New OnlineAutoInsurance.com Rate Analysis Explores Teenage Car Insurance Options

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The site runs the numbers to see whether it’s a good economic decision to delay licensure for young people.

A report released in April by car insurer Nationwide indicated that, because of cost concerns, a growing portion of American families are pushing back the time when they first allow their teenagers to get behind the wheel. In response, quote-comparison site OnlineAutoInsurance.com has run the numbers to see how this would work out financially.

Having a teenage motorist in the house can be costly, due in no small part to the large price of coverage for this high risk car insurance group. In April, OnlineAutoInsurance.com published a premium analysis showing that the average quote for a 16-year-old Californian could be around 168 percent higher than the average for a 25-year-old. But a more recent analysis from the site suggests California families who push back the DMV test may only be delaying — rather than avoiding — these high costs.

That’s because California insurers often look at the number of years that drivers have been licensed, not their age.

Source: http://1.usa.gov/jDKr9q

In the rate analysis, the site generated sets of quotes from different California insurance companies for an example driver profile at different ages and different licensing periods.

For example, let’s say that a family decides to wait until their son turns 18 to get licensed, rather than getting it right at 16. While this would delay the high policy costs for two years, the analysis indicated that rates for a freshly licensed 18-year-old would be about the same as for a freshly licensed 16-year-old; similarly, rates for a 20-year-old who has been licensed for two years were mostly the same as the rates for an 18-year-old who has also been licensed for two years.

On the other hand, a 20-year-old who has a clean driving record and has been licensed for four years had access to rates that, at their lowest, were about 43 percent less than the cheapest quote generated for a 20-year-old who was licensed at 18 and has only two years’ experience.

This poses a dilemma for families debating coverage options for their teens — to eat the high costs earlier in exchange for better rates later or to delay licensing and be hit with inevitably higher rates a few years down the line. If readers are struggling to make this decision, they should definitely speak to present or prospective insurers about their options.

If they can get their young drivers licensed without letting them drive and exclude them from coverage until they’re ready to get behind the wheel, that would be ideal, but every insurer has different practices, and the implications of these decisions should first be discussed in detail with a representative from the insurance company. (Options may also be limited depending on state of residence, since most have varying regulations on exclusions and rate-making.)

If this is an option and one chooses to go down that road, it is imperative to get coverage extended to the young driver before he or she ends up in the driver’s seat.

To learn more about how to find affordable insurance for motorists who pose higher-than-average risk, readers can go to http://www.onlineautoinsurance.com/learn/high-risk-drivers.htm where they will find informative resource pages and a quote-comparison generator that can jump-start the search for the best policy.

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Benjamin Zitney
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