Saturday, June 18, 2016

Adding Teen Driver to Auto Policy Yields Average 79% Premium Rise

PARENTS looking forward to having their newly licensed teenagers drive themselves on errands this summer may be less enthusiastic when they see the family’s new insurance bill.
Families adding a teenage driver to their auto insurance policy will see their premium increase by an average of 79 percent, the latest analysis from finds. That’s a bit lower than the average increases seen in recent years, but it is still a hit to the wallet.
In some states, the average premium doubles. And even in states with relatively modest increases, premiums can balloon by double digits. “Parents need to understand, it’s very expensive to add a teenager,” said Laura Adams, senior insurance analyst with insuranceQuotes.
The higher premiums reflect teenagers’ greater likelihood of being involved in an accident. Research shows that they have the highest crash rate of any group in the United States.
Quadrant Information Systems, a provider of data and analysis to the insurance industry, conducted the analysis on behalf of insuranceQuotes using state data from large auto insurance carriers. The study looked at the impact of adding a driver who was 16 to 19 years old to a family’s policy. The hypothetical parents were married 45-year-olds with clean driving records and good credit.
The five states with the largest average increase when adding a teenage driver were New Hampshire (125 percent), Rhode Island (119 percent), Arizona (109 percent), Wyoming (106 percent) and Ohio (100 percent).
In some states, because of regulations on how insurers set rates, the increase after adding a teenager is less severe. Hawaii, for instance, doesn’t allow insurers to consider age, gender or length of driving experience when considering premiums, Ms. Adams said, so teenage drivers don’t pay much more than adults. The average increase in the state was 17 percent.
New Jersey’s average increase was 79 percent, in line with the national average, while New York’s was 52 percent. A full list is available at
Teenagers tend to be poor drivers mainly because they’re learning something new, said Deborah Hersman, president and chief executive of the National Safety Council. “The reason why teens are not good drivers,” she said, “is that they’re inexperienced.”
Driving involves complex decision-making, she said, particularly in situations like merging into traffic on a highway, and making left-hand turns across oncoming traffic. It takes practice to get it right. “Teen drivers,” she said, “struggle to correctly assess some of the risks.”
But they improve as they log more miles behind the wheel. “As people gain experience,” Ms. Hersman said, “they become better drivers.”
Research also suggests that teenage boys are more likely to drive recklessly, particularly when there are other teenagers in the car.
The largest premium increase occurs when a 16-year-old driver is added to a policy, Ms. Adams said. The premium gradually drops each year, as the driver logs more driving miles.
Here are some questions and answers about teenage drivers:
Can I just buy my teenager a separate auto insurance policy?
You could, but the cost would generally be more than adding your teenager to your own policy, Ms. Adams said. That’s because the auto premium, even with the new, inexperienced driver added, benefits from the parents’ (hopefully good) driving history, and sometimes from other factors, like their higher credit scores.
How can I keep my premium affordable when adding a teenager?
Some insurers offer “good student” discounts of as much as 25 percent for young adults, including teenagers, who maintain at least a B average and can document their academic achievement. Typically, students must submit a report card or a copy of a published dean’s list every six months. Discounts for taking a driver’s education class are less common, but it’s worth asking.
How can I help my child stay safe while driving?
Parents can adhere to the rules of their state’s “graduated” driver’s licensing programs, which give new drivers incrementally more responsibility as they log hours on the road, Ms. Hersman said. Rules can vary by state, so parents may want to discuss their own rules as well. The National Safety Council has created a sample “contract” called the New Driver Deal, that parents and teenagers can sign to help reinforce safe habits. The teenager agrees to rules like no texting while driving, no driving while under the influence of alcohol or drugs, and no driving late at night.
It’s important to pay attention to who is in the car with your teenager, Ms. Hersman said. Having just one teenage passenger in the car increases a teenage driver’s crash risk by 44 percent. For the first six months to a year after teenagers get their license, the safety council recommends that they not have any young passengers in the car. That may be inconvenient — forget having your teenager carpool with friends or drop off a sibling at soccer practice — but it can help keep teenagers safe, Ms. Hersman said.
Parents must model good behavior by not talking on cellphones while driving and obeying speed limits. Most important, parents need to keep riding with their teenager, acting as a sort of coach while they practice driving. You’re not off the hook the minute your child gets a license. “They still need you in the car,” Ms. Hersman said. “You’re not done.”

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