It is a well-known and largely accepted fact that young people pay more for their car insurance than older drivers. This is down to a couple of factors: one is that young people are, well, young and another is that they tend to have less driving experience than older people.
Inexperience and risk
One of the main reasons young people end up paying more for their car insurance is because they are inexperienced. No matter what age you are, the less driving experience you have then the less information the car insurance company has to go on when they are coming up with a quote for you. This means that they are likely to err on the side of caution and ask you to pay more as even if you are the safest driver in the country, they don’t know that.
Plus, young people as drivers are statistically riskier than older and more experienced drivers. Again, this can be linked back to their relative inexperience. They don’t have as much experience of driving and so are more likely to make the wrong judgment call than other drivers, which can lead to dangerous situations – and costly insurance claims. There’s also a general assumption that young drivers are more likely to be impatient when it comes to driving and drive faster and more recklessly than older drivers, which bumps up the risk of them making an insurance claim and so means that their premiums are higher.
Of course, this means that young and inexperienced drivers who are perfectly good at driving and entirely safe on the road end up being penalized, but when car insurance companies have nothing but the statistics to go on, it isn’t hard to see why the young end up paying more.
Keeping insurance costs down
However, there are a few things that young people can do to help keep their car insurance costs to a minimum – and reduce them over a period of time. Probably the main thing they can do is drive safely. The longer you drive without making an insurance claim, the less you have to pay for your insurance as you’re no longer seen as such a risk. It can take a couple of years for this benefit to kick in on your insurance, but it’s certainly worth it in the long run so hang on if you can.
If young people only drive on an occasional basis, they might also be able to pay less for their insurance as the less they’re on the road, the fewer chances they’ll have to be involved in an accident. So take a look at your driving habits and ideally only do it when absolutely necessary.
Your choice of car and insurance policy can also have a significant impact on how much you pay. For instance, if you have a really nice car then it’s worth paying the extra premiums that come with insuring it. However, if your car is old and not worth very much, as long as it’s safe to drive you might not need to get fire insurance for the car as it wouldn’t be worth it anyway. It might only make a small difference to the cost of your insurance, but it’ll certainly help.
Do you remember paying an obscene amount for insurance when you were young? When did you notice your rates going down severely? Was it age 25, or later?
This has been a guest post from James. I hope you enjoyed it!
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.