I had an interesting discussion with a client the other day regarding quoting their car insurance. The parents have a daughter and son attending college and the family just recently purchased a new vehicle that will be used primarily by the daughter. What’s worth noting is neither the daughter nor the son has a driver’s license. They have their permit, but neither one their license and they are 21 and 19.
There is a growing trend among teens who are choosing to delay getting their driver’s license. What was once a rite of passage for boomers appears to have lost some of its luster. There are several reasons, guesses really, researchers cite as the reasons teens are delaying getting a license including:
- The rise of ride sharing services like Uber and Lyft
- The decision to grow up slower
- Access to mass transportation and bike lanes
- Just not interested
Regardless of the reason behind the decision, there is a relationship between when a teen or young adult becomes license and the rate they’ll pay. Let’s examine both sides of the decision.
Age: There is no perfect age for a teen to become licensed. Just because teens are eligible to get a license at 16, does not mean that is the best age for them to get one. Car insurers do charge a higher rate for someone with a brand-new license, but the higher rate is not based on age but lack of driving experience. Additionally, whether a newly licensed driver is 16 or 21, the initial rate will be roughly the same.
Experience: The overriding factor guiding a car insurance rate for a newly licensed driver is experience. As such, a driver with 3 or 5 years of driving experience should see a slightly lower rate if there are no tickets or accidents. The one advantage my client has is their oldest child will reach the age car insurance companies consider one to be an “adult,” which is 25, more quickly. This means she should see a reduction in rate more quickly than a 16-year-old driver but will still pay a higher rate than her peers due to her limited driving experience.
Maturity: The issue both the teen and their parents need to address primarily is whether they have a desire to drive and are mature enough to drive. Driving is a huge responsibility and should not be forced upon an unwilling or uninterested teen just because they turned 16. Nor should it be a reward if the teen is not mature enough to drive responsibly. This should be a joint decision.
What do you think? Share your comments, questions, and experiences with me on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!
