Why are young drivers more expensive to insure?

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In a nutshell...
  • Some companies also reduce your deductible if no accidents are reported on your policy
  • High-risk drivers pay higher premiums than low-risk drivers in order to offset any claims on their policy
  • Higher deductibles result in lower premiums, as the insurance company will need to pay less to repair your vehicle in the event of an accident

If you’re a young driver purchasing your first car insurance policy you may be surprised to realize that car insurance for young drivers is often substantially more expensive than equivalent policies for older adults.

Car insurance companies are not trying to discourage young people from driving or owning a vehicle, they are simply protecting their interests.

By understanding the reasoning behind a car insurance company’s rates, a driver can make informed decisions about their auto insurance coverage and learn how to lower their premiums.

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How does car insurance work?

When you sign up for a policy, the insurance company agrees to pay for damage to your car from an accident according to the specific coverage you purchase.

Since most drivers will pay substantially more in premiums than they will cost in claims, the insurance company is able to make a profit.

High-risk drivers pay higher premiums than low-risk drivers in order to offset any claims on their policy. The same reasoning applies to young drivers.

Car insurance companies consider drivers under the age of 25 to be high risk, due to a number of factors:

  • New drivers are not yet comfortable driving in all situations and conditions, and may not have the reaction time to avoid an accident; because driving is a learned skill, drivers with years of experience are often less likely to be involved in a collision.
  • Students often need to park their cars in unsecured school parking lots where they may be stolen or vandalized
  • Young drivers may engage in risky behavior like speeding or running red lights more often than older drivers
  • Teenagers and college students are often more likely than older adults to partake in drugs and alcohol, increasing the likelihood of driving under the influence.
  • Statistically, young drivers are involved in more accidents each year than people over 25.

Undoubtedly, thousands of young drivers are both safe and conscientious, with just as many older or experienced drivers routinely being involved in accidents.

Individuals who have been driving for several years or decades with no history of accidents or citations will be viewed as a lower risk and thus will pay lower premiums.

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How can you find cheap car insurance for young drivers?

If you are a young driver and are discouraged at the high cost of insurance, there are a few things you can do to reduce your premiums:

  • Complete a Driving Standards Agency Pass Plus course. This course, similar to Driver’s Education courses, provides practical experience driving in a number of situations. Most insurance companies will offer a substantial discount to drivers who complete such a course.
  • Increase security on your vehicle by adding alarm systems, high-security locks, or anti-theft devices. Vehicles with these devices are at reduced risk of being stolen, and many insurance companies offer a discount if they are installed.
  • Enroll in an insurance company that offers safe driving discounts for policies that are accident-free. It may take a few years to lower your policy, but the results should be cumulative. Some companies also reduce your deductible if no accidents are reported on your policy.
  • Certain vehicles are considered higher risk than others; for example, sports cars and luxury vehicles are more expensive to insure because they are usually also expensive to repair.
  • If necessary, consider taking a policy with a higher deductible. The deductible is the portion of your damage that you are expected to pay out of pocket in the event of an accident. Higher deductibles result in lower premiums, as the insurance company will need to pay less to repair your vehicle in the event of an accident.

When purchasing new car insurance coverage, be sure that you compare similar policies between companies. In other words, make sure every quote you get is for a policy with the same coverage and deductible.

Once an individual understands why young drivers are more expensive to insure and how to counteract these costs, they are better equipped to purchase affordable auto insurance coverage.

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