One odd quirk of the insurance industry is that younger drivers tend to pay more for their car insurance than their older counterparts. Auto insurance companies perceive the likelihood of an accident to occur based on how young a driver is. In their eyes, the younger the driver, the greater the chance of an accident; hence, car accident lawsuit risks also increase. Insurance companies work with the logic that young drivers have fewer years of driving experience. As such, they lack sufficient experience. From the perspective of insurance companies, younger drivers are riskier to insure compared to older and more experienced drivers.

How Does this Impact Insurance Rates?

According to Forbes Magazine, adding a teen driver to married couple’s insurance plan increases their monthly rate by as much as 79 percent. Teen drivers cause or are involved in more accidents than their elders, (even elders is a mere 10 years older) as noted by the Insurance Information Institute (III). 

The decrease begins to taper off once a driver reaches their mid-20s, as studies show they are less likely to be involved in fatal traffic accidents. Insurance rates don’t begin to increase again until a driver reaches senior status. III found that as of 2013, 5,671 people ages 65 and up were killed in auto accidents with another 222,000 sustaining traffic-related injuries. Accidents set the rate, and it just so happens that most of them include teenagers or grandparents.

Is it Just Age or Does Experience Matter?

One argument that younger drivers tend to make when it comes to negotiating for a lower policy is that they have extensive experience driving. Whether it’s from being a pizza delivery driver or taking numerous driver safety courses, teens state that these aspects should factor into a lower insurance premium.

What teens fail to realize while browsing for car insurance rates by age is that most insurance companies use a method of calculation that specifically factors the length of time they’ve been driving. Yes, having extensive experience is a great thing to have; however insurance rates are calculated based on how long someone’s been driving, not the cumulative hours of experience you have. One year is one year, even if you have driven 60 more hours than a friend of yours, you’ll likely be viewed equally to the insurance company.

The older a person is, the more “driving history” they can develop which allows insurance companies to gauge their overall risk level. While being an experienced student driver is a great thing to be, you simply do not have the needed driving history for the company to cut you a more financially stable deal. Stating that you were a pizza delivery driver or took extra classes is not the sort of statistical data that would make sense to an evaluator.

Additional Ways to Save Money

Aside from being placed on your parent’s auto insurance policy, there are other methods that can save you money on monthly insurance payments (here is a useful insurance review that can help you get started with finding some alternatives out).

Get a smaller car: Small cars tend to have lower insurance costs when compared to their SUVs. Getting slightly older and smaller cars can go a long way towards lowering the cost of your payments.

Inform your Insurance Agent How You Use Your Car: Insurance agents factor in the “use” of a car in their evaluation reports. Stating that you are using your car primarily to go back and forth to school will get you a lower insurance payment.

Yes, getting car insurance can be somewhat expensive while you’re young. However, if you follow the advice given in this article, you might be able to save yourself a few hundred dollars a month in insurance payments.