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When you’re under the age of 21, purchasing car insurance may be an eye-opening experience; at your age, you may often be considered a high-risk driver.
Insurance providers often take your age into consideration when trying to determine if providing you with coverage is in their best interest.
It’s important to understand what your provider will be looking at when they try to determine your policy rates and the coverage options you are qualified to purchase.
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Buying Coverage When You’re Under 21-Years-Old
Just because you can purchase coverage doesn’t mean it’s as simple as 1-2-3.
Due to your age, you may experience difficulty finding a company that can provide you the coverage you want at the price you can afford; insurance providers often charge young, inexperienced drivers higher premiums to offset any potential losses.
When you’re under 21, you may have started to do the following:
- live on your own
- be responsible for your bills
- purchased your first car
However, this does not mean that you have purchased car insurance coverage on your own.
Many young adults will remain on a parent or guardian’s policy until they are more established, sometimes waiting until after completing college or landing their first “adult” job.
If you choose to purchase your policy when you’re under 21, it can be another way to increase your knowledge of what being an adult truly entails; managing car insurance, choosing your coverage, and managing your budget are all necessary skills.
Your previous choices up to this point can affect your available coverage options, meaning you may be limited in what insurance companies you can buy coverage through or what coverage options you can select.
Things You Can Expect When Purchasing Coverage
There are several things that an individual under 21 can expect when shopping for a car insurance policy, including:
- Higher premium rates
- Difficulty obtaining coverage
- Limitations on coverage options
As a younger driver, your lack of experience behind the wheel often means insurance companies will see you as a higher risk compared to someone that has had many more years experience behind the wheel.
While you may not be a poor driver yourself, insurance companies use statistics that aggregate large amounts of data and provide a generalized estimate based on that data. This means that, due to being in your age group, you will be looked at as a higher risk.
Higher risk individuals often face higher premium rates when purchasing coverage. These higher rates help to preemptively offset the costs that insurance companies predict they will incur while insuring you.
As you continue to grow older and show responsible behaviors, insurance companies will often start to lower your premium as an incentive to continue being responsible behind the wheel.
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You may also encounter difficulty obtaining coverage from some insurance providers.
Insurance companies are not obligated to provide an individual with coverage in most cases, meaning they can deny coverage to an individual based on their risk assessment of that individual.
When you are deemed to be a higher risk than they want to insure, they may direct you to search elsewhere.
There may be instances where a provider is willing to provide you with coverage, but they may place restrictions or limitations on the coverage options you can purchase.
This could be as simple as requiring a high-dollar deductible for certain coverage options, or they could restrict entire coverage options from being selected.
You may have to speak to multiple providers to find one willing to work with you and your unique situation.
Factors That May Influence Your Rates and Coverage Options
Insurance providers will take many factors into consideration when determining if they should provide you with coverage, what coverage options to provide, and what rate they should charge to properly match the risk.
Some of the most common factors they consider include:
- The driving record of anyone on the policy
- The insurance history of anyone on the policy
- The history of claims for each driver
When you are under 21, you will have potentially created years of driving information and insurance histories that any potential or current provider will want to review.
Your driving record is a listing of any citations, violations, or incidents that occur while operating your vehicle; a speeding ticket is one example of this.
Individuals that have a poor driving record may encounter higher premiums as a result; insurance providers do this to offset the potential losses they foresee you claiming through your policy.
If your driving record is exceptionally poor, you may find yourself unable to obtain coverage through traditional insurance carriers.
Your insurance history is another factor that many carriers will review, as this is a record of your interactions with your previous insurance carriers and a record of your previous claims.
Your history helps provide your potential or current company with a snapshot of how you work with insurance companies as well as how often you file claims, the amount of the claim settlement, and the number of parties involved.
If your insurance history shows a record of late or incomplete payments, high-value claims, or multiple claims within a short amount of time, your potential or current provider may find themselves unable to provide you with coverage.
These factors are all indicators that you may be a higher risk than they are equipped to cover.
Anytime you purchase coverage, regardless of your age, there are multiple things to keep in mind. Your age is always going to be a factor that any insurance provider will look at when trying to decide if they should provide you with coverage and for what price.
Factors like this are something that insurance providers collect a lot of data about, this then allows them to make informed guesses about your potential risk.
This means that you will need to anticipate higher premium costs when you purchase your policy. As you grow older and show responsible driving habits, your insurance provider may reward you with lower rates.
However, this is something that cannot be changed overnight; you will need a long-term history of responsible habits to show your provider that you are a low-risk policyholder.
Your previous insurance history and your driving record are both going to influence your available coverage options.
Current and future insurance carriers often look at your history with previous insurance companies; this allows them to make some reasonable determinations about what kind of policyholder you may be.
Your driving record, on the other hand, provides an idea of your driving habits and how cautious you are behind the wheel.
Any questions or concerns you have about how your age, your driving record, your insurance history, or any other factors will affect your coverage should be directed to your carrier before purchasing your policy.
Each insurance carrier will address rates and coverage options in different ways, so one carrier may be able to provide you better rates and coverage options compared to another.