Auto insurance companies charge teen drivers higher premiums than other age groups because they consider them high-risk drivers. In fact, family insurance premium almost doubles when parents add these young drivers to their auto policy.
Teens are more likely to engage in car accidents than other drivers because they lack adequate experience behind the wheel. However, the premiums tend to drop as they age or gain experience. This is particularly so when they turn out to be safe drivers.
There are several tips to lower your insurance premium as a teen driver. Here are the top 10 tricks young drivers can use to reduce their insurance costs.
Reasons Why Teen Drivers Pay Higher Car Insurance Premiums
Insurance companies consider risk factors when setting insurance premiums. Drivers are deemed risky when they have certain driving behaviors like distracted driving, speeding, failure to obey traffic rules, or car accidents due to inexperience.
Other reasons why you’re paying a higher insurance premium as a teen driver include:
Unproven Record: Insurance providers reward drivers with a clean driving record free of accidents and traffic violations. They give them discounts that lower their insurance budget. Drivers with a poor driving record that includes multiple at-fault accidents, DUI, or traffic citations are high-risk clients, thus a higher auto insurance budget. Because of that, teen drivers lack a driving record to ascertain whether they’re safe or reckless drivers. They, therefore, pay a higher insurance premium because of the lack of a historical record of their driving habits.
Less Experience: Learning how to drive a car needs practice, time, and effort. Teen drivers lack experience because they recently started handling a vehicle on the road without their parent’s supervision. Inexperienced drivers are more likely to cause an accident because it’s harder for them to react appropriately to hazards compared to experienced drivers. They’re more likely to overreact or panic when a car drifts into their lane, it rains heavily, or faces an unusual circumstance when driving. Over speeding or driving under the influence are other reasons why teen drivers cause accidents, leading to higher premiums.
Distracted Driving Behaviors: Young drivers are more likely to focus on other things while driving. They may look at an object inside the car, apply makeup, read directions, eat or drink, read messages or make calls. These activities take their attention away during this critical time and contribute to an accident.
Reckless Driving: Incomplete brain development can contribute to tendencies such as risky behaviors as a teen. While young people understand that drinking and smoking are dangerous, they still engage in these risky behaviors behind the wheel. Engaging in reckless behaviors while driving increases your chances of getting involved in a crash and filing more claims. This increases your insurance premiums significantly.
At What Age Do Insurance Premiums Drop?
Auto insurance is costly for any driver aged 20 and below. The reason is that the driver is considered immature and inexperienced. However, the premiums tend to drop when they turn 20 because, at this age, insurance providers believe that the teen driver has learned responsible driving habits. Further, the majority of young drivers leave their parent’s policy at this age and purchase their own car insurance policy.
Although the premium is slightly higher than an older driver, the rates continue to become affordable as they tend towards 25. In fact, the insurance premium at this age is nearly 50% lower than when they began driving.
The much-needed reduction in premium is only achievable when you maintain good driving habits. However, the reverse will happen when you get involved in multiple accidents or get traffic citations on your driving record.
Best Ways to Lower Your Auto Insurance Premiums as a Teen Driver
1. Raise the Deductible
Raising your deductibles can lower your premiums substantially. Young drivers that increase their comprehensive and collision deductibles to up to $1,000 and at the same time avoid filing small claims get lower insurance quotes because they’re considered less risky. You can cover your small claims out of pocket in order to retain your claims-free discount.
The trick is that the higher the deductible, the lower the annual premium. You can discuss this with your agent to determine how your premium will be affected when you raise your deductible.
2. Take a Defensive Driving Course
Insurers promote driver safety training courses to teen drivers because they teach traffic rules to young, inexperienced drivers. The aim is to reduce accidents that significantly increase insurance rates when they happen, especially for teen drivers.
Insurance companies give premium discounts to teens who enroll in the defensive driving course, thus lowering their premiums.
3. Install Safety Features
A teenager driving a vehicle installed with added safety features pays a lower premium than someone driving a luxury sportscar without them. Insurers reward your decision to install safety features or buy a vehicle with these features. They include:
- Anti-lock brakes
- Power steering
- Automatic seatbelts or seatbelt alarms
Do your homework before making any big purchases in order to find an insurer with the best discounts for teens driving a vehicle fitted with safety features.
4. Good Student Discount
Insurance companies give star performers in high school or college discounts that help them save money. That means a young driver under 25 years and has top grades can get a good student discount from the majority of auto insurances.
The discount can range between 5% and 25%, which translates to a considerable saving per year. So hit the books and maintain a “B” average. Insurance companies base the Good Grade discount on the fact that students with good grades tend to be safer and better drivers.
Despite that, you should shop around because not all insurance providers offer this discount. Also, comparing rates can help you find the company with the highest good student discount.
5. Distant Student Discount
A young teen driver living away from home can be eligible for a distant student discount. Insurers tend to give students living 100 miles away from home a deal. Sometimes they couple it with a good student discount which lowers their insurance budget.
6. Drive When Necessary
Teen drivers that drive infrequently are eligible for a low-mileage discount. In fact, a teen that drives when necessary can opt for the pay-per-mile option, which charges them premiums based on the number of miles they actually drive.
7. Bundling Your Auto Insurance into the Family Policy
Paying your own auto insurance shows that you’re financially responsible. However, opting for an individual policy is much more expensive than when it’s under your mom and dad.
Further, putting multiple policies under a single account can earn you a bundling discount. So you don’t have to show that you’re a responsible young adult by going alone when you can enjoy some discount under your family policy. In fact, you can still prove that by volunteering to pay part or the entire cost of the family policy.
8. Safe Driving
While teen drivers want to pay a lower premium for the right coverage, their safety should be their priority. The best way to pay a lower premium as a driver is to maintain a clean driving record. Your record should be free of accidents and traffic citations.
You should also minimize filing claims for car damage after a minor crash. In fact, you can opt to pay for certain damages out of pocket instead of filing a claim because this lowers your insurance premiums.
You can achieve that by modeling safe driving behaviors. That means you should avoid distracted driving, excessive speed, driving under the influence, texting, chatting, or making calls while driving.
9. Ask for Additional Discounts
Teenage drivers are also eligible for discounts just like any other driver. In fact, you should think of an insurer as a trusted advisor so that you can feel comfortable asking questions and sharing more information about yourself.
You can tell your agent about your driving habits that make you a safe driver. For instance, driving less, installing safety features in your car, attending a college away from home earns you a Student Away discount or a “Good Student” discount if you’re a top performer in high school or college. You can also ask for a claims-free discount when you fail to file claims for minor damages after a crash.
So ask for discounts that you’re eligible for when shopping around for the best insurance policy and lower premiums. However, you should avoid prioritizing discounts or lower premiums over coverage because you might end up being uninsured or underinsured.
10. Shop Around
Ask for free quotes, as well as whether you’re eligible for any discounts, and then compare rates before making payment. While such inquiries might hurt your credit score by a few points, your rating will increase in the long run when you pay your insurance premiums on time.
Make these inquiries without any obligation to purchase so that you can find an insurer that fits your budget and that considers teen drivers.