Why Do Young People Pay More for Car Insurance?

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When we get our first car, and first have to start paying our own way in the world, one of the first major knocks the real world gives you is the price of car insurance. All of the questions they ask you when you fill out your first insurance application  can often leaving you staring at a bunch of quotes asking, “how am I meant to afford this?”

Why Younger Drivers Pay More Insurance

Unfortunately, statistics are not in your favor.   Approximately 14% of the drivers on the road are drivers between 15 and 24, and these drivers were responsible for a staggering 29.6% of all fatal accidents in 2005. The table below illustrates what percentage of fatal accidents were caused by drivers from this age group:

*Data is taken from the NHTSA Report on young driver fatalities.

The top part of the table is slightly misleading, and it looks as if younger drivers aren’t as bad as the next age group up.   However, the next two age groups up also constitute the largest portion of the population who are on the road, and so their accident levels are actually very low.

If you look at the bottom part of the table, which is how many people in 100,000 have fatal accidents, you can see that the age groups 15-20 and 21-24 together are responsible for almost as many accidents as all other age groups combined.

So this means that insurance companies will give you the beady eye when you say you’re a young driver, and add on an extra amount to your premium to compensate them for the higher risk of insuring someone who, for all they know, is about to try and drive their car while hanging out the window.

How to Pay Less Insurance as a Teen Driver

Despite the odds being quite literally stacked against you, there are still quite a few tricks you can play to reduce the amount of money you pay in insurance monthly that are within the law.

1)         Pay your insurance in one lump sum

Some states require this, and it is simply the way it works.   In most cases, however, you have the option to pay monthly, quarterly, bi-annually or yearly (or some combination of those). Discounts are usually offered if you pay yearly, so this can reduce your premiums to the amounts that over-25s would pay monthly.

See if you can get a loan from your parents to pay for your insurance yearly, and then simply pay them for it monthly.   Even if they charge you interest, it will still work out cheaper than paying your insurance monthly.

2)         Take an advanced driving course

The Pass Plus test, as it is called in some states, is a test taken after your driver’s license that indicates that you have been trained to react to dangerous situations such as driving on a slippery surface or reacting to moving hazards.   Many insurance companies will reduce your premiums if you have taken this course, especially if you are a novice driver.

3)         Get insured by your parents

Until you are a certain age (which differs from state to state) you can usually be insured as an additional driver for your car, on one of your parent’s policies. This usually works out to be a lot cheaper than if you were to take out your own insurance, especially if your parents have a good relationship with their insurance company. You simply pay your parents for your portion of the insurance.

The down side to this is that you do not develop a history of being insured, which counts towards insurance quotes you get in the future.   In the long run it can mean you will be paying more for insurance for longer, but it can be a good way to make your vehicle insurance more affordable.

4)         Get a cheaper car

If you’ve just left college and got yourself a nice new job, you might want to spend some of that paycheck on getting a nice new car to go with it. However, you should factor in the cost of insurance into the price you will be paying every month for your car.   Some factors that affect this are:

  • A ‘Sports Package’ or body kit will increase your premiums
  • Having a powerful car (usually over a certain engine size or power-to-weight ratio) will cause your insurance to go up
  • A ‘classic’ car such as a vintage Mustang or Dodge Challenger will be extremely expensive to insure
  • An older car with few modern safety features will also be expensive.   Some of the cheapest cars to insure are $85,000 SUVs, because they come packed with damage limitation and safety features that older cars don’t have
  • Some makes of car are typical targets for car thieves, and so attract higher premiums – check with a dealer, as they usually know which cars tend to be stolen in your area