At a young age, the cost of car insurance may come as quite a shock for most teens. With premiums much higher than those experienced by older drivers, many wonder why buying car insurance is so expensive when they are just starting. In this blog post, we will explore the factors that can cause car insurance to be costly for teen drivers and how one might find an affordable policy despite these obstacles.
Table of Contents
How Age Affects Car Insurance Costs
Why Is Auto Insurance Costlier for Young Drivers?
Lack of Experience and Driving History
Bigger Chances of Being Involved in Accidents
Distractions
Low Credit Scores
Greater Risk for Insurance Companies
At What Age Does Car Insurance Lower?
How to Lower Insurance Rates
Drive Defensively
Shop Around for Insurance Quotes
Get Good Grades
Find the Best Deals at Pronto Insurance
Common Factors that Affect Insurance Rates
- Driving Record: Young drivers may lack experience on the road, leading to more accidents or traffic violations. As a result, they can be considered higher risk and have higher premiums charged by insurance providers.
- Where You Live: Depending on where one lives, certain areas come with a higher cost of living, resulting in higher premiums for car insurance overall.
- Drivers Age: Teens are viewed as inexperienced drivers and therefore pose an increased risk to insurers, so young adults generally pay more for car insurance than older adults.
- Gender: Statistically speaking, men are more likely to get into an accident than women; thus, male drivers often pay slightly more for insurance than female drivers.
- Credit Score: A good credit score can affect insurance premiums as it reflects a person’s financial responsibility; those with bad or no credit often pay more for car insurance.
- Car: The type of vehicle being insured is also considered when determining the cost of car insurance. Some vehicles have higher premiums than others due to their performance capabilities or size.
- Claims History: If one has made several claims in the past, this might indicate they are a riskier driver and thus cause their rates to increase accordingly.
- Coverage Level: Higher levels of coverage will usually result in higher premiums as they come with more comprehensive protection and features.
- Marital Status: Married individuals often pay lower premiums than single people because married couples tend to be more financially stable and thus pose less of an insurance risk.
- Annual Mileage: The more miles you drive annually, the higher your premiums because you are considered riskier.
How Age Affects Car Insurance Costs
Simply put, younger drivers are more likely to get into accidents. They aren’t as experienced and, therefore, are more prone to driving errors, statistically speaking. According to the Centers for Disease Control and Prevention (CDC), the risk of motor vehicle crashes is higher among teens aged 16 through 19 than among any other age group.
Because insurance rates are high, young drivers always shop for new insurance plans. This occurs so frequently that insurers constantly set up and service new accounts to profit from them.
Why Is Auto Insurance Costlier for Young Drivers?
There isn’t a single factor that explains why car insurance can be so expensive for teen drivers. Rather, premiums for inexperienced drivers are elevated due to multiple contributing factors.
Lack of Experience and Driving History
The lack of experience and driving history plays a major role in determining insurance rates. Young drivers are seen as more prone to accidents due to inexperience, making them riskier clients for insurers. This can result in higher premiums and even difficulty obtaining insurance coverage.
Drivers without much experience are more likely to make mistakes like failing to check blind spots or driving too fast, which are common causes of accidents and insurance claims. As a result, insurers must charge more to account for the added risk associated with inexperienced drivers.
Bigger Chances of Being Involved in Accidents
Teenagers are also more likely to engage in activities that put them at greater risk of getting into an accident, such as street racing, driving under the influence, or other reckless behaviors. This increases the chances of costly claims coming through, raising the cost of car insurance for young drivers.
Distractions
In addition to inexperience, teens may be more distracted while driving. Technology-related distractions—such as texting while behind the wheel—can increase the risks and make it even more expensive for teens to insure their cars.
Low Credit Scores
Your credit score can also affect the cost of car insurance. Young drivers may not have an extensive credit history, so insurers may use other factors to determine their risk level and premiums. Why does your credit score even matter? Well, insurers may consider your history of paying bills and handling debt; drivers with poor credit scores can indicate higher levels of risk.
Greater Risk for Insurance Companies
Insurance companies often see young drivers as a greater risk because they are more prone to accidents and poor decision-making — both of which raise the potential cost of claims that need to be paid out by insurers. As a result, these added risks lead to higher premiums when insuring teen drivers.
At What Age Does Car Insurance Lower?
The good news is that auto insurance costs typically drop at age 25. This doesn’t mean your premiums will drop significantly, but you should see a decrease in cost as the risk associated with younger drivers decreases.
How to Lower Insurance Rates
Data and research are available to insurers that help them charge different rates for different categories of drivers. Young drivers are at a greater risk than older drivers, according to the available data, mainly because of their inexperience behind the wheel. That being said, there are many things young drivers can do to lower their insurance rates.
Drive Defensively
Defensive driving can help young drivers become better, safer drivers. Taking a defensive driving course is usually beneficial for younger drivers as these courses emphasize safety and risk reduction.
Shop Around for Insurance Quotes
It pays to shop around for insurance quotes. Don’t just stick with the same insurer — compare rates from different companies to find the best deal and save money on insurance premiums. Be sure to ask about discounts or other ways to lower your rate, such as bundling multiple policies into one package.
Get Good Grades
Most insurance companies provide substantial savings to young drivers who maintain a B average or higher while enrolled in high school or college. In most cases, students need to be enrolled in at least 12 credits to receive the discounts.
Find the Best Deals at Pronto Insurance
At Pronto Insurance, we understand the unique needs of young drivers. We offer competitive rates and provide a variety of discounts to help reduce the cost of your policy. Plus, our knowledgeable agents can help you find the right coverage for your needs at the right price. Get started today and see how much you could be saving!
