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In general, car insurance for inexperienced or young drivers is expensive. There are a number of reasons for this, including their lack of driving experience. By taking advantage of certain discounts and other factors, however, it may be possible to get a financial break on your insurance premiums.
Reasons for High Insurance Premiums
According to the Insurance Information Institute, the highest rates of death on the road are due to teenage drivers. The reasons for this include their deficiency in experienced driving and lack of maturity.
The higher incidence of accidents results in more money being paid out by insurance companies. The companies pass their extra costs off to teenage drivers themselves. This is one of the biggest reasons that teenagers have such high insurance rates.
Another factor that most insurance companies use to determine rates is the credit rating of the driver. As with a driving record, a teen has not had much, if any, chance to build a history of credit. This will often cause the premiums to be higher.
Searching for Cheap Insurance
One of the best ways to take advantage of more inexpensive car insurance rates is to join your parent or guardian’s policy. It will still be more expensive than if they were to add someone older, but it will generally be cheaper than buying your own. This also makes your search for a company quick and easy, and often it just takes a quick call to add you to their policy.
When you do an Internet search, you will find multiple companies that offer cheap insurance. The thing to realize is that many factors result in cheap rates, and you need to meet the requirements in order to take advantage of them.
One thing that determines your rate is the vehicle you drive. Insurance for expensive and fast cars will cost the most, so your rates will be cheaper if you drive an older car that contains all the important safety features.
A big factor is your driving record. Since you just got your driver’s license, you don’t have much of a record to go off of. Since statistics show that young drivers get into the most accidents, insurance companies will automatically put you in the high-risk category, which results in higher rates.
If you do happen to get into an accident, your insurance rates will usually increase automatically, sometimes to twice as much. It is important to practice safe driving at all times if you want your premiums to decrease. Over time, with a safe driving record, your rates will begin to decline.
One way that some insurance companies are able to offer cheaper insurance rates to teenagers is through a good student discount. If you already get good grades, which equals a GPA of 3.0 or higher, talk to the company about how it can help you. If your grades are poor, it will be in your best financial interest to study and work on improving them.
Pitfalls of Cheap Insurance
If you are an adult with good credit and a good driving history, finding cheaper insurance may not be too difficult. If you are a teenager and find cheap insurance, you may want to dig a little deeper to find out why it is so cheap.
The first thing you should do is go to A. M. Best and check the rating of the insurance company. If its financial rating is lower than an A- and it has a negative future outlook, it probably isn’t the best company to go with, especially if you are looking to stick with it for an extended period of time.
The policy may also be cheap because it only offers very basic coverage and/or high deductibles. Because of the high chance of teenage accidents, there is a good chance that you would be stuck with paying for a large amount of the damages out of your own wallet. Would you rather work extra hours at your part-time job to pay for those expenses, or spend the time hanging out with your friends while your insurance company pays for the damage?
If you would rather not be responsible for additional costs, you may choose to spend more on your premium.
It is easy and FREE to seek out low-cost car insurance rates just by entering your ZIP code!