Insurance Costs For New Drivers: How High Do They Go?

Car insurance is required to drive legally in almost every state. New drivers, including teenagers and young adults, tend to pay higher insurance premiums because they are considered high-risk due to their lack of driving experience. The exact cost of a policy depends on several factors, including age, location, driving record, vehicle type, and coverage limits. While insurance rates for new drivers can be high, there are ways to lower premiums, such as taking a defensive driving course, maintaining a good driving record, and shopping around for the best rates.

Teen drivers are considered high risk

New drivers often face higher insurance costs than experienced drivers, and this is especially true for teenagers. Teen drivers are considered high-risk by insurance companies due to their higher likelihood of being involved in accidents and their inexperience behind the wheel.

Drivers aged 16 to 19 have the highest accident rates of any age group in the United States. This is due to a combination of factors, including immaturity, lack of skills, and inexperience. Teenagers tend to speed, make mistakes, and get distracted more easily, especially when their friends are in the car. They are also more likely to engage in risky behaviours such as drinking and driving, and not wearing a seatbelt. As a result, the fatal crash rate for teen drivers is almost three times higher than that of drivers aged 20 and older per mile driven.

The presence of other teen passengers in the vehicle also increases the crash risk for unsupervised teen drivers. The risk is particularly high during the first few months of obtaining a license. Male teen drivers are at an even higher risk, with a fatal crash rate three times that of female drivers of the same age group.

In addition to the increased risk of accidents, insurance companies also consider the lack of a driving record when determining rates for teen drivers. Teenagers are likely to pay more for insurance than someone who obtains their driver's license later in life. The exact cost will depend on various factors, including age, location, driving record, and coverage limits.

While teen drivers are considered high-risk, there are ways to mitigate this risk and potentially lower insurance costs. For example, choosing a safer and more affordable car can help reduce the cost of insurance. Additionally, taking a defensive driving course or maintaining good grades as a full-time student can qualify teen drivers for discounts on their insurance premiums.

Lack of experience leads to higher prices

The high cost of insurance for new drivers is largely due to their lack of experience, which is associated with a higher risk of accidents. Insurance companies calculate premiums based on the likelihood of having to pay out, and new drivers are statistically more likely to be involved in accidents due to their inexperience. This results in higher premiums to compensate for the increased risk.

The lack of a proven driving record means insurance providers consider new drivers high-risk, regardless of their age. While teenagers and young adults tend to face higher premiums, a new driver could also be an adult who obtained their license later in life, an immigrant, or someone with a significant gap in their driving history. In the US, insurance companies view immigrants as high-risk until they establish a driving record in the country, even if they have years of experience driving elsewhere.

Data from the Association of British Insurers (ABI) shows that the average premium for drivers aged 18-20 is £972. In the US, the average cost of full coverage insurance for new drivers is $5,827 annually or $486 monthly. These high costs can be a significant financial burden, especially for young drivers who may not have a high income or substantial savings.

The type of vehicle also influences insurance costs. New drivers who choose powerful cars with fast acceleration will pay more for insurance than those who opt for more modest vehicles with smaller engines. Additionally, certain safety features, such as anti-theft devices, anti-lock brakes, and airbags, can qualify drivers for safety discounts on their insurance.

While experience is a primary factor in determining insurance costs, there are other considerations as well. Age, gender, socio-economic background, and driving history can all impact premiums. Insurance companies also take into account the driver's location, the level of coverage, and the chosen payment plan (monthly vs. annual).

Discounts for good students

The cost of insurance for a new driver is higher than the average rate. This is because insurance companies consider new drivers to be more likely to get into accidents due to their lack of driving experience. Teenagers and young adults tend to face higher premiums compared to older new drivers.

Insurance companies offer good student discounts to young and teen drivers who are full-time students and earn good grades in school. This is because insurance companies assume that young drivers who are responsible when it comes to their studies are more likely to be responsible drivers. As a result, they are less likely than teens with poor grades to file claims on their car insurance, so they deserve to pay lower insurance premiums.

To be eligible for a good student discount, drivers must meet certain criteria, including age, student status, and academic performance. Most insurance companies require a minimum B average or a 3.0-grade point average or higher. Some companies may also require proof of academic achievement, such as transcripts or test scores.

The amount of the discount varies depending on the insurance company. It is recommended to shop around and compare quotes from different insurers to find the best rates and discounts.

In addition to good student discounts, there are other ways for young drivers to keep their premiums low. This includes safe driving, completing a defensive driving course, driving a vehicle with safety equipment, and being added to a parent's policy.

Cheaper to stay on a parent's policy

Car insurance for new drivers tends to be expensive because they are considered high-risk drivers. Insurance companies assume that new drivers are more likely to get into accidents due to their lack of driving experience. Teenagers and young adults tend to face higher premiums compared to older new drivers.

If you are a new driver, it is usually cheaper to stay on your parent's policy than to get your own. The cost of adding a teenager to a parent's car insurance policy can increase the rate from 65% to 135%. However, this is still cheaper than a teen having their own policy, which can cost $468 per month. Parents can also take advantage of discounts and comparison shopping to save money on their auto policies.

Insurance companies consider drivers aged 16 to 19 to have the highest rate of accidents in the United States. As a result, auto insurers charge more to cover them. The average cost to add a 16-year-old, newly licensed driver to an adult's existing auto insurance policy is about $250 per month. This cost can vary depending on the insurance company and the policyholder.

There are several ways to lower the cost of car insurance for new drivers. One way is to choose a car that is cheaper to insure. For example, used, modestly priced economy cars are less expensive to insure than convertibles, sports cars, and newer vehicles. Another way to save money is to increase the deductible on comprehensive and collision damage coverage. However, make sure that you are comfortable paying the deductible in case of an accident. Comparison shopping and switching to user-based insurance can also help lower your premium.

Car type affects insurance costs

The type of car you drive can significantly impact the cost of your insurance. The make and model of your car, its age, safety features, and cost of repairs are all factors that influence your insurance premium.

Firstly, the make and model of your car can affect your insurance rate. Different car models have varying safety ratings and repair costs, which influence insurance costs. For example, cars with low safety ratings and high repair costs tend to be more expensive to insure because they result in higher insurance claims. Additionally, certain car brands are associated with specific types of safety systems. For instance, a Ferrari's airbag system will differ from that of a Jeep, impacting their respective insurance costs.

Secondly, the age of your car matters. Generally, newer cars are more expensive to insure than older ones. This is because newer models tend to be more costly to replace or repair if damaged. However, older collectible automobiles may be an exception, with higher insurance costs due to their rarity and the potential need for specialized repairs or parts.

Thirdly, the size and weight of your vehicle can influence your insurance premium. Larger and heavier vehicles, such as SUVs or trucks, often have higher insurance rates because they pose a greater risk to other road users and have a higher potential for damage in an accident.

Lastly, the cost of repairs for your specific car model can impact your insurance rate, especially if you have comprehensive or collision coverage. Foreign cars and luxury vehicles often have more expensive parts and repairs, resulting in higher insurance costs.

It's important to note that insurance companies consider various factors when determining your premium, including your driving history, age, location, and credit score. While the type of car you drive is a significant factor, it's just one of many elements that influence the overall cost of your insurance.

Frequently asked questions