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Higher Insurance Rates For Teenage Drivers

July 21, 2011

Teenage DriverInsurance rates for youthful drivers (drivers under age 25) are very expensive.  There is no doubt about it and no pleasant way to sugar coat it.  Why do the rates have to be so outrageous and what can be done to control it?  Let’s take a look…

Why are the insurance rates so high?
Insurance companies are all about calculating risk and charging a price that is proportionate to that risk.  I have heard it said many times that it is not a quesion of IF your teenage will have an accident.  It is a matter of WHEN.  Many, certainly not all, young drivers will experience their first fender bender in the first few years of driving.  We hope that it is just that.  If they have an accident, hopefully it is a minor one that they take a valuable lesson from. 

But what if it is not?  Much can go wrong behind the wheel of an inexperienced driver.  Some consumers, and unfortunately some agents, go with the notion that since auto insurance typically covers anyone driving the car, there is no need to report (and pay for!) these higher risk drivers.  Here is the fatal flaw with that mindset: if you lie to the insurance company on your application by failing to report the drivers in your household, you have given them reason to deny coverage on your policy. 

As a father of two youthful drivers, I WILL NOT take the chance on my own kids and my own finances.  Look at your auto policy carefully and make sure all of your drivers are rated. 

So how can we control the cost of their auto insurance?
1.  Keep the teenagers on your policy so they can take advantage of your multiple-car discount, auto-home discount and your credit score. 
2. Stress good grades.  Most insurance companies offer a substantial discount if students earn a B average or 3.0 or higher.  One idea, let the students make up the difference in the price if they fail to quality for the good student discount.
3.  Preach good driving skills.  Accidents and tickets can make the auto insurance rate skyrocket for young drivers.  Let your insurance agent help by setting up a meeting to discuss the importance of safe driving.  This is a free service our agency loves to provide and we get great feedback from the families who take the time to do this.
4.  Consider buying an older, reliable car that is cheaper to insure.  If you only need liability insurance coverage, you can save a LOT of money.  Remember though that if the car is totaled, you will be out the entire price of the car.  Make sure this plan fits your budget. 
5.  Consider a higher deductible on the car your  young driver is insured to drive.
6.  Set limits on night-time driving.  Although only 20% of teenage driving is at night, 50% of all driving fatalities happen at night.
7.  SHOP for rates.  This is where your independent insurance agent can be a great asset as they will be able to shop rates from several carriers for you and offer you real choices on your insurance dollar. 

No one likes to pay high premiums but proper insurance is absolutely essential in protecting your family’s financial future.

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