I suppose many teenagers share the same sentiment. They’ve been driving ever since the state could legally issue them their license; they’ve kept a perfect driving record from never having to be pulled over to even using perfectly timed hand signals during driving. But why is they’re insurance still so expensive? Is it legal to charge teenagers that much for insurance premiums?
Before we go to that, first we have to understand some basic principles on auto insurance. Auto insurance is like any other type of insurance out there. And the number one factor that auto insurance looks out for is risk. Whether we like it or not, the insurance system is first of above all, a business. And like any business, it is profit oriented. Insurance companies earn money if at the end of the term. The person who purchased a premium spent more on upholding it than from collecting from it because of an accident. In short, insurance companies don’t want us to get hurt not because they care for our well being but because that will equate to a financial loss in their company.
Statistics say that teenagers and the elderly are the most prone to be involved in and cause auto accidents. According to some research, a 17 year old driver is five times more likely to get into an auto accident than a 35 year old. If you look at this from a business point of view that can be equated to a 500% increase in possible loss from your company! Roughly interpreted, an average teenager’s insurance could be worth that of five middle aged men! These statistics were based on the driving patterns of American teenagers and could reflect differently in other parts of the world.
Many people may argue that judging teenagers on age alone is unfair stereotyping. It is true that there are many teenagers there that are responsible drivers and there are also many middle aged people who drive more recklessly than any other 17 year old. Many auto insurance companies argue in their defense that although there may be quite a number of reckless drivers in other age groups, the risk factor of teenagers is just too high to ignore. If teenagers would be given the same insurance rating as others, it could bankrupt the insurance company.
So what can we do about this? Well I suppose you’ll have to work it out the same way any teen works out problems growing up; through bearing with it. This could be seen as a new phase in teenage development that cannot be removed, but can be outgrown. Statistics say that people aged 25 have the lowest insurance rates. We can say that auto insurance ratings can be a new way to look at how much we mature behind the wheel.