We here at Soliz Agency have felt the echoes of the chaotic climate as much as the next person. Part of the job is telling people bad news.
But also, part of the job is making sure you can make sense of it and make the right choices. In this article we dive into reasons why those most vulnerable and least experience have to pay the most insurance. We’re talking about teen drivers.
Math strikes again, but your History is oddly quite.
Have you ever wondered how young people have less money, but pay more for car insurance than older drivers who have more money? The quick answer is that companies expect younger people to have more accidents. No brainer right? But the answer is a little more complicated than lack of faith or trust.
Insurance companies do research and find data to helps them determine what rates they will give drivers. This research is then computed, much like a sports or weather forecasted prediction. This data includes driver records and history that provide a statistical base to analyze the risk of insuring an individual.
For younger drivers, this lack of history is problematic. How does the company know if you’re a good or bad driver if you got your license? Good driving should be rewarded after all. In such cases, the wise business decision for the insurance companies, is to assume the worst-case scenario to avoid a situation where it ends up losing money for expecting someone to be a good driver.
Driver history as a stat point is why getting your license as soon as you can is a good idea, because it builds a certain point where your experience begins, and drives down cost if you have had your license years without incident.
Okay, so insurance companies pass on expenses of a hypothetical loss over to a the teen, even if said teen happens to be a good driver because… Math? Doesn’t seem completely right, so more on that later.
The reason why the price is so high
Math is one thing, but we used a word already that is the reason that math is so one-sided against teens. The word is experience.
When we are young, the expectation is simply that we don’t have the experience to carry the weight of responsibility. Teens are more likely to not be held accountable, have fewer responsibilities, and are dependent on their parents.
So, they don’t have a home and family to care for, and their actions have far fewer consequences than many adults. As a result, insurers are less eager to insure young drivers and charge high premiums to make it worth the risk they bring.
Insurance companies watch younger drivers more closely for tickets and accidents. For each violation, the insurance carrier may impose a penalty or rate increase to offset an increased risk of assumed driving habits.
Every ticket new drivers receive and accident they are involved in is reported to DMV, which adds to the driver’s record. If insurance companies find out there is a strike against drivers, they can expect to pay for it over the long term.
The resulting bill can be prohibitively expensive when added to the already elevated rate younger drivers pay.
Distracted driving has been blamed for up to 18% of automobile crashes. Things caused by distance driving are texting while driving, talking to others in the vehicle, looking for an object in the car, reading directions for applying makeup while going, eating, and drinking.
Inexperienced drivers have a more challenging time reacting appropriately to driving hazards than experienced drivers. Teens texting while driving is what comes to mind; however, distracted driving can take many other forms, such as: talking to others in the vehicle, looking for an object in the car, reading directions and applying makeup while driving, also eating and drinking.
Age and Gender
Math and experience are top level reasons for the price. Under these layers of analysis, there is something that many will find unsettling. Unless you’re an adult, in that case it’s common sense.
Listen, this is an insurance website written by real insurance representatives, but we care about the truth here at Soliz Agency. “Experience” is one way to dice it, but the question is why teen car insurance is expensive.
We know the mathematical reality. But math isn’t why you, or your teens, or all teens are likely to cost more money to insure. Math just exposes the necessity to account for it.
Age affects the price people will pay for their coverage. Younger drivers are not the only group of drivers; their car insurance is expensive, and another group is elderly drivers.
Teenagers’ pay is three times as expensive as drivers in their mid 30’s and four times more than those in their mid 50’s. Once younger drivers hit age 25, their cost drops 30%. Prices continue to decline with each birthday.
Once they reach 50, they get the best rate because drivers in 30 and 50s have more excellent driving skills and road maturity. However, when drivers reach 60, costs increase.
Aha. So with a lower age, prices are up, then as you mature, prices go down, but once you mature too much, prices go up again.
So what do we decide we aren’t going to be experienced drivers after 65? In case you haven’t figured it out, it’s our physical bodies, our pesky biology that hampers our ability to drive and thrive. Didn’t think it would get more fun than math did you?
It’s true: brains of young adults are not adequately developed compared to adult brains. To keep things simple, which is a challenge with the brain: The part of the brain that solves problems logically, is not fully developed. The kicker is, that the part of the brain that emotionally solves problems is also not fully developed.
Up until you hit the age 25, your brain is going through a radical evolution to make sure you are ready to take on the real world. At 25 your brain is very much done going through it’s programmed maturation, and the rest is up to you to grow. Speaking of which.
Gender also affects price. Men tend to pay more than women for car insurance because men are riskier to insure. But wait, why all men? Perhaps it’s culture, or maybe it’s testosterone that makes men’s number go up on risk factors, but clearly insurance companies won’t dare to guess if you are one of the “good” ones. Men are are more likely to do dangerous driving such as speeding, driving under the influence, and drive more miles.
Some states prohibit the use of gender as a factor in auto insurance. California, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania are states that don’t allow gender affect auto insurance.
The ways to reduce price.
Many new drivers are involved in car accidents the year they receive their licenses, so some insurance companies are hesitant about whether they should insure them. As mentioned, there is a lot of merit for doing this. So what are your options for saving money, while also driving with security and legality? Look at the following:
- Consider improving your driving skills and take a defensive driving course. The drivers can take classes in a classroom setting or online. Some insurance companies will lower your premium up to 10% with proof of completion of the course.
- Add credit for security features on your car. Ensure your agent or insurance company applies for a discount for all safety devices. Insurance companies will offer you a discount if you have safety features such as lane departure notifications and adaptive headlights.
- This tip is not advisable, but it’s possible to lower your insurance price by raising your deductible. This is a personal decision that you should make when weighing your options. When it comes to insurance of teens, this option is especially something most would not suggest. But it doesn’t hurt to get a quote.
- Older model vehicles mean lower prices on insurance. When you have a brand new vehicle that is a recent model, with a recently started driving history, you can bet that prices will be high.
- Finally, don’t drive without insurance if you are involved in a car accident and don’t have insurance coverage. You could be in trouble with the law and face repair and medical bills; however, if you have insurance coverage, your insurance company will pay for all of the damage caused by accident.
Conclusion
The higher prices for these drivers might not seem fair for these new drivers. The world and the life the live brings it consequences simply for being young. But coverage at the same rate as older drivers is just not possible, and isn’t fair to those that had to live through the same situation themselves.
There are courses of action that may be difficult for younger people to fully take on themselves, and may need guidance to become aware of. Make sure you or they know that they have choice in what car they have, how certified and educated they are at driving, and the coverage they have.
Finding an agent that shows you the truth and is trying to get you a good deal in food faith is key. However, even if you have one of these, it’s the teenager or the teenagers guardians that must advocate for themselves and put forward their merit and vision.
Sources:
https://finance.zacks.com/car-insurance-high-teens-young-adults-9700.html
https://www.autoinsurance.org/6-reasons-why-young-drivers-auto-insurance-costs-more/
https://www.forbes.com/advisor/car-insurance/rates-age-and-gender/
https://www.valuepenguin.com/how-age-affects-auto-insurance-costs#pay
Great article and very informative. Thank you!
Great article!