Why Is Car Insurance So Expensive For Young Drivers?

Teenage Car Insurance

If you’re the parent of a teenage driver, you know that it costs a ton of money to add your teenager to your car insurance policy. In fact on average, it costs $215 a month just to add your teenager to your car insurance policy. But don’t worry, that’s the purpose of this video. I’m going to give you some tips as to what you can do to save money when you add your teenager.

And also I am going to give you the best companies for insuring teenage drivers.

Why Are Teenagers So Expensive To Insure?

Let’s first talk about why it costs so much to insure teenage drivers, a lot of people hear that average of $215 and they immediately get so upset at the insurance company and say “that’s a rip off! Why should I pay $215 a month just to insure my teenage driver? “

Well if you remember from prior videos will link it up here. Insurance companies don’t just charge premiums willy nilly, they don’t just go out and say, “hey, we want to rip these people off and make as much money as we can. So today we’re gonna charge this much and then tomorrow we’ll charge this much. “

That’s not how it works. The insurance companies look at the data and based off of what the data shows they charge the correct premium. Can you imagine what the data shows on teenage drivers? The data shows, it’s not a matter of if they get in an accident, but it’s a matter of when your teenage driver is going to get into an accident.

Teenage drivers cost insurance companies lots of money. Therefore insurance companies have to charge you lots of money in your monthly premium.

How To Save Money On Teenage Drivers Insurance

Let’s jump into the tips and things that you can do to make sure that you’re getting the best possible deal when insuring your teenage driver.

Good Student Discount

Tip #1 for saving money on your car insurance with your teenage driver is to make sure that your teenage driver is a good student.

Almost every single insurance company is going to give you a sizable discount if you can simply prove through a progress report or report card that your student has an average GPA of 3. 0 or better.

Driver Safety Course

Tip #2 to save money with your teenage driver is to have your teenage driver take a safety defensive driver course. Now, not as many insurance companies offer discounts anymore for having taken the safety course. If they do it’s usually not a huge discount.

However , it’s still discount and we’ll all take discounts where we can get them.

Also, it’s very good to have all teenage drivers take that course. Almost all the courses really impress upon their minds the importance of driving safe. They show examples of what happens when you don’t drive safe and it really sets the expectation and the foundation for your teenage driver to be a safe driver for the rest of their lives. If they’re safe drivers they have less accidents, they get less tickets and that of course is going to keep your premiums low, which is what we want.

Older Car, Liability Only

Tip #3 is to purchase a older vehicle where you can only add liability instead of having to add comprehensive and collision. Now a lot of people make the mistake of wanting to get their teenage driver a really nice, expensive vehicle.

Imagine their surprise when they go out and buy their 16 year old, a very nice vehicle and they call the insurance company to insure that new vehicle and suddenly it’s costing them an extra $300 a month just to insure that driver and that vehicle. If you have the extra money and you want to splurge and get your teenage driver an awesome car, great! But if you’re trying to find the most affordable insurance, get them an older vehicle, an older vehicle that they’re gonna learn with. If they get a few dents or bumps in it, it’s okay and it’s gonna save you money on your car insurance.

Don’t Get Your Teenager Their Own Insurance Policy

Tip #4 is to make sure that your teenage driver gets added on to your policy instead of having them get their own policy. Having them get their own policy is problematic in a number of different ways which we won’t go into today.

We’ll just talk about why it’s problematic when it comes to saving money. If you go and get them their own policy, it could be as much as double the premium as if you just added them on to the parents policy.

Insurance companies have an insurance score or insurance history, similar to credit history. A young teenage driver that’s never been insured obviously does not have an insurance history.

Therefore they’re going to be charged more versus you as the parent, you have that insurance history, you have the lower rates, it’s much more effective and cheaper to add them onto your own policy instead of getting them their own policy.

Insurance Company Telematics

The last tip for saving money when it comes to adding your teenage driver is to utilize the insurance companies telematics program.

What is this? Most every insurance company has a program now where you can either plug something into your vehicle or download an app on your phone and when you do that, the insurance company is going to track your teenage drivers driving habits. You as a parent have access to that so you can see how your teenager is driving.

Telematics monitor things like time of day they’re driving, if they’re making hard stops, breaking fast, if they’re accelerating fast, etc. Each company may monitor something different as well. So it’s very effective for you as a parent to be able to monitor these things on a daily basis and then use that information to work with your child to help them improve their driving skills.

If they can improve their driving skills quickly and perform well on these things that are being measured, the insurance company is going to give them a discount. Telematics is something that’s available to everybody. It’s not just for teenage drivers, you as parents can do it as well.

Best Insurance Companies for Teenage Drivers

Let’s talk about which companies have the best rates when it comes to adding your teenage driver. This comes from national studies, a lot of these studies only take into consideration the larger, well known companies and they don’t take into account the smaller regional insurance companies. A lot of times those smaller companies that are just as good, just as financially secure can offer really really good rates.

Progressive

The first company is Progressive. Progressive historically has really good rates for teenage drivers. Progressive is one of the companies that we work with and we put a lot of young drivers with Progressive and overall, they are a pretty solid company.

State Farm

The second company is State Farm. This one was kind of surprising to me but the data shows State Farm has decent rates for teenage drivers. They’re not a company that we recommend. They’re not a company that we work with.

USAA

The third company is USAA. You have to be a military family to be able to sign up with USAA. This is another company that we don’t work with. However they tend to have good rates for teenage drivers.

So if you qualify to sign up with us a it may be worth it to look at a quote.

Travelers Insurance

The fourth company that has good rates for your teenage driver is Travelers insurance. We do a lot of work with Travelers insurance as well. They are a very good company and they tend to have really good rates for teenage drivers.

Geico

The last company is Geico, everybody knows Geico, everybody knows the lizard. They also have really competitive rates for teenage drivers. They’re not necessarily a company we recommend because they don’t work with agents. They historically aren’t a company that tries to educate you and make sure you get the best coverage.

But if you’re looking for the very cheapest way to insure your teenage driver you may, you may want to take a look at Geico insurance.

So number one, protect yourself with the best coverage. Then number two, take everything we said in this post and go out and make sure that you find the best price for your teenage driver.

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