Telematics car insurance: Majority of young UK drivers avoid it despite cheaper premiums

Young drivers are avoiding telematics car insurance due to a reluctance to give up privacy, new data shows.

Despite the huge savings offered to under-25s, three in five aren’t interested in a black box in the car to monitor driving habits.

The main reason is that they don’t feel comfortable sharing their driving data with insurers – 55% of drivers aged 21-24 said this, and two in five are under 21.

It highlights the steep price some are willing to pay for their freedom on their first drive – two-thirds of drivers under 20 could halve their annual cost and save an average of £1,137 a year, according to Compare the Market.

Big Brother: Two in five drivers under 21 said privacy was the top reason against telematics policies, though 58% agree they make driving more affordable

Telematics premiums are the cheapest insurance option for four out of five drivers aged under 20 and two-thirds of drivers aged 21 to 24, the comparison site says.

Data privacy concerns are the main reason young drivers don’t choose telematics policies, despite the significant savings.

It comes at a time when many are happy to give up their personal data in an increasingly technological world, including signing up for apps without checking permissions or the fine print, but it seems they’re drawing the line driving in the real world.

The average cost of a telematics premium is £1,091 per year. That compares to £673 on average across all premiums. Generally, the younger your age group, the higher the cost of coverage.

Telematics policies target younger drivers, as car insurance is more expensive, due to inexperience and increased likelihood of speeding.

A telematics policy means having a small device fitted to your car that measures the quality of your driving, including the speed at which you are driving, the distance traveled and the force of your braking.

Average premium for a telematics policy (August 21 – February 22)
Age Average telematics premium
17-20 £1,811
21-24 £1,275
25-29 £1,056
30-39 £904
40-49 £807
50-64 £650
65-79 £555
80+ £977
Average telematics police premium: £1,091

In theory, the device can prove to your insurer that you’re a safe driver, which could lower your premiums sooner.

The proportion of quotes where telematics premiums are cheaper decreases as drivers age, however, some can still benefit from hundreds of savings.

The research found telematics policy prices are also cheaper for 30% of drivers aged 30-39 and almost a quarter of drivers aged 40-49.

It is likely to benefit those who have just passed their test more than others.

On average, the savings from choosing a telematics premium over a regular policy are £388 for 21-24 year olds and £264 for drivers under 30.

Alex Hasty, director of Compare the Market, said: “As the cost of driving rises with higher fuel and insurance costs, young drivers may consider upgrading to a telematics policy.”

“These policies are generally aimed at young people and students, which is why policies may be cheaper for what is considered a high-risk age group.

“The idea is to encourage safe driving, which could also help young drivers get more affordable car insurance.

“Telematics can also provide the same benefits to other motorists who might be classified as high risk, including elderly drivers or convicted drivers.

“Telematics policies can offer many benefits, including a discount on your premium for reasonable driving, a smoother claims process after an incident, and GPS technology that can be used by emergency services to find your car.

Percentage of requests where telematics is less expensive (August 21 – February 22)
Age Non-telematics cheaper Cheaper telematics
17-20 22% 78%
21-24 30% 69%
25-29 59% 40%
30-39 69% 30%
40-49 76% 23%
50-64 85% 14%
65-79 95% 4%
80+ 98% 1%
Average 57% 47%

“However, if you are considered a dangerous driver, you may face higher premiums when you renew your insurance and, if your driving is considered dangerous, your insurer may cancel your policy.”

Alongside this, a separate study by Compare the Market suggests that the cost of running a car for a young driver has risen by an average of £163 over the past six months.

Mainly driven by rising fuel and insurance costs, a driver aged 17 to 24 now pays an average of £2,229 a year to drive a car – the highest figure since 2020.

There are now fears that driving is becoming increasingly unaffordable for many young people, despite a majority choosing insurance policies offering thousands of pounds off.

Drivers under the age of 25 generally pay the most for car insurance, as the average annual car insurance premium for a young driver is now £1,154, 9% more than at the start of 2021.

Compare Market also calling on the government to scrap insurance premium tax on policies aimed at young adults. The so-called ‘Youth Mobility Levy’ would add an average of £123 to under-25 premiums.

IPT is levied on insurers by the government as a proportion of a person’s premium, which is then passed on to consumers, currently at a rate of 12%.

It has been reported that the government is considering cracking down on IPT ‘loopholes’, but Compare the Market said the system remains unfair to young people who pay far more than the rest of the population.

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