Why is Car Insurance so High for Teenagers?
A major right of passage happens when we turn 16 and get our driver’s license. It signals the first real freedom we have in our lives, and is the start of demonstrating real responsibility to our parents. However, insuring a teenager can be quite an undertaking, because of the huge risk the young drivers represent to the insurance company.
The higher risk a driver is, the more he or she can expect to pay in car insurance premiums. Why are teenagers such high risk drivers?
Lack of Experience
Teenagers haven’t been driving very long, and without experience to know what to do in certain situations, they are more likely to have an accident. As they get more driving experience, they become more familiar with the rules of the road and how to drive defensively, which reduces their risk to the insurance company, and thereby lowers their policy premium.
Less Likely to Follow the Rules
Teenagers are inherently rebellious. They may think it is cool to drive faster than the speed limit, and if so, they may not get caught or cause an accident. If they speed without consequence, they’re more likely to do it again. Teens who do not follow the rules of the road are dramatically increasing the potential for an accident, and therefore representing a major risk to the insurance companies who cover them.
More Likely to Be Easily Distracted
Teenagers are more likely to be distracted by the music on the radio, texting or talking on their cell phones, talking with their friends who are in the car, etc. Each of these distractions represents less attention on the road, which increases the risk for an accident. With the increased risk for accident, comes a higher premium. As teens become more experienced drivers, they are more likely to concentrate on the road, and less likely to be distracted, which means the likelihood of an accident will decrease.
What You Can Do
When your teenager gets his or her license, there’s no way to completely avoid the high insurance rates, but here are a few tips to help ensure the high rates are as short lived as possible.
- Put the teen on your policy. Though it will increase the rate, it is more cost effective than having the teen get his or her own policy, and protects your vehicle. If the teen has her or her own vehicle, insuring it on your policy will also help you qualify for multi-car discounts.
- Buy an older sedan for your teen. Typically, older cars have lower insurance rates, so even though the teen driver will be charged more, it is still cheaper than insuring them under a brand new sports car. When you’re car shopping, get quotes for multiple vehicles you’re interested in, and opt to buy the car that is cheapest to insure. The kind of car you drive, even down to its color and safety features, impacts the insurance rate.
- Insure the teen at the minimum state required coverage. You’ll save more by not paying for more coverage than you need, or for all the bells and whistles like towing and rental car coverage.
- Wait it out. With a couple of years of incident free driving under their belt–this means no accidents or traffic violations such as speeding, they will have proven they are safe drivers, and therefore less of a risk to the insurance company. When the insurance company sees they are not as risky as they once realized, the rate will be lowered.
- Shop around. Some insurance companies out there are willing to give teenagers a chance at a lower rate, until they prove they are as risky as they initially seem. Compare quotes with multiple providers to see what will get you the best deal.