What to Know When Adding a Teen Driver to Your Car Insurance Policy

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Older people just love generalizing about younger generations, but there’s one stereotype that is painfully true: Young people are terrible at driving. Unfortunately for parents who add teenagers to their insurance policies, that bad driving can prove costly, even if young drivers never get into trouble.

A study commissioned by insurance pricing site insuranceQuotes looked at how much it would cost a family to add a driver between the ages of 16 and 19 to their policy. The answer, on average, was 82% more a year.

“Auto insurers are primarily interested in one thing: Are you a safe driver or a risky one?” said Nick DiUlio, insurance analyst at insuranceQuotes.

However, it isn’t as if insurers view all teens differently. For example, the average premium increase is 112.1% for a 16-year-old male driver, compared to roughly 80% for a female driver the same age. By the time those drivers hit age 19, the male driver will cost his family an extra 70%, compared to 51.3% for the female driver.

Yet age and gender are just part of the growing risk that drivers as a whole present to insurers. According to the Federal Highway Administration, Americans are driving more than ever. U.S. vehicles logged 3.21 trillion miles in 2017, sitting at the same record level reached in 2016 and up from 3.1 trillion miles in 2015. It’s the sixth-straight year without a decrease in mileage, but that isn’t great for drivers. The National Safety Council (NSC) reports that traffic fatalities in 2017 topped 40,000 for the second time in two years and has increased roughly 20% since 2014.

Worse, the NSC estimates that 4.57 million drivers were seriously injured in 2017. Meanwhile, the overall cost of motor-vehicle deaths, injuries, and property damage last year was $413.8 billion, a more than 10% increase from 2015. As a result, insurance companies are paying a lot more attention to how people drive and how many miles they travel.

For young people, this means insurance companies are taking a hard look at just how bad they are at driving. As the NSC points out on its teen-focused site DriveItHome.org, the 3,327 teen driving deaths in 2015 — the last year for which information was available — exceeded the number of teens killed by either homicide or suicide.

The Centers for Disease Control and Prevention (CDC) notes that motor vehicle crashes are “the leading cause of death for U.S. teens and that 235,845 drivers age 16-19 were treated in emergency rooms for injuries suffered in motor vehicle crashes. In 2013, young people ages 15-19 represented only 7% of the U.S. population. However, they accounted for 11% ($10 billion) of the total costs of motor vehicle injuries.

The Insurance Institute for Highway Safety (IIHS) says teenagers “drive less than all but the oldest people, but their numbers of crashes and crash deaths are disproportionately high.”

Mike Barry, vice president of media relations for the nonprofit Insurance Information Institute, told insuranceQuotes that the high cost of insuring teens is the only way to insure a fair cost for everyone else.

“Unfortunately, teens just aren’t very good drivers because they don’t have much experience behind the wheel,” Barry says. “Teens are twice as likely to be involved in an accident and 50% more likely to be involved in a fatal accident. Anytime you add a driver that is likely to be involved in more accidents as well as more serious accidents, the rise in insurance costs will be steep.”

There are ways to mitigate that cost, but not all of them are as effective for teens as they are for everyone else. An insuranceQuotes survey conducted in 2017 found that an American who drives 5,000 miles a year pays 9% less on average for car insurance than a fellow driver who logs 20,000 miles a year — a bit more than the 13,476 miles the average American drives annually, according to the Department of Transportation. However, teens only drive about 7,624 miles a year, less than any demographic other than those age 65 and older. However, both of those demographics have accident rates higher than those ages 20-64 who drive twice as much.

There’s a chance that the problem may fix itself as well. For instance, the IIHS reports that there were nearly 10,000 teen driver deaths in 1975, a figure that has continued to drop substantially every year since. According to the National Highway Transportation and Safety Administration (NHTSA), fatal crashes among drivers age 15 to 20 are down 43% from the 7,493 involved in fatal crashes in 2006. Modern vehicles are safer, sure, but economics, ride-sharing apps, and graduated drivers license (GDL) programs are also keeping more teens off the road. A 2012 study from the University of Michigan found that 80% of Americans between the ages of 17 and 19 had a driver’s license 30 years ago. Today it’s fewer than 60%.

