Car insurance companies like to protect themselves just as much as they like to protect their customers. They do this in many ones, but one of the biggest ways they do this is by carefully calculating the risk for each individual that applies for auto insurance protection. This includes young drivers. The DMV outlines some of these risk categories with the following list:
- The credit rating of the applicant. The lower the rating, the higher you car insurance premiums will be because studies have shown drivers who have a low credit rating tend to be high risk drivers.
- Your occupation. The more your job requires you to drive, the more you are on the road and thus the higher risk you are for getting into an accident.
- Where you live. Living in a city where there is more traffic puts drivers at a higher risk than those who live in a rural area.
- Your past driving record. The less dings you have in terms of speeding tickets, traffic violations and accidents the less your premiums will be.
- Your payment history. If you are a responsible person in paying your bills, then you will be seen as a responsible driver in the eyes of the car insurance company.
- The type of car you drive. Vehicles that are filled with safety features often get reductions in premiums.
- Male drivers tend to pay more in car insurance premiums than women, because studies show that they are higher risk drivers.
All of the above things are great, but the issue with young drivers is that they do not have a credit history, a strong background of paying bills on time and their past driving record is inexistent. This leaves car insurance companies a bit lost in determining the risk of the young driver. Thankfully they do not just slap young drivers with an absurdly high car insurance premium while they figure out whether or not the driver is a high-risk driver or not. The statistics show that the younger you are the higher your rates will be, because until the age of 25, statistics prove that most drivers fit the high-risk category.
There are many ways in which you can save money on car insurance for your young driver. Kiplinger, a personal finance advice website, outlines several examples.
The first way really has nothing to do with your young driver directly. Raising your comprehensive and collision deductibles is always a good way to lower your car insurance premiums. Raising your deductible to $1,000 or more prevents you from filling claims for small dings and dents on your vehicle. Though this can save you money monthly, it also will cause higher out of pocket costs in the event of a car accident. This can be a risky choice with a new driver, who is at an increased risk for an accident in their first year of driving.
Similar to raising your deductible, families can choose to drop collision and comprehensive coverage entirely from their auto insurance coverage. If you are handing down your 10-year old vehicle that has more than 200,000 miles on it to your son or daughter to drive to and from school and soccer practice than you probably will be able to drop collision coverage from the vehicle. You may be paying more in premiums than you could ever get back from the insurance company if the car was totaled.
If your lucky child is going to get a new car for a graduation gift so that they are able to make the 200-mile drive home from college on occasion there is some things to consider while you shop. Having your young driver drive a nice save Toyota Camry or a nice safe SUV filled with safety features is something that you car insurance company will love. The safer the vehicle the safer your child will be and the lower their insurance rates will be.
You know that report card that is on your fridge? You want your kids to do well in school so that they are able to get into a good college and qualify for some good academic scholarships. Well that report card can also help you save a few dollars on insuring your child to drive. Car insurance companies do not have a driving record to look at when assessing whether or not to insurer a young driver, making it difficult to calculate their risk. Because of this they lean heavily on statistics in their determination and the statistics show that students who do well in school tend to be responsible drivers. This student discount is not limited to high school students. Often college students can take advantage of a student discount by taking at least 12 credits and maintaining a 3.0 grade point average.
Car insurance companies also love when young drivers do everything in their power to be good drivers. Some insurance companies offer discounts for drivers who participate in safety programs. Ask your independent auto insurance agent about defensive driving courses and other special classes that may be available for your young driver.
If your son or daughter spends a majority of their time away at a college that is more than 100 miles away it is likely that they will not be driving your vehicles very frequently, making it a waste for them to be listed in your car insurance policy all year. Car insurance companies offer discount for temporarily removing a young driver from your car insurance policy. Different insurance companies will have different rules regarding temporary insurance for your young drivers. Students who reach the ages of 23 to 25 often do not qualify for this discount.
CNBC posted an article in July 2013, that mentioned that adding a teenage driver to the family car insurance policy can double annual premiums because of the high risk for younger drivers being on the road.
The report mentioned that drivers under the age of 20 are three times more likely to be involved in a fatal car accident according to the Insurance Institute for Highway Safety. Unfortunately everyone has to suffer because of these statistics, at least to some extent. But having children get their drivers license is not all bad. You want them to grow up and gain the responsibility, you want them to be able to help with your busy life schedule, driving themselves and their siblings to and from athletic practices, school, band practice, get-togethers with friends and so on. It takes away the need for you to drive your kid everywhere, allowing you to take that extra time to yourself and allowing them to not feel like the immature kid that still has to have his or her mom drop them off everywhere they go. You want them to drive, and you want them to be safe. There is the list of things that you can do to lower your insurance premium costs with the new driver, but then there is the shopping process. You are going to want to shop for an auto insurance policy that offers the best discounts for your young driver, limiting the financial affect the additional driver will bring.
CNBC lists all the major insurance companies including State Farm, Allstate, GEICO, Progressive, Farmers, USSA, Liberty Mutual, Nationwide, Travelers and American Family; comparing the various discounts that each policy offers for young drivers. Most of which offer student discount and distant student discounts. Polices may vary state to state so to take out the headache that comes with the search, it is best to contact a local independent auto insurance agent who will know your specific area’s restrictions and have multiple policy options to consider.
If you are a young driver looking to purchase your own car and your own auto insurance policy the same rules will apply. You will want to shop for multiple quotes. You will want to check out auto insurance quotes before buying a vehicle. That beat up old sports car that your neighbor has may seem like a pretty awesome new car to drive to school every day, but the flashy fast cars attract higher premium costs than the safer more reliable cars. It is your first car purchase; it is probably a good idea to get a car that has good safety standards such as automatic seat belts, anti-locking brakes and other common aspects.
You will quickly learn about deductibles and comprehensive and collision coverage when you start shopping for auto insurance. If you want low premiums then keep high deductibles and turn down and comprehensive or collision coverage. Just know that doing this means that you will have to pay for any small damages without the help of your insurance policy. So like your nagging parents may tell you: Drive safe!
Speaking of your parents, it is great that you want to be independent and purchase your own insurance policy, but if you are able to add your policy to theirs you may be able to save yourself some money. If your parents have a clean drivers record, your insurance company may see that as a reason to give an extra discount that will transfer to you too.
I know your weekends are valuable to you, but if you can spend a Saturday morning sitting through a driver’s safety course you may save yourself money on your car insurance. Trust us, it is worth watching some outdated safety video for a few hours if it means you can have an extra few dollars in your pocket to take that cute girl in your Spanish class on a date.
Lastly, just drive safe. The longer you drive with a clean record the better off you will be. Insurance companies do not like when you get in several accidents or if you pile up speeding and traffic violation tickets. You area already labeled as a high-risk driver because of your young age, do not give the insurance company any further reason to drive your costs up. Prove the statistics wrong.
Whether you are a parent or a young adult looking to purchase car insurance for a young driver, there are plenty of options for you to keep your auto insurance premiums down. Insurance companies want to work with you so that they can count on you to be a reliable customer for many years to come. With the help of your independent insurance agent you will be able to find a policy that offers you good young driver discounts, allowing you to enjoy the new freedom that comes with a driver’s license.
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