Who Pays The Most for Car Insurance?

It’s an interesting question isn’t it?! Some may think it’s gender based and guess men pay more than women. Others may think it’s location based and guess people in big cities pay more than people in rural communities. While both of guesses are correct, they’re not the right answer. Teen drivers, or their parents, pay more for car insurance than any other group.

It may seem obvious, but teens are more prone to having an accident than any other group, even elderly drivers. The statistics overwhelmingly support this which were nicely summarized in an article on MSN earlier this year. In this article, they provided data from three different studies; a 2002 study conducted in Nova Scotia, a 2011 study conducted by the US Institutes of Health (NIH), and a 2014 study conducted by AAA.

Below are several interesting bullet points from the three studies.

  • The first 6 months of driving are the most dangerous for a teen with a new license
  • Crash rates dropped 41% from the first month of driving to the seventh, and 60% after two years
  • During an 18 month period, teens were involved in 37 accidents and 242 near accidents versus their parents who were involved in 2 accidents and 32 near accidents
  • Teens are 12 times more likely to be involved in an accident in the first month of driving than they were after one year of experience
  • Crash rates drop 26% for the youngest drivers over the first 6 months of driving and by 45% after one full year of experience

There are two main reasons this phenomenon occurs; teens take greater driving risks when driving than most adults take, and they don’t understand their or their vehicle’s limitations in different driving scenarios. Risky behavior includes hard acceleration and braking, as well as harder cornering, all of which combine to cause higher incidents of accidents and near accidents.

Data from these studies, as well as from insurance carriers own claim statistics, mean the cost of car insurance for teens is much higher than it is for other age groups. One of the questions I’m routinely asked by parents of teens who will soon receive their driver’s license is how much will their car insurance rates change. My answer is to expect it to double and be pleasantly surprised if it’s lower than that.

According to the MSN article, increases of two to three times more were pretty standard in different US cities. Male teens still pay more than female teens and older cars cost a little less than new cars to insure. My word to parents of teens, and even the teens themselves, is to avoid accidents and speeding tickets. Both of these can cause dramatic rate increases to the family’s car insurance rates.

Taking driver education (whether the parent taught or driving school) provides a great discount. In addition, an A/B grade average will also provide an attractive discount which help lessen the sting of higher rates. I even have a few parents who make their teen driver’s pay for their portion of the car insurance. You’d be amazed at how much motivation that provides!

What do you think? Share your thoughts, questions, and parental suggestions for our parents of teen drivers with me on my Google +, Facebook, and LinkedIn pages. I’d love to hear from you!

Evie Wise
Evie Wise


Evie Wise
Evie Wise

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