Most parents know that when you add a new, less experienced driver to the insurance plan, the rates go up. Since a car crash can cost so much money for both parties, most states require car insurance in some form, even if it is the lowest coverage option. Having car insurance protects you and your teen driver in case of a crash.
The Reason for Increased Costs
Insurance companies work off a system of probabilities for who will cost them more money in payouts and who will not. A new driver of any age does not have a lot of experience and is viewed as a bigger risk for insurance companies. Since there is a bigger risk, the cost to insure a new driver is more than an experienced driver.
According to the CDC, the group that has the highest risk of motor vehicle crashes is teenagers aged 16 to 19 years old. They are nearly three times more likely to get into a fatal car crash than drivers aged 20 or older. Male drivers are twice as likely to crash than females and all teens increase their chances of risk with each teen passenger added to the car. For these reasons, insurance on new teen drivers will be the most expensive.
Practical Tips for Insurance
If you have a new teen driver, there are several tips that experienced parents and insurance brokers recommend.
- Shop around. Just because you have always had the same car insurance company does not mean they are the best option for you now. See if there are less expensive rates with a different company.
- Coverage options. Read up on what types of insurance your state requires. Providing minimal coverage for your new teen driver may be a more affordable option. Be warned though that less coverage can mean more costs for you in case of a crash because of gap coverage.
- Find discounts. Some insurance companies will offer discounts for good grades, completing defensive driver courses, or using a driver monitoring device, like an app. There are also multipolicy discounts for adding homeowner’s insurance, military discounts, and family policies.
- Use less conventional insurance. Some insurance companies will offer a pay-per-mile option. While many new teen drivers are excited and look for opportunities to drive, there are also many who do not like to drive a lot or just don’t have the opportunity.
- Consider the car. Expensive cars cost more money to insure because they are stolen more often and have higher repair costs. Research cars that are less expensive to insure for your new driver to use.
The best way to decrease insurance costs is by driving well over time. The more experience over time that your new driver gets where there are no car crashes, the less they will cost to cover. Be sure to set an example of good driving and remind your teen about the importance of following all driving laws and the dangers of distracted driving.
Sources:
https://www.nerdwallet.com/article/insurance/car-insurance-new-drivers
https://www.forbes.com/advisor/car-insurance/car-insurance-tips-2021/