Today, we take a look at the factors that are considered when getting auto insurance. And if ager and gender really even matter when it comes to auto insurance rates.
Auto or Car insurance is a type of insurance that protects you from financial losses in case of damages to properties or persons involving your car. Almost all U.S. states require some kind of car liability insurance before you can operate a vehicle.
Benefits Of Having Car Insurance
- Car insurance can give you financial protection. If you cause an accident on the road, you will be held responsible for all the costs related to it. To pay for these expenses, your liability coverage can help. Comprehensive coverage can help pay for repairs and replacement of parts for your own car if damages are not collision-related. This includes damages caused by falling trees or posts, fire, and other natural disasters
- Medical payments coverage can help pay for medical-related costs regardless of who is at fault
- Save you out of pocket costs in case you are sued in court
- Gives you peace of mind knowing that you can afford to pay for any accident-related costs
Factors Affecting Car Insurance Premiums
There are many factors that affect your auto insurance premium rate. There are two factors that play a substantial role in calculating your insurance rate. These are:
Young, new drivers are the most expensive to insure. The risk factor for this group is high and insurers take driving experience into consideration when computing for the premium rate.
According to the Centers for Disease Control and Prevention (CDC), teens aged 16-19 are three times more likely to get into car accidents than people over 20 years of age. Almost 2,400 teens in the United States were killed in 2019 and more than 250,000 were treated for injuries due to motor vehicle crashes. Risk factors are due to the following reasons:
- Not using seatbelts
Teen drivers are notorious for driving without wearing their seatbelts. They almost always forget especially if they are new drivers as well. The National Highway Traffic Safety Administration (NHTSA) reported that in 2019, there are 22,215 passenger vehicle occupants killed in car crashes and 47% were not wearing seat belts.
New teenage drivers are eager to drive alone. The first 6 months of solo driving is when most accidents happen. Because of their young age, they are also prone to making decision errors.
- Night and Weekend Driving
Teen drivers are likely to get into car accidents between 9 pm and 6 am. The peak is before midnight. Alcohol-related crashes mostly happen during Friday night and Saturday evenings.
Teen drivers are more likely to speed and allow a shorter headway when driving.
- Distracted Driving
Teenage drivers who text while driving are 20 more times likely to crash. Other forms of distraction include talking on the phone, eating while driving, and reaching for other things inside the car
- Alcohol Use
Drinking and driving is a notorious combination. The same blood alcohol concentration will have different effects on a teenager and an adult. Teenagers are more likely to get drunk faster and if they decide to drive, the likelihood of a car crash accident will shoot up.
Adults or 20-year-olds and up are generally more experienced drivers. They are more careful and safety is their priority. By this time, the cost of auto insurance begins to drop. And if you have a good driving history and relatively few insurance claims, you will continue to enjoy reduced premium costs throughout adulthood.
As you reach the age of 65, your premium cost will likely go higher again but not as high as the rates for new teen drivers. Age-related factors are considered which include loss of hearing, failing vision, slow mental reactions, and situational awareness. Driving in traffic and bad weather conditions may become more challenging for older drivers as well.
Safety Tips For Teen Drivers
- Everyone in the car should wear their seatbelts all the time
- There should be no more than 2 friends inside the car for lesser distraction
- Music volume must be kept at a low level
- No texting is allowed when driving
- No phone calls are allowed when driving
- Do not drink and drive. Assign a designated driver or do not bring your car at all
- No nighttime driving if possible
- No long-distance driving
- Avoid driving when angry or tired
- Pullover if you need to check location and directions on your GPS
- No eating and drinking while driving
- Use turn signals appropriately
- Follow speed limit signs
A popular assumption is that men pay more for auto insurance than women. While it is true that men pay more, the amount is not significantly high. There are more factors that are taken into consideration for premium price aside from gender. Some U.S. states do not even allow gender to be used to determine prices.
Gender used to be one of the significant risk factors that insurers take into account. The reason behind this is:
- Men are more likely to over speed
- Men are more likely to drive under the influence
- Men are more likely to drive without seatbelts
- Men are more likely to buy sports cars
Here are other factors that are combined with age and gender to determine premium cost:
- Driving experience
- Where you Live
- Credit Score
- Marital Status
- Claims History
- Type of Vehicle
When it comes to auto insurance rates, age, and gender matter. However, they are not the only two that determines the cost of insurance premium. They are combined with other factors and calculations will depend on the overall risk level of the driver.
To make sure that you don’t spend as much on premiums if you have a teenage male driver, you can as a parent follow these tips:
- Let your teenager drive a safe vehicle. Resist the urge of buying your son that new sports car he has his eye on. Second-hand cars are better but if you must, buy him that sedan with safety features instead.
- Encourage your son to maintain good grades to avail of a “Good Grade” discount. He needs to get at least an average of B to be eligible.
- Enroll him in a driving course to improve driver knowledge and skills. Once he completed the program, he will be eligible for a discount on auto insurance
- Install telematics to your child’s car. This will help the insurer to monitor the driving habits of your son and track pertinent data.
- Bundle all your insurance policies. Have your agent recalculate to include your teen driver in your car insurance
- Call several insurers and ask for quotes. There are times that other insurers will give discounts to a new client. They can be much cheaper than bundling with your existing insurer.
- Teach your child good driving habits. Before you let him drive alone, make sure that he is ready to face road challenges.
- Make sure that the car he is driving is equipped with safety features like airbags, car alarms, seat belt alarms, anti-lock brakes, and others.
- Set limits. A parent-teen driving contract with rules can be used to get discounts. Some rules you can include are wearing seatbelts at all times, no texting or using the phone when driving and a maximum of 2 passengers inside the car.
- Drive safely. It is important to remind your child to always drive safely. A clean driving record will eventually earn him low insurance rates.
Male teenagers are discriminated against when it comes to insurance rates. They are perceived to be more aggressive and risk-takers when driving. This may be true for some but as in most cases, it is not applicable to all male teen drivers.
Females are becoming more independent today. More women are driving themselves even at night. They are also more likely to get distracted easily. Although there are fewer studies about female teenage driving, it will likely be comparable to teenage male driving in a few more years.
There are a lot of factors that determine auto insurance rates. They are all important to know but the best thing to do is instill in your child safe driving habits. Be a good example to them. They will learn the importance of safe driving if they see it in you. Spend more time with them when they are first learning to drive. You will be able to see how your child will fare once they are driving on their own. You will be the only one to say when your teenage driver is ready.
We Can Help You With That
To help you save on auto insurance, you can contact our knowledgeable team members here at Advantage Insurance Solutions (AIS). We can provide you with a comprehensive guide on getting car insurance for your family. Pick up that phone and call us toll-free today at (855) 973-1202 and get covered!