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Car Insurance Companies are Refusing to Insure Teen Drivers

Turning 16 is a big time in a person's life. Sweet 16 is a benchmark birthday and is often associated with driving. After passing their driving exam, teenagers are more than willing to get behind the wheel to go to the store, run errands or even pick up their siblings from after school activities. Even though parents would love to be able to turn over the keys without another thought or worry, teenagers driving can be expensive. One of those expenses comes from the need to have car insurance, but now some companies are turning their backs on teenage drivers altogether.

Every teenager has hopes of the new car with a big red shiny bow strapped on top for their birthday. This may not be the most realistic of fantasies, especially given the recent economic climate. Used cars can even cost families more than they can afford. A family sharing one or two vehicles is not uncommon. No matter what a teenager is driving, be it his or her own car or the family station wagon, he or she must be covered by auto insurance.

Young drivers are seen as a high risk for auto insurance providers. They lack real life experience and can often be stereotyped as irresponsible drivers. The higher the risk an insurance company sees you as, the higher your premium rate will be for monthly coverage. That is why parents have to prepare for the spike their insurance will take when they add their latest driver to the policy.

Insurance companies survive by risk management. That means that if they see you, the teenager, as too much of a risk they can choose not to offer you coverage. If this happens you may be forced to go with a company that has higher premium rates, meaning you will have an even bigger spike to your payments.

Why are Teenagers Seen as Insurance Risks?

Statistically teenagers are not only, more likely to be involved in a car accident, but also be the cause behind it. With this kind of history, it is difficult for teenagers to truly get a fair shake out of the insurance deal, but individual drivers can lower their premiums by being cautious and safe on the roadways.

Even though teenagers only make up 14 percent of the United States population, they account for almost half of the medical care costs from automobile accidents. Male teens accounted for $19 billion and females cost $7 billion, a 30 percent and 28 percent representation of the entire driving population respectively.

First year drivers are especially prone to be involved in a motor vehicle accident. Highway statistics show that teenagers behind the wheel of a vehicle are more likely than older drivers to underestimate how dangerous a driving situation can be. This lack of experience can cause a young driver to misjudge a certain situation, such as speeding in the rain and leading them to hydroplane or lose control of their vehicle.

Lack of experience and excitement also leads young drivers to speed. Not knowing how to handle the car at high rates of speed can be deadly for any drive. Studies show that male drivers who were involved in fatal crashes were speeding almost 40 percent of the time or drinking almost 25 percent of the time. Not wearing a seatbelt is another deal breaker for insurance agencies.

Ways to Save on Teen Insurance

Shopping around is the best way to ensure you receiving a good deal for your teen's insurance. You do not have to stay with your current provider or settle for the "best" deal around because that could be your most expensive option. Even with all the data that shows teenagers as bad drivers, there are still ways you can save on your insurance premium.

While it may seem odd, it may be in a parent's best interest to open a separate policy for their teenage driver. This will give them greater flexibility with coverage and pricing options. A teenager driving a second hand car while your car is still being financed may increase your premium rate simply because he will need more coverage than you will. Creating a separate policy will help you be in control just how much coverage your teenage driver needs and save your money. Having a used car is especially beneficial for a teen because it will allow you to only need general liability instead of comprehensive and collision car insurance.

A teenager with good grades will be rewarded for his or her academic excellence by having a lower premium rate because they will be seen as more responsible. Teenagers are seen as irresponsible drivers because they lack experience and the statistics paint a stereotypical picture, but students who have proven themselves in the classroom have a better advantage to prove themselves on the road. If your child has good grades, at least a "B" average, then you can save up to 20 percent off your auto insurance.

There are even restrictions you can place on your teen to receive a better rate if your insurance company approves the plan. Most car insurance providers will allow your teen to limit his or her nighttime driving and amount of passengers to have a lower premium rate. This takes away the inexperience of nighttime driving and the distraction of multiple passengers. Accident statistics show that the more teenagers there are in a car with a teen driving, the more likely the teen driver will be involved in a collision or accident.

Increasing your deductible will also help you lower the premium rate for teen drivers. Your deductible is how much you have to individually pay until your insurance policy kicks in and handles the expenses.

Find the Right Insurance Company for Your Teenage Driver

You want to have peace of mind when you hand the keys over to your teen to head to the grocery store, Friday night football game or study session at a friend's house. That means you want the right coverage. You do not need the most coverage to achieve that goal. If the car your teen drives is in good mechanical order and no less than five years old, you do not have to add collision (an optional form of coverage) to your policy.

Research insurance companies and see which ones are "teen friendly," even if it means switching providers. You do not have to stay with your current provider, and some insurance companies, like Allstate, will even tell your old company that you are changing providers for you.

Insurance companies are suffering from hard economic times just like parents trying to insure their teen are, so you want to find one that is financially strong. When they are coming off strong financial years, they are better able to handle the financial risk of insuring your teen driver.

Let your teenagers driving years be some of the best of his or her young life, by not letting vehicle insurance premiums break your bank. Look for all the ways to save and prepare for auto insurance at least a month or two before your teenager receives their driver's license.


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