Insurance costs can soar when a teenage driver is added

The cost for car insurance increases sharply when a teenage driver is added to the policy. Though the amounts vary from company to company and state to state, on average parents should expect to pay yearly premiums that are about 84 percent higher when they add a teenager. This translates to about $2,000 more a year.

There is a reason for the substantial hike in the cost of insurance. More teenagers are killed in car accidents than in the second and third leading causes of death for teenagers combined. Teenagers are inexperienced drivers. They also drive distracted and often have many other teenagers in the car with them. This combination can lead to traffic accidents that result in injuries and even death.

While teenage deaths related to car accidents have decreased about 64 percent between 1975 and 2010, and have actually decreased significantly since 2002, the risk that teenage drivers pose remains, so insurance premiums continue to be expensive. In most states, the insurance companies look at other factors besides age to decide premium rates. These include gender, marital status, driving record and credit record, as well as the make and model of the car driven. But the rates still vary widely from company to company. In Hawaii, insurance companies are not allowed to look at gender, age or driving experience when adding a driver to an insurance policy, so the increase is only 18 percent when someone is added. There are states, however, where the increase for a teenage driver can be higher than 100 percent.

As teenagers get older, though, and become more experienced, cautious drivers, insurance rates should decrease. There are several things teenagers can do to keep the rates lower. They can keep a clean driving record, earn good grades, take defensive driving courses and drive cars that are older, less luxurious and safer. Drivers should shop around for their insurance yearly, particularly when they add a teenage driver since the difference can be so significant. Someone who has been involved in an accident with a teen driver may want to seek the advice of an accident attorney who may be able to seek compensation for any damage or injuries sustained.

Source: Market Watch, “Have a teen driver? Open your wallet“, Jennifer Waters, July 11, 2013

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