning for before taking your driving test, you can use your provisional driver’s licence and choose between a short-term or a 12-month policy. Once you’ve passed, you need to let your insurer know and your policy will switch to a standard car insurance policy.
Insurers calculate premiums based on how much of a risk they believe a driver, and the car they drive, are likely to be. So being on a provisional driver’s licence is more likely to raise your premiums than lower them, but this is mostly due to age rather than driver’s licence status.
Provisional licence holders generally only face significant price differences if they’re over the age of 25.
Can I just latch onto my parents’ policy?
Considering the cost of under-25s car insurance, it’s definitely worth asking your mum or dad to add you to their policy. While this will cause their premiums to rise, the added cost is cheaper than if you were to take out a separate policy for yourself. Even if your parents ask you to chip in to help cover the premiums, you’ll still likely save money but there are a few potential downfalls you should be wary of when choosing this option:
Policyholder must own car. You can only add yourself to a parent’s car insurance policy if that parent actually owns the car. In other words, if you own the car, you’re not allowed to buy cover in your mum or dad’s name just to enjoy cheaper premiums.
A higher compulsory excess may apply. Many insurers impose a young driver excess for claims that arise when the vehicle is being driven by someone under 25 years of age. This excess amount can be substantial so paying it could well and truly outweigh the cost of simply buying your own policy.
You’ll need to check the small print. It’s also important for you to be aware of exactly what a policy does and does not cover. Make sure you take a look at the limits and exclusions as well as the terms and conditions before adding yourself to a particular policy.
Dos and don’ts for drivers aged under 25
DO tell your insurer if your circumstances change, or it might use this as a reason to refuse to pay a claim later.
DO add a second responsible driver to your policy if you have one, as this may help reduce your premium.
DO drive safely at all times. A consistently safe driving record will help your no claims bonus and could decrease the cost of your premiums.
DON’T lie to or mislead your insurer. Your insurance could be voided if the truth is discovered.
DON’T nominate an older driver as the first driver if it is your car. That would be deceptive.
DON’T modify your car without telling your insurer. Even then it’s best to stick with legal modifications that they approve of (a sunroof rather than a spoiler or sports exhaust, for example) or you can expect raised premiums.
Bottom line
There’s no denying it, unfortunately, your age means that your car insurance premiums are likely to be high but that doesn’t mean all hope is lost. If you are a safe and careful driver and don’t want to pay over the odds just because of your age, there are ways of reducing your premium such as with a telematics policy.
Just remember to shop around and compare deals to find the best deal for your situation.
Car insurance for under-25s: Other questions you may have
Buying a vehicle privately involves a certain level of risk. Not only does the car not come with a warranty of any kind, but its history may be unknown.
Inspect the car and have a test drive.
Check its history. Ask for the car’s registration number, mileage, make and model and its MOT test history. You can then check these details match with the Driver and Vehicle Licensing Agency’s (DVLA) free online vehicle information checker.
Have it checked over by a mechanic prior to purchase. Make sure you have insurance coverage before signing anything so you’re covered before you drive it away.
As with buying from a dealer, whether you choose third party or comprehensive cover will depend on your finances, the value of the vehicle and the requirements of your loan provider if you’ve taken out a loan.
Car insurance for this age group is so expensive because younger drivers are less experienced. Not only are they statistically more likely to be involved in accidents, and therefore more likely to make claims, their accidents also tend to be more severe than those of older drivers, resulting in more expensive claims. This combination drives prices up from all car insurance providers.
Yes, because their policy may have restrictions regarding learner drivers.
As well as their basic excess, they might have to pay an additional excess because you are under 25.
Yes. This is considered a non-standard accessory and all such modifications to your vehicle need to be reported to your insurer, otherwise they may not be covered by your insurance policy.
Usually, however it depends on whether you can afford to repair or replace it yourself in the event of an accident, and how much you depend on having a working car.
*Based on data provided by Consumer Intelligence Ltd, www.consumerintelligence.com (Mar ’24). 51% of car insurance customers could save £539.54
The offers compared on this page are chosen from a range of products we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations), aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When making a big financial decision, it's wise to consider getting independent financial advice, and always consider your own financial circumstances when comparing products so you get what's right for you. Most of the data in Finder's comparison tables has the source: Moneyfacts Group PLC. In other cases, Finder has sourced data directly from providers.
William Eve is the Country Manager for Finder's Canada operations. He has previously held the positions of group publisher of insurance for Finder Australia and lead publisher for the Finder global team. William has a Bachelor of Communications from the University of Technology Sydney, Australia. He loves the challenge of launching Finder into new markets while helping grow Finder’s global team. See full bio
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