Under-25s, Teens Find Big Premium Savings

By Author: Marcus Stalder
Total Articles: 491
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Automotive coverage for people under 25 can be a daunting task. Teens and 20-somethings have significantly higher premiums than their older counterparts. Furthermore, rates for people in this age range vary significantly more from one insurer to the next. Knowing what guides these decisions and how to use them will allow you to get a lower monthly rate in your policy.

Why Rates are so High
The crucial issue with young drivers is that, lacking experience behind the wheel, insurers do not have information about a potential policyholder's driving abilities. Plus, the first few years as a driver are the most dangerous, and therefore the likelihood that a young person will need to use their policy increases dramatically.
The bottom line is that no matter what you do, if you're 16-24, your rates will be substantially higher than someone older. Even if you are diligent and get a great deal, the policy will still be more than twice what someone 55 or older would pay for the same coverage.
Nonetheless, understanding how a potential insurer determines what to charge will make it much easier to save money in the ...
... long run.

Different Companies, Different Priorities
The difference between the lowest and second lowest car insurance rates found online can be over $1,000 per year. If that's the difference between the two lowest premiums, imagine how much more you'll pay if you hastily purchase a policy with an insurer who purposely raises prices to avoid covering teens in the first place.
Part of the reason for the enormous disparity between prices is that various insurers have different ideas about how to best approach the young market. For example, some insurers will reduce monthly premiums for students with good grades as a sign of responsibility. Other insurers will inflate prices for teens simply in order to avoid insuring them.
You may be able to reduce the price of a policy by adding a young driver to a family policy. Your insurer might then adjust rates based on the most expensive car belonging to the household. Or they might allow you to specify which vehicle they drive. If the young person goes off to college, some companies will reduce rates thinking that they will only use the car during summer or on vacations, or they might take them off of the policy entirely.
The basic lesson is that there is no universal method for insurers. To make sure you're getting the least expensive policy, make sure you shop around and thoroughly understand each insurer's method for creating a premium.

Shopping Online
If you are looking for car insurance for any age range, you will have better luck shopping on the Internet. This saves time and money. By going online, you can simultaneously look at detailed comparisons for car insurance rates for multiple companies, rather than calling up each company and receiving potentially unclear information.
This quick alternative to calling or walking in to a brick & mortar shop will also allow you to compare specific aspects of each company's policies that you couldn't do if you were speaking to a representative who is interested in framing only their best qualities.