Most people are generally aware that teenagers cost a small fortune to insure when buying auto insurance, but fewer know the reasoning behind this. This pricing structure can impose serious financial hardships on families with young drivers, so it’s important to understand the underlying logic. A working understanding of how auto insurance is correlated with age can actually save you money! So let’s get started…

How Do Insurance Companies Decide Your Rate?

When you buy an insurance policy, both parties (you and your insurance provider) hope that you will never need to exercise the policy. If a time comes when you need to cash in on your insurance policy, it would probably be in response to a major, negative life event. Your insurance provider would then need to expend a lot of resources to make sure that you are safe. Everybody loses, but at least you will be kept safe and made whole.

Insurance companies essentially calculate your rate based on how likely you are (statistically) to cash in on your policy.

Statistics On New/Young Drivers

It’s a well-established fact that young and inexperienced drivers account for a disproportionately large fraction of fatal car accidents. In fact, while young drivers (that is, drivers between the ages of 15 and 20) make up only 7% percent of total drivers on the road, they are responsible for 11% of fatal accidents.

As drivers gain experience and mature, they become less accident-prone and their car insurance quotes will reflect this. However, as drivers enter old age, this trend begins to reverse. As drivers get older, they become less and less capable of performing the duties required of them behind the wheel. Consequently, they become more prone to accidents, and their car insurance rates will begin to go up again.

The Cost Of Insuring New/Young Drivers

Your auto-insurance rates will continue to fluctuate as long as you live. However, once you exit from the “young driver” bracket, you’re mostly out of the woods. Generally, insurance rates begin to level out between the ages of 25 and 30 years old. They will hit a lifetime low when you reach your mid fifties.

So, typically, how much more will insurance rates be for young and new drivers? Quotes will likely be approximately 3.5 times higher than they would be for drivers who are in their early-thirties. By the time drivers reach their mid-fifties, rates should be about 4 times lower than those of young and inexperienced drivers.

What Can You Do To Lower Your Insurance Rates?

  1. The simplest solution is this: don’t get into any car accidents! Even a small traffic violation can raise your insurance rate through the ceiling. It will likely take years for your insurance rates to level out again. So be careful!
  2. If there are young or inexperienced drivers in your household, there are steps you can take to lower the rates they incur.
  3. If your young drivers are still in school, some insurance providers will provide discounts for good grades.
  4. There are defensive driving course and supplementary driving courses that young drivers can take which can yield as much as a 10% discount on insurance rates.
  5. Choose your vehicle carefully. The identity of the car’s driver is not the only thing that affects insurance rates. Indeed, the specs of the car also play a big role in determining your insurance rates. When it comes to cars, quotes can vary wildly between different models, years, and makes. Sometimes insurance providers will also provide low-mileage discounts for relatively new vehicles.
  6.  Have a good credit score. Many insurance companies factor in your credit score when calculating your rate. A better credit means lower insurance rates.

Have Questions About Car Insurance In Nashville?

If you have questions about car insurance in the Nashville area, don’t hesitate to get in touch with us today! We are here to help!

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