Experts have warned some young drivers that they could be faced with a car insurance premium of at least £3,000 due to compensation claim payouts.
Young drivers aged under 22 are already faced with high insurance premiums compared to any other age and along with the cost of a vehicle it can prove to be expensive. Reasoning behind high premiums for young drivers is because they are statistically most likely to be involved in a serious crash.
Experts have now announced that prices for car insurance are set to increase by up to 15% a year with the hardest hit drivers being young drivers. According to the AA an average premium for a driver aged under 22 stands at £2,537 but could rise to £3,300. The reason behind even higher premiums is due to the changes in how compensation is paid to crash victims.
Courts have been issuing regular payouts to drivers who have suffered from a serious injury due to a road traffic accident. As a result of this the insurance industry has had to introduce added costs to motorists. As well as this fraudulent whiplash claims have also caused insurance premiums to rise.
To add to the news of insurance premiums, young female drivers will feel more pressure after the gender equality rule was introduced in December 2012. This means insurers will no longer be able to take gender into account when calculating a premium.
Malcolm Tarling, from the Association of British Insurers, said: “It is little surprise motor premiums are rising because insurers have been hit with a mixture of extraordinary conditions such as increased cases of fraud and whiplash claims.
“When these costs come under control, the cost to drivers will fall.”
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By Amanda Bainbridge