Why Is Insurance So Expensive For Teenage Drivers? (9 Reasons Why)

When teenagers first get their cars, it is highly recommended that they get car insurance to be prepared for any situation that can occur. However, most people will quickly realize that the price for car insurance for teenage drivers is vastly different to average drivers.

If you saw the price for insurance for teenage drivers, you may be wondering why it is so expensive. I did some digging, and here is what I discovered!

Why Is Insurance So Expensive For Teenage Drivers?

Insurance is expensive for teenage drivers because teenage drivers are very likely to get into accidents. Teenage drivers are susceptible to distracted driving, driving under the influence, and more. Moreover, teenage drivers have low credit scores and no proven track record of their driving, which adds to the price of their insurance.

Do you want to find out more reasons why car insurance for teenage drivers costs so much? I made a list of reasons below, so read on!

1. Higher Accident Rates

Firstly, the main reason why insurance for teenage drivers is so expensive is that they are more likely to get into accidents.

Generally, teenagers aged 16-19 are the most likely to get into a car accident compared to any other age group.

For instance, teenagers are three times more likely to get into a fatal crash than drivers who are 20 years old and above.

As such, most insurance companies look at these statistics to decide what rates they should give teenage drivers for insurance.

Usually, you can expect an insurance company to charge more for high-risk clients because they are more likely to have to cover for the costs of an accident.

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2. No Track Records

Normally, one of the main ways insurance companies determine how much your insurance will cost is your driving record.

For instance, if you have little to no accidents and have been driving for a long time, you are likely to have a cheaper car insurance rate.

However, teenage drivers are very new drivers, so they will have no driving record to prove that they are safe drivers.

As such, insurance companies will usually prepare themselves for the risk by charging teenage drivers more for insurance since they cannot prove that they are unlikely to get in an accident.

3. Distractions

Usually, teenagers are more likely to be distracted, and being easily distracted can lead to accidents.

Normally, insurance companies check the statistics of various types of accidents caused by various age groups, including distracted driving.

For instance, the CDC stated that distracted driving was the cause of 9% of fatal accidents involving drivers that were 15-20 years old.

Generally, some examples of distracted driving are texting while driving, talking while driving, reading directions, etc. 

Teenagers are not often that used to driving, so if they are distracted, there is a higher chance that they will get into an accident. 

Moreover, teenagers often get bored easily or overly confident, so they can easily get disrtacted whilst driving compared to older age groups.

4. Recklessness 

Typically, another big reason why teenagers pay more for car insurance is that teenagers are more likely to be reckless drivers.

Normally, teenagers may want to appear cool, so they may try to speed or cut other people off on the road, which can lead to many accidents. 

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Therefore, insurance companies charge higher premiums to teenagers since teenagers often engage in reckless behavior.

5. Higher Financial Risk For Insurance Companies

Higher Financial Risk For Insurance Companies

As stated above, teenagers are more likely to get into an accident when driving, which insurance companies take note of.

When a teenage driver gets into an accident, they will likely use their insurance to cover most or all the cost of the accident.

As such, insurance companies may be more likely to cover more accidents for teenage drivers, which puts the insurance company at risk of losing money.

Insurance companies will want to cover their bases early by charging higher rates to teenage drivers.

That way, the insurance company will be able to earn some money that they would otherwise lose from a teenage driver.

6. Low Credit Scores

Usually, another big factor that affects anyone’s car insurance rate is their credit score, and teenagers are not exempt from that.

Normally, credit scores prove how good you are at paying back loans, but insurance companies believe low credit score drivers have a higher chance of filing claims.

Unfortunately, teenagers usually have a very low credit score because they do not have credit cards, loans, etc. to increase their credit score.

Moreover, building a good credit score can take years, so they will likely be adults by the time they get a better credit score. Until then, low credit scores can keep teenage car insurance high.

7. Peer Pressure

Generally, teenagers are very susceptible to peer pressure, which can lead to various car accidents.

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For example, teenagers may pressure each other into driving despite drinking illegally, which puts them at a great risk of an accident.

Back in 2010, 22% of teenagers were drinking when they got into fatal car accidents.

So, insurance companies see these statistics before they give a teenager a premium for car insurance.

8. The Car

Normally, the type of car you drive can affect your insurance rate no matter what age you are.

If you happen to have a new car, your insurance will cost more because the cost of parts and repair for your car will be more expensive.

9. Low Deductible

If you choose a low deductible for your car insurance plan, you will likely have a higher insurance rate.

This is because you will be paying less money out of pocket during an accident, so your insurance company will charge you higher premiums to offset this loss.

To know more, you can also read our posts on why USAA insurance is so expensive, why Michigan car insurance is so expensive, and why Honda Accord insurance is so expensive.

Conclusion

Normally, car insurance is expensive for teenage drivers because teenagers are more likely to get into accidents.

Moreover, teenage drivers often have low credit scores and choose low deductibles, which will make their premiums higher.

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