The minimum age to drive in the US in most states is 16 - a tender young age to join roads that are now full of 286.9 million other registered cars, according to Finances Online. Thousands of people join the road each year, which leads to an increase in traffic, accidents, and costs on the roads. Plus, Transportation for America confirmed that between 1993 and 2017, there was a 43% increase in cars on the road.
All of that spells trouble for young drivers who are already experiencing their first significant investment learning to drive and putting a car on the road. Below, we'll look at one of the main ongoing costs and sources of turmoil for young drivers - insurance costs.
How Much Does Insurance Cost For New Drivers?
The US works differently from other parts of the insurance when dishing out insurance premiums - NerdWallet found that the average person in the US pays $136 per month, but that's for a good driver with a good credit score. That works out to $1,630 per year. Countries like the UK won't look at your credit score, and as a young driver at 16, they're not exactly going to have built up a stellar credit report.
Young drivers have it far worse, with Motley Fool finding that the average 18-year old driver will have to pay out $5,988 for insurance - that's a whopping increase from the average driver with a good financial and driving history. Plus, when you look at the cost of the average used car in America ($22,000), it's easy to see why so many young drivers struggle to get on the road.
What Does It Cover For?
There are multiple variations of auto insurance coverage that protect drivers on different levels. Young drivers should always look for full coverage, or comprehensive, insurance because it covers all the bases. There are also bolt-ons in the US, like collision and bodily injury packages, that further protect drivers in the event of a road traffic accident.
Young drivers will notice that insurance packages are super customizable, and sometimes it's easy to reduce the premiums with a customized package. For example, drivers can add on parents with a good driving record, agree to pay a higher payout, set limits and deductibles - it's really flexible.
Beware when attempting to reduce insurance premium fees - it's not always the best decision to go for the most basic insurance package. In 2019, 250,000 young drivers ended up in hospitals due to injuries from a road traffic accident, so it pays to take out extensive coverage for all situations, including theft and fire. Theft is another cause of trouble - in 2020, car theft rose by 11.8% in the US, according to the Insurance Information Institute.
Why Are Premiums Higher?
Premiums are higher for several reasons, some of which we've listed above. In America, insurance providers take into account financial and driving history - young teenage drivers will have neither. Forbes lists inexperience as one of the reasons why insurance is more expensive but also highlights that there isn't much that young drivers can do about that problem. That is true - the reality of driving isn't experienced until young drivers finally get behind the wheel of a car.
The other problem is that young drivers are statistically more likely to end up in an accident, according to Forbes, again, and many other sources. Again, there's nothing young drivers can do about inexperience other than start driving on the roads.
How To Reduce The Costs
There are several ways that young drivers can reduce the cost of their insurance premiums. Below is a list of some of the proven ways to reduce costs:
Buy a car with an excellent safety and maintenance rating
Put responsible and experienced drivers on the policy
Agree to a higher payout
Take additional driver safety courses.
Ask for higher deductibles.
Typically, young drivers will need to shop around both motors and insurance providers to see what car and insurance provider will get the best deal.
Driving is getting more expensive as the years pass by. The average cost of gas, vehicles, and insurance policies seems to be increasing every year - according to Forbes Advisor, but it's the young drivers that get the rough end of the stick. Ultimately, it's driving experience on the roads and a good driving record over the years that'll bring premium prices down.