The answers to why do young drivers pay more for auto insurance lies in past accidents data. Statistically, they are four times more likely to get involved in a fatal crash, compared to over 25 year olds. This is what scares most underwriters away from covering them. And they want an arm and a leg for premiums when they do. Some of them are probably exaggerating this correlation when they quote for a novice.
It is understandable that some of them turn down or price high-risk applicants prohibitively because they already have enough good ones. On the other hand, some high-risk vehicle insurance companies are better equipped to handle the exposure that comes from inexperience. So, half the job is done when you find carriers who are prepared to take a chance.
Another reason is that they cannot qualify for enough discounts. The key to getting cheap rates is that experienced motorists qualify for a few discounts for having long clean history, good credit scores, owning home and living in nice zip codes. Of course, they get further savings for mature age too. Youngsters need time to build positive history.
Average auto insurance rates by age table in that post clearly shows this point. They are bundled in the most perilous category due to cautious approach toward them. It would be disappointing to learn that they may not be able to afford to pay the premium, even if they can manage to buy a car.
This generalization will result in expensive average car insurance rates for teenagers even though they haven’t done anything. In fact, it is irrelevant that they are not personally responsible for such decisive statistical data because underwriting works on predictions. Young people will be overpriced until they have enough proof that they will be responsible behind the steering wheel.
How to Reduce Insurance Premiums for Young Drivers
How could they prove that they are more responsible than their age group? This may appear to be a tough question but many companies address this particular question. Hence there are several options available in this regard. One of them is to prove that they are putting heads down and studying hard for exams. Good grades are seen as enough indication of responsible behaviour to offer lower rates to them. If you are doing what it takes to be successful it is likely that you will do what it takes to be safe on the roads.
Taking safe or advance driving courses is another good example of reducing risk. Many people argue that tests are not hard enough and they should be made tougher to reduce deaths. They probably have a good point. Taking initiative to learn more and improve is in fact admirable. Even though it is mainly taken to improve driving it is a good thing that they are encouraged to do so with lower premium offers.
Even when a young person cannot get immediate discounts they can achieve them shortly. After the first year without an accident most companies would be convinced to offer very good rate cuts. With that thinking they can look for a pay as you drive policy or similar ones based on monitoring habits behind the steering wheel. Should they keep traveling to minimum and to sensible hours they will not have to pay expensive premiums even in the first year. Then, they can look for more traditional packages since they would be eligible for no claim discount.
Why is automobile insurance more expensive for teenagers in the first year of driving? This initial period is critical in several aspects. There is a high chance of involving in an accident in this year than any other. Perhaps parents should pay extra attention to children’s driving until they get over initial excitement. It does not mean that they are safe because they passed the tests. It is best to keep a distant watch in the first year.
Vehicle insurance is a business of pricing risk correctly. When a claim is a real possibility there will be fewer takers and not many reasonable quotes. Understanding this simple basic heighten the importance of aligning for lower rates. Irresponsible behaviours will have consequences. They usually come in the form of high premiums because most carriers become unwilling to take a chance with them.