Purchasing auto insurance for teenagers can be an expensive proposition due to the statistical probability that they will be most likely to have an auto accident. This increased likelihood is due to a lack of experience for various driving conditions and external distractions in addition to poor decision-making and questionable judgment. While this might sound like a slight against teenage drivers it is a reality that auto insurance companies must embrace in order to offset increased risk. For parents of teenage drivers, understanding these various factors can help mitigate accidents in the future and steps can be taken to decrease premiums saving significant money over the long run.
Auto insurance premiums, much like premiums for other types of industries such as health insurance and life insurance, are determined by auto insurance risk selection. This is important to understand because it takes emotion out of the decision-making process and bases premiums on statistical models and probability. Insurance companies have no incentive to punish teenage drivers as it is very likely they will become lifelong customers. Sometimes it is beneficial for a teenage driver to stay on the learner's permit longer than necessary as it provides restricted driving which can ensure better habits and more time to get accustomed to various driving scenarios preparing them for the future.
It is very unlikely that once a teenage driver has a full drivers license they will be able to afford an individual auto insurance policy. Due to their age and lack of driving experience, auto insurance premiums will often be cost prohibitive necessitating other alternatives to continue driving legally. One of the most common scenarios is for a teenager to be added as an additional driver on to their parents auto insurance policy. Premiums will still be extremely expensive but it is possible to lower premiums by adding various options such as safe driver and good student discounts. These discounts will help a little but any slip ups, even something as mild as a fender bender, could lead to an insurance company denying coverage altogether. Needless to say, it is imperative for teenage drivers to be cautious at all times and avoid being in an at fault accident.
If a teenage driver can make it through high school and the first years of college without having any significant automobile accidents or moving violations, such as speeding tickets for DUIs, then it should be smooth sailing. Many auto insurance companies have various milestones which result in significant insurance premium reductions such as hitting a certain age or getting married. Signing up for auto insurance is similar to getting your first credit card in that establishing a solid record of responsibility and maturity early on can pay significant dividends throughout the rest of your adult life. As parents, when selecting auto insurance for teenage drivers it is always important to establish good driving habits early and often with constant reinforcement to ensure they are prepared for any driving situation which presents itself going forward.
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