Why is Auto Insurance More Expensive for Young and New Drivers?

As a young driver, or parent of a young driver, you might be shocked by how much it cost to purchase auto insurance coverage. Unfortunately, auto insurance rates for drivers under 25 can be double or triple what older drivers pay.

There are many factors that contribute to why young drivers pay so much more for car insurance. The fact is, insurance companies base their premiums on the driver’s record and the likelihood of financial risk that the driver is to the insurance company. The less experienced the driver, the higher the risk. The higher the risk, the higher the cost of coverage.

When a new driver hits the road, they are basically guilty until proven innocent. The insurance company has no historical data to predict or measure whether the driver will be safe or reckless. Because they don’t have a driving record to prove otherwise, the insurance company assumes the worst-case scenario when calculating risk. Therefore, they raise the rates to cover all the “what-ifs” of a reckless driver. As the driver gains experience and a driving record they can be awarded lower auto insurance premiums.

It’s no surprise that new drivers tend to be more accident prone simply because they don’t have much experience behind the wheel. New drivers have a harder time reacting to driving hazards and are more likely to panic or over-correct. Becoming a skillful driver takes time and experience in various situations to practice. Because of this, insurance companies know the probability of a new driver being involved in an accident is higher than a seasoned driver. So they make sure the rates will cover for these probabilities.

Another statistically proven fact is that younger drivers are easily distracted while driving. Not only do they have their cell phones, music, and GPS systems to distract them, they can also be distracted by other passengers or trying to multitask. In our fast paced world, teens are running from home to school to football practice and trying to eat, communicate, or put on makeup as they drive. Many young drivers do not yet realize the danger they are putting themselves and others in attempting to multitask while driving. Distracted driving is a huge problem and insurance companies have the data to prove it. Yet another reason to raise premiums for young drivers.

For these reasons and more, young drivers are statistically more of a financial risk to insurance companies which is why their premiums are significantly higher than more experienced drivers. While car insurance rates for teens and new drivers might be disheartening at first, remember that if you keep a clean driving record you will be able to lower your premium over time. Insurance companies love to reward safe drivers! Not only that, but you’ll be doing the world a service by being safe on the road!

JR Carnahan offers all types of Personal Insurance, including Auto Insurance. If you are a young driver or parent of a new driver and have questions regarding purchasing an auto insurance policy or updating a current one, contact us today! We would love to assist you in finding the best insurance solution for your business!