A piece of advice if you are a young driver who is below 25 years of age and if you are planning to purchase auto insurance – shop around. Auto insurance premiums generally vary from insurer to insurer and there is a lot of disparity irrespective of the age. However, the disparity is much greater when you are younger, states Des Toups who is a senior managing editor at the California-based auto insurance website CarInsurance.com.
If you are a 55-year-old then you can save at least $456 on an average per year by just shopping around with multiple insurance providers, but if you are below the age of 25 you will be able to save more than $1,102.
This is not the difference between quotes which are the highest or the lowest, but this is just the difference between the second-lowest and the lowest.
Even the difference of $1,100 is just the difference of opinion in the actuaries, states Toups while referring to those executives who are responsible for setting the insurance premium rates.
One of the prime reasons for this disparity in rates is due to the driving records of young drivers. This is one of the most critical factors in setting the rates and this is also one big question mark, stated Pete Moraga who is the spokesman for Insurance Information Network of California. This is a big challenge while setting the rates as young drivers will obviously not have ample proof to show that they are good drivers as they would not have spent enough time driving.
Hence each insurance company follows its own set of parameters while predicting risk. In some cases, the insurers might go by the grades that these young adults have and they might offer them discounts if they obtain good grades. But there may be the others who might not go by the grades but may use other parameters.
There are a lot of auto insurance companies who simply shun young drivers as they assume that they pose a major risk. It is a well-known fact that the first year in a motorist’s life is filled with a lot of risks and dangers and there is more likelihood of being involved in accidents. Toups went on to state that some of these insurers treat youngsters like a ‘poisonous risk.’
There are many variables when it comes to the insurance premiums and the best way to find out is to shop around.
