6 Reasons Auto Insurance Costs More for Young Drivers

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Things to Remember..
  • Young drivers are inexperienced on the road and are therefore considered higher risks
  • Young drivers are statistically more likely to engage in dangerous behavior behind the wheel
  • Young drivers can lower their insurance rates by driving safely and asking for various discounts

The cost of car insurance is a concern for most Americans. For young drivers, however, it can be especially troubling.

Young drivers can pay up to double, or even more, than the average annual cost of insurance.

There are many factors that contribute to why young drivers pay so much more for automobile insurance.

Knowing and understanding six of these important factors will help you learn how to potentially mitigate these high costs.

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1. Young Drivers Have an Unproven Record

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You probably already know that insurance companies partially base insurance premiums on the driver’s record.

If you have a clean driving record with few or no accidents and no traffic violations, you will likely get a break on your insurance premiums.

On the other hand, if you have had multiple accidents, especially if you were at fault, you’re going to pay a higher rate for car insurance.

You’ll especially get whacked if you have a DWI or a DUI on your record. Some insurers may refuse to grant you a policy at any price!

A driver’s record gives an insurance company a statistical base to analyze the risk of insuring the individual. For a young driver, this lack of a record is problematic.

The insurer has no historical record to make a judgment on whether the young driver is a safe or reckless driver.

In such a case, the smartest business decision that the insurance company can make is to assume the worst-case scenario because it protects the insurance company from offering low premiums and then being hit with high claims.

2. Young Drivers are Less Experienced

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Like most skills, learning to drive a car takes time, effort, and practice to perfect. The fact is young drivers simply haven’t had enough time behind the wheel to be well skilled at driving.

In fact, many young drivers are granted their license after only having a couple of hours of driving experience. Inexperienced drivers have a harder time reacting appropriately to driving hazards than experienced drivers.

For example, an experienced driver will be more able to stay calm and handle a situation like hydroplaning on a rainy road or a car drifting into his or her lane.

An inexperienced driver, however, is new to these experiences and may not respond appropriately. Young drivers are more likely to panic or overcorrect when they face an unusual circumstance on the roads.

According to studies by the Research Institute at the Children’s Hospital of Philadelphia, 75 percent of serious crashes by teen drivers occur as a result of errors related to inexperience behind the wheel.

These errors most commonly include failure to scan for road hazards, excessive speed, and distraction by factors inside or outside of the vehicle.

3. Young Drivers are More Likely to Engage in Distracted Driving Behaviors

Distracted driving has been blamed for up to 18 percent of automobile crashes.

The U.S. Government has an entire website dedicated to educating the public about the dangers of distracted drivers.

Distracted driving can take many forms such as:

  • Cell phone use or texting
  • Talking to others in the vehicle
  • Looking for an object in the vehicle
  • Reading directions or applying makeup while driving
  • Eating and drinking

All of these things can take a driver’s attention away from the road at critical times, making them more susceptible to being involved in an accident.

In fact, the Centers for Disease Control (CDC) reports that 15 people are killed each day and about 1,200 injured as a direct result of distracted driving crashes.

The U.S. Government reports that 11 percent of drivers under age 20 who were involved in a fatal car accident were engaged in distracted behavior during the crash, according to Distraction.gov.

Automobile insurance companies take these facts into account when assigning insurance premiums for young drivers.

Education about the dangers of distracted driving is key to helping young drivers not only learn to preserve a good driving record but to keep themselves and others on the road safe.

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4. Young Drivers are More Likely to be Reckless

Scientists have actually proven that lack of complete brain development contributes to teen’s tendencies to engage in risky behavior.

WebMD has reported on studies that have shown that teenage brains are actually hardwired to ignore the risks associated with certain behaviors.

This hardwiring makes teens more likely to drink, smoke, and engage in other risky behaviors despite the fact that they know that these things are dangerous.

The good news is this risky behavior is reduced as teens get older and their brain matures.

As young drivers enter their twenties, they are less likely to engage in risky behaviors whether behind the wheel or not.

As these risks are reduced, so are the chances that the individual will be involved in an automobile accident.

Accordingly, insurance companies lower the premiums for drivers as they get older and keep a clean record because statistics show that they are becoming less likely to have an accident.

5. Young Drivers are Statistically More Likely to be Involved in an Accident

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Whether it is a result of inexperience, distraction, speeding, or poor choices, it is simple fact that young drivers are more likely to be involved in an accident.

Insurance companies charging more for young drivers is not unfair or prejudice. Rather, it is soundly grounded in years of research, data, and statistical fact-finding.

Insurance companies carefully study accident statistics in order to set their premiums.

Their goal is to make premiums low enough that consumers can afford them and they stay competitive in the market, but high enough that they cover their losses from claims.

In order to do so, insurance companies must set higher rates for young drivers.

6. Young Drivers Pose a Financial Risk to the Insurance Company

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Young drivers are a statistical financial risk to insurers. The more likely young drivers are to get into accidents, then the more likely they are to cost the insurance company money.

The insurance companies have to charge more to cover this risk.

Of course, shopping around for the best insurance rate will help ease the burden of the higher cost of insurance on young drivers.

Young drivers can also look for discounts that mitigate their higher premiums. Discounts aren’t always advertised, so be sure to ask your insurer what you may be eligible for.

The best thing young drivers can do to lower their insurance costs is to be vigilant on the road, practice safe driving behavior, and avoid accidents and speeding tickets at all costs.

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