Why is Car Insurance so High for Teenagers?

28 Dec

So why are teenagers being charged sky high rates to get auto insurance? Well the reality is there are a number of factors that go into determining premiums. Auto insurance as is all insurance is really all about the determination of risk. For auto insurance the question insurance companies ask is what is the probability that this driver will get into an accident? Accidents mean the insurance company has to pay claims and they want to limit that as much as possible.

In regards to auto insurance drivers get grouped into categories from high risk to low risk and the young 16 year old male is the highest possible risk, followed closely by the young 16 year old female. Insurance companies put these drivers in this category for a few reasons the first is the lack of experience behind the wheel. Have you ever driven with someone who just got their license? That’s not exactly a very comfortable experience. Also teenagers, especially males, are prone to be influenced by their environment which can impact the way they drive. Whether it’s friends in the car or the need for speed these things impact driving behavior. I remember being young and foolish and racing my cousin down a somewhat crowded highway at 95 miles per hour. I don’t know who won but what an adrenaline rush. I look back on that and realize how stupid that was. One wrong move and I could have killed myself and maybe others with me. At the time though I was young and invincible, which is a terrible mindset to take behind the wheel of a car.

All is not lost on the cost of insurance, there are some things that can be done to lower premiums. Now these things won’t bring them all the way down because they are still in the high risk category but a few dollars saved here or there can add up over time.

1 – Consider the type of vehicle they will drive – Obviously a souped up sports car in the hands of a teenager is like a blind man trying to land an airplane, that is an accident waiting to happen. Insurance companies recognize this and they will make you pay dearly for this. Consider getting a safer, older family sedan and this will save you some money on the premium.

2 – Shop Around – The internet makes it possible to get rate quotes from various insurance companies. Look around and see which company provides the best possible option for you and your teenager. Sometimes it may mean having to switch companies but if the savings are worth it consider the option.

3 – Encourage good grades in school - Some insurance companies offer a good student discount. Usually you would need a B average or higher to qualify. Insurance companies that offer this look at good students as responsible and are willing to reward these drivers with discounts sometimes up to 10% on the premium.

4 – Have your child take driver’s education – Again insurance companies look at these drivers as more responsible. Even though they are still high risk they are not as high a risk as the teenager without driver’s ed. The result of this is a reduced premium. Always remember anytime you can lower the perceived risk you lower your insurance premiums.

Any way you slice it having teenagers drivers in your house will cost you more money. The best you can hope to do is get that premium as low as possible and encourage responsible driving on behalf of your teenager. As they demonstrate they are a lower risk you will begin to see your premiums go down.