Insurance companies consider young drivers to be high risk, so they charge higher premiums.
Here are a few reasons why:
1. Lack of experience
New drivers simply haven’t been behind the wheel long enough to develop safe driving habits and instincts. Insurance companies know inexperience leads to more accidents and claims. The good news is, premiums will decrease over time as you gain more experience.
2. More prone to reckless behavior
We’ve all been young and prone to take more risks. Insurance companies realize young drivers are statistically more likely to speed, text while driving, not wear seatbelts, and engage in other dangerous behaviors that lead to claims. Drive safely to avoid becoming another statistic.
3. They drive less expensive vehicles
Even fender benders and minor claims on an inexpensive vehicle can potentially total the car. The insurance company is more likely to have to pay for the full value of the vehicle in the event of a claim. Choose a vehicle that balances safety, affordability, and low insurance costs.
4. They have less financial responsibility
Younger drivers typically have lower incomes and less savings, so insurance companies view them as riskier to insure. They worry that if there is an accident, high claim costs may not get paid. Maintain a good credit score and consider higher coverage limits and deductibles to offset costs.
Ways to Get Discounts on Car Insurance as a Young Adult
Here are some of the discounts you should look into:
1. Student discounts
If you’re a student with good grades, you may be eligible for a student discount of up to 25% off. Most major insurers offer this discount for students under 25 who maintain a B average or higher.
2. Driver’s ed discount
Taking a driver’s education course shows insurers you’re serious about safe driving. You could get a discount of up to 10% for 3 years after completing the course.
3. Bundled policy discount
If you have renter’s or life insurance through the same company, you can often get a lower rate by bundling multiple policies together. Bundling can save you up to 20% on your total bill.
4. Low mileage discount
Do you drive less than the average person? Let your insurance company know. If you drive only 5,000 to 7,500 miles per year, you may qualify for a low mileage discount of up to 15-20%.
5. Increase your deductibles
The higher your deductibles, the lower your premiums. Raising your deductibles from $250 to $500 can lower your collision and comprehensive coverage by 15-30% each. Just make sure you can afford the higher deductibles if you have a claim.
By taking advantage of available discounts, you can save hundreds each year on car insurance as a young driver.
Choosing the Right Car and Coverage to Save Money
Choosing the right vehicle and coverage level for your needs is key to finding affordable insurance as a young driver.
1. Choose an Inexpensive, Safe Vehicle
The type of car you drive significantly impacts your premiums. Opt for a modest, safe sedan or small SUV, not a sports car. Vehicles with high safety ratings and low theft risk will cost less to insure. Do some research to find affordable, highly-rated options.
2. Consider Higher Deductibles
Raising your deductibles, the amount you pay out of pocket for a claim before coverage kicks in, can lower your premiums by up to 40%. Go for at least $500 to $1,000 for comprehensive and collision coverage. Make sure you can afford the higher deductibles if you do file a claim.
3. Drop Unnecessary Coverage
Do you really need comprehensive and collision coverage on an older vehicle? Dropping this coverage can save you hundreds per year. Uninsured motorist coverage is important, but you may be able to lower medical payments or rental reimbursement coverage. Review your options and see what’s mandatory in your state.
4. Bundle with Other Policies
If you have renters, life or other types of insurance, bundle them together with the same company for a multi-policy discount. Bundling multiple vehicles on the same policy can also lower rates. Ask about discounts for safe driver programs, students, anti-theft devices, and automatic payments as well.
5. Consider Usage-Based Insurance
New options like MetroMile and Root offer low rates based on the number of miles you actually drive. If you don’t drive much, this can really slash your costs. These companies also use telematics to track your safe driving and offer additional discounts for low-risk behavior like avoiding excessive speeding or hard braking.
Keeping these tips in mind and shopping around at different companies can help you find the best deal on car insurance, even when you’re first starting out.
Maintaining Good Driving Habits for Lower Premiums
Maintaining safe driving habits is one of the best ways for young drivers to lower their car insurance premiums. Insurance companies view good drivers as less risky, so your rates will be lower if you can prove yourself to be cautious and responsible behind the wheel.
1. Obey the speed limit
Speeding is dangerous and illegal. More importantly for your insurance, speeding tickets can increase your rates. Obey the posted speed limits to avoid penalties and keep your premiums down.
2. Avoid distractions
Put down your phone and focus on the road. Texting or making calls while driving is illegal in most places and extremely hazardous. Distracted driving can lead to accidents that raise your rates or result in fines.
3. Maintain a clean driving record
Get in the habit of safe driving to build a history of no accidents or traffic violations. A clean record is the best way to qualify for the lowest premiums. If you do get a ticket, take a defensive driving course. It can often help reduce the impact on your rates.
4. Drive an affordable, safe vehicle
The type of car you drive also affects your premiums. Sporty, high-performance vehicles are more expensive to insure. Consider an affordable sedan or crossover with a solid safety rating. Newer vehicles with advanced safety features like emergency braking can also earn you discounts.
5. Consider usage-based options
Many insurers offer usage-based or telematics programs that can save good drivers up to 30% on premiums. These monitor your driving habits through a mobile app or device in your vehicle. By proving you exhibit safe driving behavior, you can earn sizeable discounts. See if your insurance company offers a usage-based option to take advantage of the potential savings.
Following these tips and maintaining safe driving habits from an early age will help ensure the most affordable car insurance premiums for years to come. Keep your record clean and your rates low by obeying the rules of the road and avoiding risky behavior every time you get behind the wheel.
Comparing Rates From Multiple Insurers to Find the Best Deal
Here are some tips to find the most affordable policy:
1. Check Multiple Insurers
Don’t just go with the first insurance company you find. Compare quotes from at least 3 to 5 different insurers to make sure you’re getting the best deal. Some of the major insurance companies include Geico, State Farm, Progressive, and Liberty Mutual. Compare their quotes as well as some smaller regional companies.
2. Look for Discounts
See what kinds of discounts each insurer offers for young drivers. Common discounts include good student, safe driver, anti-theft device, and bundling auto with other policies like home or life insurance. The more discounts you can take advantage of, the lower your premiums will be.
3. Consider Usage-Based Insurance
Some companies like Progressive, State Farm, and Allstate offer usage-based insurance programs where they track your driving habits to determine your rate. If you practice safe driving, you can save up to 30% on your premiums. These programs typically use a mobile app or device installed in your vehicle to monitor things like speed, braking, and mileage.
4. Raise Your Deductibles
If you opt for higher deductibles, such as $500 or $1000 versus $250, your premiums will be lower. Just make sure you can afford to pay the deductible if you need to file a claim. Higher deductibles mean lower risk for the insurance company, so they charge less.
5. Ask About Discounts for Students Away at School
If you go away to college and don’t have regular access to your vehicle, you may be eligible for a discount. Some insurers offer up to 50-75% off your premiums if your vehicle is unused for the majority of the year while you’re living at school. You’ll need to provide proof of enrollment to qualify.
Comparing multiple quotes and taking advantage of available discounts and programs can help young drivers save hundreds per year on car insurance premiums. With some time and patience, you’ll find an affordable policy that provides you good coverage and peace of mind while out on the road.