Why is it so expensive?
Outside of the typical nervousness of having your teenage driver on the road by themselves that any parent will go through. The second most nerve-racking thing is how much will my auto insurance increase by adding them to my policy.
When your 16 or 17-year-old gets their driver’s license they must be added to your auto insurance policy as a listed driver in your household.
Failure to discuss a child driving could cause issues during a claim or potentially afterward.
But why is it so expensive?
Insurance Actuaries
All insurance rates are calculated and determined based on the insurance company’s actuaries. Actuaries are the people who analyze the claim data to determine who is a higher risk consumer.
Higher risk consumers will pay more for their insurance rates as they have a higher probability of costing the insurance company money.
It is important to know and realize that insurance companies are a for-profit business. They use the data they have available to them to try and figure out the best way to make money.
It is unfortunate but teenage drivers have a much higher chance of getting into an accident based on history and data.
Teenage drivers aren’t the only ones that are usually rated higher, elderly drivers are as well. As drivers get older, their reflexes tend to slow down resulting in more auto claims.
What you can do to lower the cost
The best way to lower your auto insurance rates with teenage drivers is to make sure you are using an independent insurance agent to shop your rates for you. Some insurance carriers will rate your insurance differently if a teenage driver is present in the house. This can cause your current rates to increase more than they should.
Any time you add a newly licensed operator to your policy, your agent should be shopping your insurance through all the options for you.
Other ways you can lower your costs, is to make sure your teen is a good student, has taken driver education, and/or a defensive driving course. Each one of these can be significant discounts for you and your family.
If you do not currently use an independent insurance agent who can provide options for you then click the button below to talk to one of our licensed insurance professionals who can help guide you through some options.
