Cutting Car Insurance Rates for Young Drivers

I have more than a casual interest in this subject. That’s because I have a 21-year-old son and a 19-year-old daughter. When you’re that age, car insurance rates matter more than usual. Cutting car insurance rates for young drivers becomes something of an ongoing part-time occupation. As if getting started in life isn’t already tough enough for young people.

Why Car Insurance is So Expensive For Young Drivers

It’s easy enough to understand why car insurance rates are so high for young drivers. Driving is a completely new experience to them, and that means they will make “school boy errors”. When you’re operating a car, those errors result in traffic citations and accidents that raise the cost of car insurance across the board.

Cutting Car Insurance Rates for Young Drivers
Cutting Car Insurance Rates for Young Drivers

As a result, car insurance companies “rate” policies for young drivers, charging them substantially higher premiums. Fortunately for us, our daughter has shown little interest in driving. As a member of the millennial generation, she’s still more into her iPhone and laptop than she is about the prospect of driving. And of course, the cost of owning and operating a vehicle represent an expense that she just doesn’t want right now. But we’ll soon be forcing the issue.

Our son, on the other hand, has been driving for the past four years. In that time, he has had no accident claims and only one citation, that for speeding. Still, his car insurance premium at approximately $1,200 per year is nearly as high as that of my wife and myself combined. Car insurance for young drivers is not just more expensive than it is for other drivers, but it’s much more expensive.

Geography plays a big part in car insurance premiums. They can vary dramatically from one state to another. For example, when we moved from Georgia to New Hampshire late last year, our car insurance premiums dropped substantially. Though the national average car insurance premium is $1,311 in 2015, it averages just $905 per year in New Hampshire, compared with $1,519 in Georgia. That’s a difference of more than $600 per driver.

Car insurance wasn’t the reason for our move, but it sure has been a welcome benefit. Especially for our son, and soon for our daughter.

By the way, it turns out that New Hampshire is the only state in the US were car insurance is not required by law – unless you have a car loan. We maintain it anyway, because not having it brings a host of complications to your life.

Helping Your Own Cause

It’s the natural order of things that young people have an overly optimistic view of life and especially of the risks and hazards that they face. This optimism by itself may cause them to be more careless than they need to be. But they can help their own cause in regard to car insurance premiums simply by driving more carefully.

We’ve made the following suggestions made to our son (and repeated often):

  • Stay as close to the speed limit as possible – going 5 miles over the speed limit isn’t nearly as bad as 20.
  • Always slow down in high traffic areas, particularly school zones and other streets that have significant pedestrian traffic.
  • Minimize driving at night and during less-than-perfect weather conditions.
  • Keep at least a loose eye on other drivers, they are the source of at least 50% of your problems on the road.
  • Stay off your cell phone! Fortunately New Hampshire just passed a “hands free” law banning all cell phone use while driving. But in many states it’s still perfectly legal. I’m of the opinion that cell phones and cars don’t mix . Period.
  • Buy a more conservative car. Brand new may look better, but it costs a lot to maintain, and to insure. Besides, young drivers need to cut their teeth on a “beater” before taking the plunge into owning a brand-new car.
  • If you’ve had more then two drinks, you’ll need a ride home.
  • Never argue with the police officer – you don’t need an arrest go to with that citation!

It’s unfortunate that all young people will pay higher car insurance premiums because of the negative actions by a few. But you can still help your own cause by keeping your nose clean when you drive. Advancing age will take care of the rest.

Shopping For the Best Car Insurance Rates

Next to clean living/driving, it’s important to shop around for the best car insurance rates. Because of the high cost of car insurance for young drivers, the difference in premiums from one company to another can be hundreds of dollars per year.

Do some research on the web to see which companies charge the best rates, but make sure that it is specific to your state. The same company that is on the higher end of the premium spectrum in one state, could be one of the lower cost providers in your state. Get quotes from several companies before making a decision. And be ready to change carriers every couple of years if there’s a better deal to be had.

Get the Lowest Coverage Levels Allowed in Your State

As a young driver, it’s generally best if can stay on your parents car insurance policy. But failing that, choose a policy that has a minimum level of car insurance required in your state. Insurance is mostly about protecting assets, and if you don’t have any – as most young people don’t – it’s generally to your advantage to take the lowest coverage available. (Naturally, if you do have substantial assets, you will want to adjust your car insurance coverage accordingly.)

There various minimum car insurance requirements in each state. You can use this list as a guide.

Car insurance coverage is usually expressed as a sequence of three numbers. For example, in Georgia the car insurance requirement is 25/50/25. The first number is the bodily injury liability maximum for one person injured in an accident ($25,000 required in GA); the second is the bodily injury liability maximum for all injuries in one accident ($50,000 in GA); while the third is the property damage liability maximum for one accident ($25,000 in GA).

A good coverage type is uninsured motorist – even if it isn’t required by state law (most states don’t require it). It will cover medical expenses if you or your passengers are injured by an uninsured driver, as well as damage to your car caused by an at-fault uninsured driver.

Even though a young driver can save money by not having this coverage, it’s fairly inexpensive and well worth having. A lot of people continuing to struggle in the current economic environment, and may be driving without car insurance, despite the fact that it is illegal to do so. Uninsured motorist will  protect you against this outcome.

Increasing the deductible – proceed with caution. This is the most common route to lower a car insurance premium. It’s a fine strategy – until you get into an accident and need to file a claim. So if you increase your deductible from $500 to $2,000, make sure you have at least $2,000 sitting someplace safe and liquid, like a savings account. Always remember that increasing the deductible shifts responsibility from the insurance company to the driver.

There’s no way to make the high cost of car insurance for young drivers go away completely. But there is plenty that can be done to minimize it.

Do you have a young driver car insurance horror story to tell? Or do you have additional tips on how to keep the premium reasonable?

( Photo by State Farm )

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