It’s a common scenario – a young motorist completes their driver’s education, and their parents buy them a nice car – then they go to insure it and discover that the insurance is so expensive it would be cheaper for them to buy a little old run-around outright.
The dreams of driving a sporty vehicle shatter upon the discovery of exactly how much it costs for a teenager to get car insurance, compared to mum and dad’s decades of no claims discounts and lower premiums.
If you think that sounds like a hyperbole – check out these figures. The reality is that auto insurance for young people is vastly more expensive than for more mature drivers.
Average Car Insurance Rates by Age and Gender
The average insurance premium for a 19 year old male in 2016 was $2,154. Young females are thought to be safer drivers than their male counterparts, according to the statistics gathered by insurance companies – but a 19 year old female would still be paying $1,930.
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Compare that to a 31 year old, and the premiums have started to balance out – with men paying $833 and women paying $831.
By the time motorists are in their early 40s, premiums are one-third of what they are for a teenager – with men paying $747 a year.
Interestingly, older females pay more than older men – with premiums for women being $752 per year.
As a general rule of thumb, insurance is highest for those under the age of 25 – then it starts to fall, being cheapest for drivers aged 40, 50 and 60.
This is no wonder that under 25 is the age group that pays the most for car insurance. After 25 the price goes down for males and females as well.
At aged 60, the state minimum liability insurance is at its lowest level – $508 for men, on average. At age 70, premiums increase again – if a 70 year old wanted to take out a premium that was full coverage, with a $500 comprehensive and collision deductible, then they could be expected to have to pay $1,316. State minimum liability would be $567.
Factors that Affect Car Insurance Rates
There are many other things that could affect the cost of auto insurance.
- A married people tend to pay less than single people, and people who have been driving for a few years will pay less than people who are new drivers – at any age.
- An older driver who has just qualified will probably pay less than a newly qualified teenager, but still more than someone who has been on the road for several years.
- It’s not all about the driver, either. The car that you choose, the area that you live, and where you park your car all matter too, as well as occupation. If you can park your car off the street, in a garage, and you have good trackers and immobilizers then you will pay less than if you live in a high crime area and park the car on the street.
- Some insurers offer a black box scheme where a driver can have a car monitored – and if they are driving sensibly, then they will save money. If they are caught speeding, or it is noticed that they frequently ‘slam on the breaks’ then they may face their premiums being increased.
- There are even some insurance companies that will tie premiums for college students to things such as the grades that they get in their studies. The theory here is that a responsible student will also be a responsible driver.
- If you can maintain a low mileage, this is another way to get discount on premium.
Tips for Teenagers
A young person who wants cheap insurance has a lot of options – being added to a parent’s insurance could be less expensive than being a primary driver. Buying a less flash car could be a good way to earn some no-claims bonus and build up some driving history so that they can get less expensive insurance on a more expensive car at a later date.
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It pays to shop around and to compare your bonuses and the different policies. Consider taking a higher excess if you can afford it so that you get a cheaper premium. If you do this, make sure you save the excess in an instant access account so that if you are in a minor accident you have the money to pay for the repair as soon as possible.