By Jana Rhodes / Posted February 12, 2015
Teen Drivers and Car Insurance: What's Driving the Cost and What You Can Do About It.
At MOTOsafety, we want to do our best to help you keep your teen safe on the road AND hopefully eliminate some of your stress along the way. Remember, we’re parents here too. We’ve walked in your shoes. That’s why we do what we do.
We’ve put together the following to help parents and teens better understand your options when it comes to securing affordable auto insurance.
Whether or not you subscribe to MOTOsafety Teen Driving Coach, we hope you find this information helpful.
Why is car insurance for teen drivers SO expensive?
First, the most obvious: Teens are teens. They’re young. They’re still maturing. And they are brand new to driving. They’ve passed the tests and been granted their driver’s license, but they still lack experience behind the wheel. That means – they tend to bump into things from time to time.
OK, so we’ve put that a little mildly. Here are a few important stats every parent of a teen driver should know:
- Teen drivers are at least three times as likely to crash than adult drivers.
- A brand new driver is 12 times more likely to be involved in an accident than someone with a full year of driving experience.
- A 16-year-old driver who has already had one accident is 50% more likely to have another.
- Automobile accidents are (by far) the leading cause of death of teens between the ages of 16-19.
- Speeding is a factor in nearly half of fatal teen car accidents.
- Compared with other age groups, teens have the lowest rate of seat belt use. More than half of teens killed in car accidents were not wearing seat belts.
- Teen drivers are more likely to be in an alcohol-involved crash than drivers in any other age group.
- Teen males have a higher rate of accidents and traffic violations than teen females.
- A young driver’s crash risk does not drop significantly until after age 25.
Another Fact: Insurance companies don’t like to gamble. They invest a great deal of time and effort to determine their risk – or their odds of winning or losing – before they ever sit down to play a hand (i.e., taking on a new customer like your teen driver).
Extensive data (like that you’ve just seen above) is collected and reported by federal institutions including the National Highway and Traffic Safety Administration (NHTSA), the National Institutes of Health (NIH), and the Centers for Disease Control (CDC) annually. Insurance companies use statistics from these and other sources to determine general risks for drivers based on demographics like age and sex. Based on the data, teen drivers, especially the boys, fall right into the high-risk category.
For older, more experienced drivers, insurance providers are also able consider more individualized data found in drivers’ credit reports, driving records, and insurance histories – none of which your brand new, teen driver is able to offer.
The Good News: There are ways to save on insurance for teen drivers.
The following tips may help you keep your/your teen’s car insurance costs down. Keep in mind, these options will vary by insurance provider and according to state regulations. Consider which of the following options, or combination of options, might work well for your family, then start contacting providers in your area to inquire as to what they might be able to offer.
1. Shop Around
You’ve heard the expression, “Time is money.” In this case, investing a little of your valuable time comparison shopping can result in significant savings. These days, it’s easy to compare car insurance quotes. Many websites will allow you to compare quotes from multiple providers at once, some even side-by-side. The difference can be hundreds or more in savings per year.
2. Inquire About Teen Driver Discounts
Insurance providers understand that teen drivers can be costly to insure – but they want to do what they can to earn your business. Many insurers offer discounts – some as much 20% – to teens for the following:
- Good Grades: The requirements and rewards will vary by provider, but often, teen drivers can qualify for a good student discount with a ‘B’ or above grade average.
- Driver Education / Driver Training: Your teen may be eligible for an added discount if he or she has completed a driver’s education course and/or additional professional driver training. Even if your teen is already licensed, s/he may still qualify (and benefit) by enrolling in a class. Check with your provider.
- Low Annual Mileage: If you know your teen will drive a limited number of miles, check with your insurance provider. They may reduce your cost if your teen isn’t spending much time behind the wheel.
- Driver Monitoring Programs: Some (not all) insurance companies now offer plug-in devices that will monitor your teen’s activity behind the wheel and will apply a discount based on your teen’s driving behaviors and average distance traveled. (Yes, that does sounds familiar to us.)
The MOTOsafety Teen Driving Coach is a similar type of product, but with a larger purpose of safety and on-going driver training, as well as GPS-based vehicle monitoring. (Learn More) The devices offered directly by the insurance industry are, by intention, more limited in features and capabilities than MOTOsafety.
Another difference that is important to note – MOTOsafety does not report your teen’s driving data directly to your insurance company. MOTOsafety data reports only to you or approved users you designate. One potential downside to installing an insurance-owned device in your teen’s vehicle is that, while your teen driver may have the best of intentions, if his or her device does report a speeding or other driving event, the insurance company will be the first to know – and that can mean the opposite of a discount. It can also remain on your teen’s driving record for years to come. The same can happen should another driver operate the vehicle in which the insurance-owned device is installed.
