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Young drivers' cover costs down a third

There's good news for young drivers as car insurance prices fall by almost a third, with prices down by 28.4% for young men and 31% for young women.

Young male driver in car

Young men and women have benefitted from a fall in car insurance prices in the first three months of 2014.

The average annual cost of cover for men aged 17 to 20 fell by 28.4% to £2,040 – down from £2,848 this time last year.

Meanwhile, the cost of car insurance for women aged 17 to 20 has fallen by 31% to £1,557 – down from £2,256 a year ago.

Car insurance price falls

There have also been price falls for young drivers aged between 21 and 25.

Male drivers in this age group are now paying an average of £1,217 for annual cover compared with £1,501 a year ago – an 18.92% price drop.

And female drivers aged 21 to 25 now pay £862 a year for car insurance, down from £1,117 a year ago – a 22.8% price drop.

Confused.com car insurance price index

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

The index analyses more than 4 million quotes to reflect what prices drivers have been paying for cover.

This latest index looks at car insurance prices between the start of January and the end of March 2014.

The index shows that the cost of cover has fallen for drivers of all ages, of both sexes, and across all regions of the country.

When averaged across motorists of all ages, sexes and regions, the annual cost of cover now stands at £596, down from £736 this time last year – a fall of 19.1%.

Why are car insurance prices falling?

The rise in drivers taking out telematics or black-box car insurance policies is one explanation for falling prices, according to experts.

With these policies, a small black box, about the size of a packet of playing cards, is fitted to your car to monitor driving behaviour such as acceleration and braking.

This information is then fed back to your insurer.

By demonstrating responsible driving, customers can prove to insurers they present a low risk, and premiums are adjusted accordingly.

Telematics lowering car insurance prices

Telematics policies are particularly aimed at young drivers who typically have higher car insurance prices due to their higher risk of accidents.

Stephen Jones, of insurance analysts Towers Watson, said: "As well as a growing number of telematics providers on price comparison websites, the frequency with which they are coming up with the cheapest quote, particularly for young drivers, is rising.

"Two out of every three drivers aged below 30 are being offered a competitively priced telematics product."

EU gender ban

The fall in prices can also be partly attributed to the European Union (EU) Gender Directive.

This new law forced insurers to stop using gender to set car insurance prices from December 2012.

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 woman would typically have received a cheaper insurance quote.

Men & women's car insurance costs

But following this EU gender ban the gap between male and female premiums has narrowed.

Of course, you might be wondering why, following the EU gender ban, men and women aren't paying exactly the same cost for cover.

Gemma Stanbury, head of car insurance at Confused.com, explained.

"Although insurers can't set prices differently based on gender, there are many factors taken into account when setting car insurance prices.

"For example, men typically drive more powerful cars which means their insurance would be more expensive than women."

Video: Top tips for cheaper car insurance

Take advantage of car insurance price falls

Stanbury said the fall in prices was "welcome news for motorists" but explained that prices wouldn't keep falling forever.

"Prices peaked in 2011, when the average annual cost of car insurance reached £858, and since then the trend has been downwards but prices won't keep falling forever.

"We would recommend that drivers shop around for cover while prices are at their lowest to find the best deal.

"Don't simply accept your renewal price as your current car insurer may no longer be the cheapest option for you."

What do you think?

How does your latest car insurance quote compare to previous years?

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Naphtalia Loderick

Naphtalia Loderick

Naphtalia Loderick covers all things consumer for 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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