Saving on car insurance is still a reality
Drivers Under 25 are typically not charged the same
All vehicles on the road need to be insured. Having a certain level of liability coverage will protect other people (and their property) if you were to cause an accident. However, not all drivers are charged the same amount of premiums.
How are premiums calculated for under 25 drivers?
Even before going shopping, it's essential to understand what auto insurance companies consider when calculating premiums for drivers under 25. The following factors will determine the value of every auto insurance policy:
The coverage options and limits you choose
Coverage refers to the compensation received if your vehicle were to cause an accident. When signing up for a policy, you’ll be able to select from different types of coverage options. For example, a third party policy will only cover damages incurred to other people and their property. Comprehensive coverage will cover both your vehicle and damages incurred by others.
As you would expect, comprehensive coverage costs more than liability. The amount you’ll pay in premiums for comprehensive coverage will also depend on the type of car you drive, its age, and how often you drive it.
Every auto insurance policy will also have a limit. The limit is the maximum amount of coverage that you can receive in the event of an accident. For example, if your limit is $20,000, your insurer will only pay out a maximum of $20,000 for any damages caused.
Higher limits typically result in higher premiums. This is one of the reasons why younger drivers end up spending more on auto insurance. If the state (or insurance company) requires you to have a certain minimum amount of coverage, you’ll have to pay a higher premium to obtain such a policy.
Your deductible amount will also directly impact premiums. A deductible is a standard fee that you must pay when making a claim. When obtaining auto insurance, you’ll be able to select your deductible amount in accordance with your level of coverage. A high deductible will result in lower premiums, and a low deductible will translate into higher premiums.
High-risk drivers may benefit from lower deductibles because they’re more likely to make a claim. But if you have a clean driving record, you could save money by selecting a higher deductible.
Your driving record
One of the biggest reasons why drivers under 25 end up paying higher premiums is because they don’t have a lengthy driving record. Therefore, insurers view younger drivers as inexperienced and more likely to cause accidents while on the road.
If you already have a bad driving record, your premiums may be even higher. For example, DUI drivers under the age of 25 may pay twice as much (or more) in premiums than drivers who are 35+.
Auto insurers will carefully examine your driving record when you apply for coverage. The cleaner your driving history is, the lower you'll pay in premiums.
Location is another significant determinant of premiums and coverage options. As previously mentioned, some states have specific limits that are required for younger drivers. These limits are often higher, and they will translate into higher premiums.
Why it costs more to insure drivers who are under 25
Younger drivers will end up paying more in premiums because of two main reasons: limited experience and their driving records. An older driver (aged 40 who has never been involved in an accident) will pay significantly less than a younger driver who’s had their license for only 3 years (and has been convicted of a DUI).
Having a clean and lengthy driving record serves as proof for insurance companies to charge lower premiums. On the other hand, younger drivers are statistically more likely to cause accidents. This is due to a combination of factors- ranging from inexperience to distractions while on the road.
How to save on costs when looking for a policy
All is not so gloomy for younger drivers though. There are many different ways you can save on high premiums while obtaining the coverage you need. When shopping around for a policy, here’s what you should keep in mind:
Compare quotes from multiple insurance companies
- Take a certified driver training course (such courses will help you negotiate lower premiums)
- Practice safe driving and maintain a stellar record
- Look for discounts and perks such as accident forgiveness
- If you’re driving a parent or friend’s car, ask them to list you under their policy
- If you’re married or have children, communicate this to your auto insurance company. Young couples and parents are likely to be charged lower rates.
What to do when looking for coverage
In addition to the cost-saving tips mentioned above, you should also be aware of how to find a policy that suits your needs. Saving money is important, but providing accurate information will ensure that you receive coverage when making a claim.
Be honest about your driving record
If you’ve received a DUI in the past, a ticket for reckless driving, or any other significant traffic violation, don’t try to hide it from your insurer. Being dishonest may result in denial of coverage if an accident were to occur. You may also have your policy canceled, which could result in higher premiums down the road.
Inform your insurer of any modifications on your vehicle
If you make any modifications to your vehicle, make sure you communicate such changes to the insurance company. Modifications that add value to your car should be accounted for so you can receive proper coverage if an accident were to occur.
Male drivers under 25
Male drivers under 25 are the hardest hit when it comes to paying high premiums. This is because they’re statistically regarded as causing the highest level of risk while driving. Shopping around is the best way of finding competitive rates for male drivers under 25.
Start by comparing policies from multiple insurance companies- and find the best coverage option for your vehicle. While some policies may have higher premiums at face value, they may also provide long-term savings. For example, accident forgiveness will protect you from premium hikes after your first accident.
New car replacement is another policy option that will compensate you for the depreciated value of your new vehicle if an accident were to damage it. You may also be able to save on costs by signing up for a policy online.