The New York Times discovered that less than half of U.S. youths aged 19 or younger had a license in 2008, down from nearly two-thirds in 1998. And the Department of Transportation notes that just 28% of 16-year-olds and 45% of 17-year-olds had driver’s licenses in 2010. That’s slid from 50% and 69%, respectively, in 1978. The number of 16-year-olds with driver’s licenses peaked at 1.72 million in 2009, but plummeted to 1.08 million by 2014.

The Insurance Institute for Highway Safety (IIHS) notes teen driver fatality rates started dropping around 1996, when states first began graduated driver licensing (GDL), and have kept falling. That decreased accidents involving 16-year-olds by 68% between 1996 and 2010. During that same span, fatal crashes fell 59% for 17-year-olds, 52% for 18-year-olds, and 47% for 19-year-olds.

Meanwhile, the share of new cars being bought by Americans between 18 and 34 is down 30% in the last five years, according to auto pricing site Edmunds.com. A Pew Research Center study notes that people under 35 bought 12% fewer cars than they did in 2010.

Look to Big Brother to Save Money on Your Teen’s Car Insurance

For parents unfortunate enough to have teenagers who actually want to drive more often, there are steps worth taking. You can set a good example through your own driving, hammer home the dangers of distracted driving, or even set rules and schedules for driving. However, technology and insurance companies can help out with the latter.

Pay-as-you-drive or usage-based insurance programs like Progressive’s Snapshot or Liberty Mutual’s RightTrack use small sensors installed in a car’s dashboard or an existing on-board communications system (think OnStar) to track driving habits.

For providers including State Farm and MetroMile, that means strictly counting the miles you’re driving. Other insurers, however — including Progressive, Allstate, The Hartford, Liberty Mutual, GMAC, and Travelers — can record how many miles you drive each day, how often you drive between midnight and 4 a.m., and how often you slam on your brakes. Good drivers can get discounts of 5% to 30% if these devices — or even telematics systems or smartphones — like what they see.

Progressive’s Snapshot program, for example, has collected enough data to figure out that not only were school driving manuals wrong about keeping four seconds between you and the driver in front of you, but that it takes even the most aggressive stoppers 12 seconds to come to a complete halt when traveling 60 miles per hour. The average driver takes 24 seconds — or roughly 420 yards — to come to a stop at that speed.

“After analyzing Snapshot driving data, we’ve found hard braking to be one of the most highly predictive variables for predicting future crashes,” says Dave Pratt, general manager of usage-based insurance for Progressive. “We know that one of the main contributors to hard braking is tailgating, so we’re using our data to help drivers be as alert and aware as possible on the road.”

More privacy-minded U.S. drivers are a bit freaked out by the monitoring aspect. In fact, a majority of U.S. drivers (51%) told insuranceQuotes that they would never join a pay-as-you-drive insurance program. That’s actually up from the 37% who were dead-set against pay-as-you-drive insurance in 2014.

The National Association of Insurance Commissioners (NAIC) predicts that 20% of all U.S. auto insurance companies will incorporate some form of pay-as-you-drive program by 2020. That isn’t as scary as most drivers would believe. More than half of those surveyed by InsuranceQuotes said they think insurers can monitor whether or not they’ve been drinking and driving (they can’t), while 35% say they think insurers can jack up rates for driving in “neighborhoods with a lot of crime” (they don’t).

Though 26% of respondents dismissed pay-as you-drive insurance solely because “I don’t understand how it works,” that’s been less of a problem with younger drivers. Nearly half (47%) of drivers between the ages of 18 and 29 are aware of pay-as-you-drive programs, compared to just 22% of drivers 65 or older. Meanwhile, only 15% of millennials share their elders’ privacy concerns and 43% of drivers between the ages of 18 and 29 said they would consider enrolling. That far outpaces the 36% between the ages of 50 and 64 who’d do the same and the 28% of respondents over 65 who’d give it a shot.

“From considering pay-as-you-drive programs and electronic monitoring devices, to shopping for cheaper policies and teaching the dangers of distracted driving, there are many measures parents can take to maximize safety and also minimize monthly costs,” DiUlio says. “It is imperative that parents take the initiative.”

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