Young drivers typically pay higher insurance rates than more experienced adult drivers. However, at what age does it change, and premiums start to come down? There’s no simple answer because it’s different for each individual driver. The common notion that rates automatically drop at age 25 is actually a myth. Here’s what you should know about how insurance rates go down for young drivers.
How Insurers View Age
Each insurance agency has its own methodology for determining rates it sets for customers. Generally, the industry shapes rates based on risks. Inexperienced drivers bring high risks to the road and society, as a high volume of claims involves accidents caused by teen drivers. Yet this view of inexperience and high-risk shifts for insurance agencies during the 18-25 age range when the driver sees a rate reduction.
Plenty of statistical evidence backs up the insurance industry’s concern about young drivers. Collisions caused by teens are four times the rate of crashes caused by drivers in the 20 or older age group, according to the Insurance Institute for Highway Safety (IIHS). The accident numbers drop off after age 20. The sharpest declines in insurance are between the age of 18 and 25, when average annual insurance costs fall from $1,842 to $1,488.
Nonetheless, your age alone is not the only factor that determines your auto insurance rates. There are multiple other factors that an insurer evaluates to determine monthly premiums for anyone regardless of age, including the following:
- Driving history of violations and accidents
- Zip code and its crime rate
- Payment history
- Age and type of vehicle
- Gender (males drive more and tend to get into more accidents than females)
Solutions to Lower Auto Insurance Rates for Teens
The best way for anyone to lower their auto insurance rates is to practice defensive driving, which helps avoid accidents and violations. A driving record full of “marks” will probably trigger higher monthly rates. Usually, the older you get after 20, the more your rate gradually goes down through age 25. Then it may stay low for decades, but rates tend to increase again for senior drivers, who also have higher accident rates.
Various special insurance discounts are often offered to college students. Ask your insurance agent if you qualify for a Student Away at School discount. Some insurance agencies reward both high school and college students who earn good grades by offering a break in monthly premiums. This deal usually requires the student to submit a copy of their report card as proof of a B average or even better grades.
You may also cut insurance costs with a multi-car discount policy in which students are covered under a shared plan with their parents. Shared policies can save money for everyone on the plan.
Another solution for teens to consider for lowering insurance rates is to enroll in a telematics program. Most carriers offer this tool on auto policies to let the driver see how they perform on speed, braking, time of day driving, and acceleration. Some also gauge phone use while the vehicle is in motion. This allows not only the driver to see how they are performing but let the rate they are charged be more tailored to their actual way of driving.
Young drivers pay higher insurance rates due to the risks associated with inexperience. Even so, focusing on maintaining a good driving record and getting good grades are effective ways to lower high insurance costs for teens and young adults. Contact us at Reata Insurance Group to learn more about how to get the best insurance rates for the auto coverage you need.