3. Stress Safe Driving
Safety should be every driver’s priority, always. Driving safely protects us and our loved ones from harm. It can also make a huge difference to our budgets. Even one accident or traffic violation (speeding ticket, running a red light) can make car insurance premiums skyrocket. This is especially the case for our already “high-risk” teen drivers. Depending on the severity and number of incidents, these blemishes on a driving record can result in a suspended driver’s license or even dropped insurance coverage. Once a driver is dropped by their insurance carrier, that record will appear to other insurance companies when applying for new coverage, making obtaining new insurance difficult, and more expensive than ever.
4. Choose Your Teen’s Car Carefully
Insurance costs vary considerably depending on your vehicle. Understandably, cars with higher horsepower, or that are classified as sports cars (even older models) tend to be more costly to insure, as they tend to be driven more aggressively (especially by teens and males). Also understandably, the more valuable the vehicle, the higher the insurance premium – but that doesn’t necessarily mean that the cheapest car is necessarily your best bet for your teen driver.
Cheaper to buy does not automatically equal cheaper to insure, and it may not be the safest choice for carrying your precious cargo. In addition to shopping based on the price of the vehicle, you will also want to consider each prospective vehicle’s safety features/rating, and cost of repairs. Some makes and models may appear very similar in price and features, but they may require special parts or more intensive labor to correct damage. Insurance companies know this and will charge you accordingly. Your best bet? Check with your insurance provider before making a new car decision. If you have a specific vehicle or vehicles in mind, run the options by your agent to get a good idea of insurance costs in advance.
5. Play Around With Coverage and Deductibles
First, consider which types of coverage your teen really needs. If your teen is driving an older, hand-me-down car that doesn’t carry much value, you may decide that comprehensive coverage isn’t worth the cost. (“Comprehensive” is insurance coverage that will repair or replace your vehicle in the event of an accident.) You may opt to purchase your state’s minimum required coverage, likely liability (insurance coverage that will repair or replace other drivers’ property in the event of an accident caused by your vehicle’s driver) and possibly medical.
The less coverage you purchase, the lower your premium cost will be. Once you decide which types of coverage to purchase, you will then need to decide how much of each would make you feel the most comfortable. (The amount of coverage refers to the maximum dollar amount your insurance company will pay in the event of an accident.)
Another factor that will affect the cost of your policy is your deductible. (The out of pocket amount you or your teen driver will be required to pay before the insurance coverage is applied.) Deductibles can range from zero (rare), to a few hundred, to thousands. The higher the deducible, the lower the premium cost. But be careful – increasing your deductible can be a risky move. It can be tempting (especially to the young and less experienced) to opt for a higher deductible in order to save on regular premium payments, but if an accident should happen and the vehicle owner isn’t able to afford the cost of the deductible, it can mean big problems.
Your insurance provider will be able to help you understand your state’s minimum required coverages, and help you with recommendations on coverage and deductible amounts according to your unique needs.
More Ways to Save:
- Multiple Car / Multi-Car: Insuring more than one household vehicle on the same policy can reduce your rates.
- Multiple Policy / Multi-Policy (Bundling): Combining multiple types of insurance policies with the same company (example: homeowner’s and car insurance).
- Safe Vehicle: The more safety features on your vehicle(s) (like airbags and anti-lock breaks) the more likely you are to save on your policy.
- Anti-theft: Vehicles featuring theft-deterrent or vehicle recovery devices may help keep comprehensive costs down.
- Good Driving: By keeping a clean driving record (no traffic violations or at-fault accidents), your teen can maintain affordable insurance and even begin to receive rate reductions the longer s/he maintains an event-free driving record.
- Passing Time and Driver’s Age: Many insurers impose and automatic surcharge for new drivers (regardless of age) during their first year (some a bit longer) of driving. Some new driver surcharges can be as high as 100%. It is a good idea to ask all prospective insurers about this when shopping for your teen’s first policy.
The good news, that charge is temporary. If your teen is without incident in their first twelve months of driving, their rate should drop by Year 2. After three years of clean driving, their rate should drop considerably. Also, with age comes maturity. Statistics show, teens who receive their licenses at age 18 have fewer accidents than those who are licensed at 16. You will likely see some savings insuring an older teen, even if she is brand new to driving, than if you insured that same driver heading out of the DMV on her 16th birthday.
At the end of the day, protection is what matters most. Insurance protects you financially and can replace damaged property, but keeping your loved ones safe is always what’s most important.
Safety is key. The best thing anyone can do to keep insurance costs down over time is to behave safely behind the wheel. Promote safe driving behaviors and set good driving examples when your teen is riding with you. Even after your teen becomes an official licensed driver, it is important to continue working with them. Remember, they’re still new to this. Help them continue to learn and gain experience. Help them stay safe.
Learn More about how MOTOsafety can help you work with your teen to keep them safe and focused behind the wheel.
We’re here to help. Have a comment or question for us? We’d love to talk to you. Contact Us
MOTOsafety Teen Driving Coach was developed by parents, for parents.
- Installs in seconds
- Rates driver performance
- Monitors safe driving behaviors
- Shows location in real time
- Generates alerts for speeding and more
- Signals unauthorized usage
The time has come – your teen is ready to drive. And it seems like only yesterday she was taking her first steps. Where did the time go?
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