Driver Alert: Car Insurance Will Cost You

Gasoline is one huge expense of car ownership – and the other is insurance, which all drivers legally need before they can get behind the wheel. Accident-prone teens are especially vulnerable to high insurance premiums. You can take some steps to keep your costs low and your chances for reduced future payments high. How’s that report card?Read More

by Diana Drake

When it comes to teens and cars, drama is unfolding daily. Check out these recent headlines. From Illinois: “Teen Driver Injured in One-Car Monroe County Accident.” From Connecticut: “Bristol Teen Killed After Car Crashes into Tree.” From Texas: “Local Teen Kills Two in San Antonio Wreck.” From New Jersey: “Car Flips, Teen Walks Away.”

Statistics show that the crash risk per mile driven is three times higher for 16- to 19-year-olds than for drivers age 65 to 69. It is no surprise that teen drivers have some of the highest car insurance rates. Most of the time, a teen is added to a parent’s existing policy, hiking the cost by an average of $800 a year, according to a recent national survey released by Nationwide Mutual Insurance Co.

That number can vary by state. In Colorado, for example, a policy for a newly licensed male teen driver will run about $1,000 every six months, according to the Rocky Mountain Insurance Information Association. A single accident and ticket will hike that to $2,637 for a six-month policy.

You Pay for Fast and Flashy

Car insurance is costly — and necessary. When you buy insurance for your car – which is legally required for all drivers — you are providing protection against physical damage and/or injury resulting from collisions with other cars. You or your parents will have to pay regularly for this coverage. Those payments, or premiums, will go up any time the insurance company has to pay out because you get into an accident, or even if you get a speeding ticket or other moving violation.

The specifics of car insurance, like how much and what kinds you need, vary by state. There are, however, a few types of basic automotive insurance coverage. They include:

  • Liability insurance, which pays for personal or property damage.
  • Medical, or personal injury protection, which pays the medical expenses for individuals harmed in a car accident.
  • Collision insurance, which helps pay for damage to your car if you get into a crash with another vehicle or with an object.

A good insurance agent can walk you through the details of each – and all the issues that might increase your insurance costs. For instance, notoriously fast cars are likely to jack up your insurance bills, compared to less flashy vehicles.

Noelle LeBlon, 18, had fast cars on her mind when she first saw her dream ride. “I was out trick-or-treating during Halloween when I caught sight of an [Alfa Romeo] Spider,” says LeBlon, a senior at Southern Regional High School in Manahawkin, N.J. “I always thought I would love one of those cars.”

That is until LeBlon got her learners permit a few years later and found out how much car insurance costs. “Before I started driving, I didn’t even think about insurance,” she says. “When I got a permit, I was shocked to find out that my parents had to pay an extra $600 a year for me,” even though she hardly ever drives her parents’ cars.

LeBlon is doing what she can to keep her car insurance costs low, including maintaining a straight-A school average — which qualifies her for an insurance discount — taking driver safety courses in her school and at an automobile driving school, and putting the brakes on any need for speed.

No Accidents or Moving Violations

LeBlon, who is lining up a summer job to help cover the costs of her own car, has been studying car insurance so she can be an informed consumer when she buys her own coverage. According to the Insurance Information Institute (III) in New York City, “Car insurance premiums are based in part on the car’s price, the cost to repair it, its overall safety record and the likelihood of theft.” Some insurance companies offer discounts if a car has antitheft devices, or if the driver has no accidents or moving violations in a three-year period.

Increasing your deductibles — or the amount you pay before the insurance policy kicks in — can also help, says the III. “By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15% to 30%.” But don’t just jump to a high-deductible policy. “Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim [an application for the benefits provided by an insurance agency].”

Shopping around and driving safely can help save money, according to information from Progressive Casualty Insurance Co. Rates may start out high for 17-year-old drivers, but “at age 19, if you have a Progressive rate, it could drop by as much as 35%,” according to the company. “At age 21, it could drop an additional 25%.” The main message: Keep shopping as you get older to see if you get a lower rate,” and be responsible behind the wheel and with your finances. “Age is only one factor we consider [when determining rates],” according to Progressive. “A clean driving record, good credit history and prior insurance could help you keep your rates lower in the future.”

LeBlon is determined not to become a statistic – or go broke paying car insurance. “I’m into conserving energy, and going slower is one way to cut back on using gas,” she says. “And even though I’m careful about keeping under the speed limit, any time I see a police car I slow down a bit more and turn down the radio because I don’t want to draw attention to myself.”

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12 comments on “Driver Alert: Car Insurance Will Cost You

  1. Car insurance does not just protect you. If an accident occurs, the insurance covers you, your vehicle, and any other people that may have been involved. There are different policies that you can purchase depending on what amount of coverage you want. For example, you can choose to guard yourself against accidental harm, burglary, and fire. Your insurance agent can help you choose the policy that meets your needs and your budget.

  2. The cost of insurance – your premium – is based on how much of a risk insurers perceive you to be. For example, if you are a youngster ready to hit the highway after just passing your test, or you have had more than a prang or two, you will pay more. if you’re just looking for the very cheapest cover, never only check third party and never auto-renew. Loyalty is expensive.

    Well I have read alot of tips in this article : by Nina Hoe, for example if you’re a high-risk driver and you add someone who is a much lower risk as a 2nd (and/or 3rd) driver, they can bring down the average risk and you may get a cheaper policy… Great tips hah!

  3. where is the Excel file – “Computation4 – Excel.” ? I can’t find it.
    6. Open the file: “Computation4 – Excel.” In this file, you will find data that compares
    average annual insurance expenditures, number of traffic fatalities, deaths per 100
    million vehicle miles travel, percentages of population living in urban areas, per capita
    incomes by state, and state populations. Have students discuss these different

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