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Car insurance costs for young men down 10.7%

Young male driver in carThe cost of car insurance for young male drivers fell 10.7 per cent during the last three months of 2012. But for young women it was a different story with costs up 16.4 per cent.

There's good news for male young drivers when it comes to motoring costs.

The average annual cost of comprehensive car insurance premiums for 17 to 20-year-old males stood at £2,960 at the end of 2012 – a fall of 10.7 per cent since September.

But their female counterparts fared less well with average annual premiums rising by 16.4 per cent between September and December 2012, to £1,986.

This is according to the latest quarterly Confused.com/Towers Watson car insurance price index.

The index looks at more than four million quotes to see what prices drivers have been getting when shopping around for car insurance.

Price rises for 21-25-year-olds

Female drivers aged between 21 and 25 have also been hit by increasing prices.

Their average annual comprehensive car insurance costs stood at £1,091 at the end of December 2012, a rise of 5.5 per cent since September.

But again, male drivers in this age group fared better.

The average annual cost of comprehensive car cover for male drivers fell by 4.5 per cent to £1,524 between September and December 2012.

Young women pay the price

It seems that young female drivers have paid the price of a decision made by the European Court of Justice (ECJ).

Traditionally, because women have fewer road accidents than male drivers, women paid less for car insurance as they were less likely to make a claim.

So if an insurer was presented with a male and female driver with the same car, location, mileage and so on, the female would typically have received a cheaper insurance quote than the male.

But the ECJ ruled that taking gender into account when calculating insurance prices was discrimination.

The European Union, which is bound by the court, said that insurers had to stop this practice by 21 December 2012.

As a result, insurance firms were recalculating prices to level out the difference between men and women ahead of the ruling coming into force on 21 December 2012.

'Shop around'

Gareth Kloet, head of car insurance at Confused.com, said: "With the EU gender ruling taking effect, it's clear to see that the insurance industry has both reacted and prepared for the well documented and anticipated change in legislation during the last quarter. 

"As expected, our index shows that women have seen the greatest changes in their insurance premium as insurers prepared for the change in legislation with what is effectively a gender tax on their car insurance premiums.

"Our advice to drivers is simple, with gender neutral pricing now having taken full effect, the need to shop around has never been greater, as much has changed in terms of pricing. 

"We encourage everyone to shop around in order to get the best deals and if you are married, consider car sharing with your partner to benefit from cheaper car insurance premiums."

Three ways to save

  • More insurers are offering telematics insurance policies, also known as black box insurance, where a gadget is installed into your car which monitors your driving behaviour, such as acceleration and braking. A good score will result in your car insurance premium being lowered. These insurance policies are particularly good for young drivers who face the highest premiums of all age groups due to their higher risk of being involved in a road accident. Try before you buy by downloading the free Confused.com MotorMate smartphone app that mimics how a telematics or black box device works.
  • Get a small car. The UK insurance industry uses a grouping system that rates all cars on a scale of 1 to 50 based on how much that vehicle costs to repair following an accident. Cars with smaller engines tend to be in low insurance groups so will cost less to insure.
  • Get your mileage right. From an insurer's point of view, the more you're on the road, the more risk you run of an accident. So spend a little time trying to estimate as best you can how many miles you're likely to drive each year. If you're not sure how much you drive, look back at your last two MOT documents which will show your mileage for that period.

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick reports on all things personal finance at Confused.com. She started out on a weekly newspaper, via a national news agency and a stint in the fun but ‘not as glamorous as it appears on screen’ world of TV at the BBC researching consumer films for The One Show.

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