How can I get the lowest possible car insurance for young drivers?
As kids approach driving age, mom and dad have a lot to process. First of all, let’s be honest- it’s just scary. Maybe by the time you get to the 2nd or 3rd child, the anxiety is a little less, but I’m not sure most parents are ever completely comfortable with the idea that their child (and yes…they are still children!) now has the ability to control several tons of metal moving at a high rate of speed in close proximity to many other large, moving objects.
According to the Insurance Information Institute, drivers age 15-20 account for about 5.3% of the driving population, but when measured per mile driven, they are 4 times more likely to cause an accident than any other age group, and they account for 8% of the accidents involving fatalities. As adults with a little more life behind us- we know that driving a car is inherently risky, especially when you are just learning the ropes. My intent isn’t to add to your anxiety, so I’ll spare you the distracted driving (texting) and DWI statistics for teens, but I think you get the point.
Young drivers are expensive- and with good reason. On the whole, they are very costly to the system as drivers, but there are a couple ways to mitigate the cost and understand how the auto insurance surcharges work. While every state is a little different, most states follow similar pricing models.
One obvious thing to point out is that safety features (airbags, anti-lock brakes, etc) do positively affect premiums, so that’s a good place to start. Those ‘peace of mind’ features are also good for your car insurance rates. Any vehicle that is marketed as supercharged or is considered by the industry to be a “hot” car is going to drive premium in the wrong direction. Sports cars come to mind, but midsize cars with supercharged engines or luxury cars with some high end options can also trigger this surcharge and add to the cost.
There’s also the issue of comprehensive and collision coverage (commonly referred to as “full coverage”). If the car is new enough to have modern safety features, but not so expensive that you can’t afford to have liability only- then putting your younger driver in a car with liability only will significantly reduce the premium, maybe by as much as $1k/year or more. If the car does need to have full coverage- then the more expensive the car…the more expensive the insurance. All of these things are true of all insurance policies…but every price difference is multiplied when it involves an inexperienced driver.
One more tip that may not be practical for every situation- but will definitely reduce the cost, is to have more drivers than cars. In other words, if Johnny has a license- but not his own car, your rates will not go up nearly as much. It isn’t enough to tell your agent or insurance company that the car isn’t “his”. If there are 3 drivers, and there are 3 or more cars, the insurance company system assumes that your teenager is the primary driver of at least one of them, regardless of how vehemently you try to convince them otherwise. The only way to reduce the young driver usage to ‘part time’ or ‘secondary’ is to have fewer vehicles than drivers.
How long will I feel the impact of the young driver surcharge on my auto rates?
The biggest impact will be for the first 3 years. A 15yr old with a permit doesn’t get added to the policy because they don’t have an actual driver’s license and can’t drive unsupervised. Once they are eligible for their license, they must be listed on an insurance policy in order to get the license. That’s when the clock starts. The surcharge will be the highest for that 1st year. In the 2nd year, the surcharge will drop somewhere around 20-30%. In the 3rd year it drops again, maybe by as much as 40-50%…and then it goes away after year 3. The premium for a 20 year old is still higher than a 40yr old driver on the same policy…but it’s nothing compared to the 3yr surcharge.
As always, your independent agent is best suited to help find the right fit for your family- especially during this stage of life, and if you don’t have an independent agent that you trust, we’d love to help you. For those of you with multiple children less than 3 yrs apart approaching driving age at the same time…our expertise is limited to insurance, but maybe we can refer you to a pastor, priest, therapist…or all of the above. Whatever works!