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MPs debate £1,200 cap on insurance costs for young drivers

Motorway traffic Image copyright PA

MPs are debating whether car insurance costs for young people between the ages of 18 and 25 should be capped at £1,200 a year.

It follows an online petition that was signed by 185,000 people.

So-called e-petitions that attract more than 100,000 signatures have to be considered for a debate in Parliament.

It comes on the day that car insurance premiums are expected to start rising, as a result of a government decision to change the injury compensation rules.

The changes mean that insurers will have to pay out more to accident victims, which in turn means they are expected to increase premiums.

'Ridiculous'

19 year-old Rhys Parker, who started the e-petition, said that insurance companies were making it harder and harder for people aged 18-25 years of age to start driving.

The teenager, from Lowestoft in Suffolk, said he was quoted £2,500 for his first year of driving, but eventually managed to get it for £1,400.

"That's very much basic insurance," he told the BBC.

"I think it's ridiculous. Young people just don't get the help they need."

MPs were recently told that the average premium for a 17 to 20-year-old driver is £3,878 a year.

E-petition debates are for discussion only, so MPs will not have the power to introduce any limit on premiums.

The debate will be opened by Steve Double, the Conservative MP for St Austell and Newquay.

"I don't support the cap, but I do think we should be doing more to help young people," he said.

"The reason premiums are high is that young people have far more accidents."

Image copyright Getty Images
Image caption The government is advising young drivers to shop around

In response to the petition, the government said that reforms to whiplash rules would result in lower premiums.

It also advised consumers to shop around, and to take advantage of companies that install black boxes under the bonnet. The boxes give insurance companies more data on driving patterns and can lead to reduced premiums for safer drivers.

Government review

Accountancy firm PwC has estimated that the average cost of car insurance could rise by between £50 and £75 a year as a result of the changes to injury compensation rules, with young people having to pay up to £1,000 extra.

The Association of British Insurers (ABI) warned that premiums would begin to rise from Monday, with two further waves of increases expected in July 2017 and January 2018.

The government has promised to review the new injury compensation rules as a matter of urgency.

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