Want to know why is car insurance so expensive for teenagers? Read to find out.
Ah, sweet sixteen: ready to get a part-time job, ready to date, and ready-ready-ready to drive. Boy or girl, the hand is out for the key, the foot is twitching to hit the gas, and freedom awaits!
Except it is not so very free. Indeed, insurance for teenagers can be agonizingly steep even if the teen has taken appropriate driving and driving safety courses and is driving a statistically low-risk vehicle. You still look up the price of insurance and scream, sweat, and keep the keys in your pocket…and you kid looks at you with big eyes and asks, “Why?”
The reason teens cost more to insure is because, as a group, they then put more demands on their insurance than other demographic groups. The way insurance works is by spreading risk over group of similar individuals, charging a price that allows the company to break even on pay-out and operating costs, with a bit over as profit for the company and its stock holders.
Each group is charged according to figures evaluating how likely any one member of the group is to need pay -out from the insurance, how often, and how much. This area of math and science falls under the heading of “risk management.”
That is where mathematical precision puts the bite on insurance buyers. Statistically teen drivers have more accidents than other drivers. Not just a bit more: a lot more. Sixteen year old drivers are three times as likely to die while driving than any other demographic, and the improvement over time is slow.
Teens have more wrecks, teens cause more wrecks, and teens require far more pay-outs than other drivers. According to AAA accidents involving 15-17 year-old drivers cost $34 billion. Yes, billion! It should not surprise you that the insurance companies demand enough extra money to pay for that big, bad $34 billion.
Your kid then says, “But I am a good driver! I took my driver’s ed lessons, you made me take extra collision training, I am careful…”
The good news is that, first, if you child has taken driver’s ed lessons, and special ed for emergencies, the statistics improve. They improve further if your teen puts off driving a year or so. They are likely to be safer, and many companies reflect such things when calculating the cost of insurance. It is not impossible to find a responsible company that will grant a lower rate to a properly educated young driver with extra training and a bit of extra age.
The best way to find out who will cover your kid for the best available price is to do your homework. Evaluate plans, contact agents, and most of all get car insurance quotes. Quotes can be gotten in a number of ways, but one of the quickest in the beginning is to go online and search for quotes on driver’s insurance for teens.
When you have done your homework, evaluated the plans, then take a good, careful look at your homework and at your child. Do not be swayed by the big, pleading eyes…think instead how precious those eyes are to you, and how precious your child is to you.
If you think your child is realistically likely to drive well, cautiously, and responsibly, then it is time to pay up on the insurance, make sure you child will be driving a safe vehicle…and then, hand over the keys.
Use the quote form below to find the cheapest auto insurance rates for your teen:
1 Comment
Dear Sir/Madam: Dec 13th. I teach high school automotives here in Calgary and part of our course is Auto Service and Care. We talk about vehicle insurance and how much it cost to operate a motor vehicle. I have noticed the trend over the last 10 years that less and less high school students are driving vehicles. This relates to our studies because many of my students have never worked on a vehicle before they reach grade ten. I would like to share their thoughts with you on Teenage Insurance. My class group said because they can not afford insurance, less and less youth are driving. They have observed that many adults are involved in crashes here in Calgary. Last week there was over 270 auto crashes in one day and our students assumed none were teenagers. The age group who are speeding on Deerfoot and Crowchild trail are not teenagers but people in the upper 40’s and 50’s trying to get to work on time. The age group who are the tail gaters are not the teenagers, but the aggressive young executives who are in a big hurry to get to their office on time.
Our automotive class students also realized that there are 4 adults to one teen. So the insurance company makes lots of money off the adults and if the insurance company charged the adults what they charge the teens, the adults would not be driving and the insurance companies would go broke.
So all the big talk about teens driving fast and crashing alot is not all true. It’s not true because the teens are not driving. It is the adults that crash, speed and drive like there is no tomorrow.
Maybe look into the high school population and see how many teens drive and then compare that to the people involved in crashes and speeding tickets.You may have your eyes opened. But for now, as long as the adults pay a low premium, the insurance can make all the excuses they want about the teen drivers. Just remember, the baby boomers are getting older and they will be involved in more crashes and then who will the insurance companies blame for the high cost of pay outs and insurance claims?
Maybe it is time to charge the adults who crash to many times and then reduce the fees for the teen and let them prove they are good drivers.
Thank you
Howard Rymes
Calgary, Alberta