Accident claims often result in increased auto insurance rates, but those increases could rise dramatically with a teenager behind the wheel. Teens have higher insurance premiums to begin with because companies usually operate on the premise that they're a greater risk than adult drivers. Auto crashes are the leading cause of death for teens, according to the Centers for Disease Control and Prevention. Teen coverage policies differ according to state laws and insurance firms.
Face the fact that as a teenager, you're an inexperienced driver. That means you stand a higher chance of making mistakes or taking risks on the road, according to insurers. Insurance companies calculate rates on factors that include your driving record, the safety of the type of car you drive and how often you use it. You might drive the car in a busy or unsafe area that increases the chances of accidents and theft. Age also figures into the insurance formula, especially for teens.
Since you don’t have a driving record as a teen and are new behind the wheel, you're more likely to cause or get involved in an accident, most insurers believe. Your insurance premiums generally don’t start to drop until age 25 unless you have an excellent driving record without any claims, which some insurers might consider. Some insurers provide discounts for every term you go without a claim or a ticket. Check with several insurance agents about credits for a good driving record when you're shopping for a policy.
Car and Education
Insurance companies often have to pay more claims for accidents involving teen drivers. However, you can take measures to lower rates when you first need insurance. Insurers usually take a quality driver’s education course into consideration. The type of car you drive could lower rates if it has a good or excellent safety record. Insurers look at studies and tests for a track record on specific car makes and models.
Parents can add the teen driver to their insurance policy or ask about getting an insurance policy in the teen’s name. Either way, insurance premiums most likely increase, more significantly than older motorists, after an accident. This might result in rate hikes for a teen’s individual policy or the parents’ policy. If you cause an accident, the company could cancel either policy. You might not face a rate hike if it wasn’t your fault, but some insurers raise rates no matter who caused the accident. You can learn more by talking with an agent and reading the policy.
- DMV.org: How Car Insurance Claims Affect Your Auto Insurance Policy
- esurance: Teen Driver Insurance Basics
- AllAboutCarAccidents.com: Teen Car Accidents — What Happens to Parents’ Car Insurance?
- CDC: Teen Drivers — Fact Sheet
- Kelley Blue Book. “Five Things You Might Not Know about Car Insurance,” Accessed Feb. 29, 2020.
- Insurance Information Institute. “What Determines the Price of an Auto Insurance Policy?” Accessed Feb. 29, 2020.
- Insurance Information Institute. “What's the difference Between Auto Policy Cancellation and Nonrenewal?” Accessed Feb. 29, 2020.
- Progressive. “Auto Insurance After a DUI,” Accessed Feb. 29, 2020.
- Progressive. “What Is an SR-22?” Accessed Feb. 29, 2020.
- Insurance Information Institute. “Do Auto Insurance Premiums Go Up After a Claim?” Accessed Feb. 29, 2020.
Jerry Shaw writes for Spice Marketing and LinkBlaze Marketing. His articles have appeared in Gannett and American Media Inc. publications. He is the author of "The Complete Guide to Trust and Estate Management" from Atlantic Publishing.