The majority of young drivers could save an average of £848 by switching to a telematics policy instead of having traditional cover, new research has
The majority of young drivers could save an average of £848 by switching to a telematics policy instead of having traditional cover, new research has revealed.
Some 54 per cent of 17 to 24 year olds could cut costs by moving policy, according to exclusive data from Compare the Market.
It found that telematics premiums remain cheaper for 67 per cent of quotes for drivers aged between 17 and 20 years old with the average saving sitting at £1,307 for those switching in this age bracket.
However, the cost of these premiums is not keeping pace with the falling prices in the rest of the car insurance market.
Cost cutting: Young drivers could save an average of £848 by switching to a telematics policy
The average cost of telematics premium declined 4 per cent annually compared to an 8 per cent fall in overall average motor premiums.
Telematics policies are usually popular for younger motorists as car insurance is usually expensive for them, often reaching into the thousands.
This is due to their lack of experience on the roads, the increased likelihood of speeding, having friends in the car and a multitude of other risks.
It involves having a small device fitted in your car that will measure how well you drive. It will monitor how fast you are going, how far you travel and how harsh or smooth your braking is.
If you can prove to your insurer you are a safe driver, it could lower your premiums.
|Age||Average Telematics Premium|
|Source: Compare the Market|
The research found that telematic policy prices are not just cheaper for the youngest drivers but also for 42 per cent of drivers aged between 21 and 24 giving a typical saving of £388.
However, the proportion of young drivers who could save money by switching to telematics policies has decreased year-on-year.
At the end of 2019, telematics plans were cheaper than regular premiums for 74 per cent of quotes for 17 to 20 year olds and 48 per cent of 21 to 24 year olds.
But in the same period in 2020, 67 per cent of telematics premiums quotes were cheaper for 17 to 20 year olds and 42 per cent of 21 to 24 year olds.
The proportion of quotes where telematics premiums are cheaper also declines as drivers get older.
For drivers aged between 30 and 39, telematics premiums are only cheaper for 17 per cent of quotes giving a typical saving of £220.
Telematics premiums are also not keeping pace with regular car insurance prices with the average cost of a telematics premium now standing at £1,243 compared to an average cost of £727 for overall premiums.
|Age||Non-Telematics Cheaper||Telematics Cheaper|
|Source: Compare the Market|
Dan Hutson, head of motor at Compare the Market, said: ‘While the average cost of car insurance has fallen as a result of the pandemic, our research shows the cost of telematics premiums has declined at a much slower pace.
‘This means that these policies are less likely to be the cheaper option for drivers compared to previous years.
‘However, this shouldn’t deter younger drivers from considering these policies. Telematics premiums are usually aimed at young people and students which is why the policies can be cheaper for what is considered a higher risk age group.
‘The idea is to encourage safe driving, which could also help younger drivers get more affordable car insurance. Telematics can also provide the same benefits to other motorists who might be classed as high risk, including elderly drivers or drivers with convictions.’
Separate research from Compare the Market showed that car insurance premiums fell by £100 in January compared to December.
The change of £100 means a fall of 14 per cent from December 2020 to January 2021 and a decrease of 16 per cent annually.
The typical annual outlay for cover now sits at £627, the cheapest level since summer 2015.
The areas of Britain that saw the biggest monthly fall to their premiums were the South East, the North West and Scotland at 15 per cent.
Motorists who think they might be paying too much for their car insurance are encouraged to use price comparison websites to see if they could save money by switching policy or provider.
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