Your First Year’s Car Insurance Could Now Cost An Extra £1,000

If you drive, you’ll know just how money-guzzling owning a car is, particularly in your first few years on the road. In fact, young drivers are paying thousands of pounds from the moment they apply for their provisional (£34, please) to paying for their first years' insurance - a cost that could go up by an extra £1,000 by the end of next month.

Well, it will, if Justice Secretary Liz Truss's proposed compensation changes come into place. The minister announced yesterday that she’s cutting the ‘discount rate’, a percentage used to calculate compensation payments for people who suffer life-changing injuries after an accident. This will directly hit the pocket of car insurance companies, who’ll have to foot the bill (do you see where this is going?)...

At present, courts take 2.5% off the total compensation figure, reflecting the interest rate received once the victim's lump sum money is banked. But now this discount rate will be reduced to -0.75%, in line with the Bank of England's lowest ever interest rates, meaning insurance companies will have to cough up the difference. And, you’ve guessed it, they could well stick an extra grand on your yearly insurance fee to keep their profits afloat.

But it’s really only 18-22 year olds that’ll feel the real brunt of it. Long-time motorists will see an average price surge of £50 to £75 per year, according to PwC general insurance chief Mohammad Khan. He added: 'There could be higher increases for young and older drivers – potentially up to £1,000 for younger 18-to-22 year-old drivers – and a rise of up to £300 for older over 65-year-old drivers.'

Not only will the proposed law hit the pockets of car insurance companies, the government's decision to hand over compensation charges is also likely to affect the NHS, according to the Association for British Insurers’ director general Huw Evans.

He said: ‘We have repeatedly warned the government that this could lead to very significant price rises, with younger drivers in particular likely to find it much harder to get affordable insurance.’

This is a real kick in the teeth for young drivers, and unwelcome news if you’re getting ready to take your driving test. I've tallied up a quick run-down of all the driving costs in your first year behind the wheel, from buying a 'How To Pass Your Theory Test' guide to booking your first MoT (loosely based on my own real life experiences):

How Much First-Time Drivers Forked Out Before Government Plans Threatened Another £1k Could Be Whacked On To The Bill

Hooray you've passed! Now it's time to find:

That's a whopping total of £5,928.19 before you've even made the compulsory solo trip for a McDonald's breakfast that all first-time drivers must do (that's an extra £3.59, btw).

If predictions for increased car insurance premiums become an actual thing, whack on an extra £1,000 and you've spent nearly £7,000 before you're even paying out for regular petrol. Let's just hope the young aren't priced off the road with another potential red light (sorry) for first-time drivers.

But it's not all doom and gloom...

Of course there are still some ways you can cut the cost of your insurance, from getting telematics insurance (installing a black box), increasing your excess, adding on a second driver and more, young drivers can still make the most of a less-than-ideal situation. For more suggestions on how to reduce your car insurance as a first time driver, check out the ideas here.

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This article originally appeared on The Debrief.