When it comes to driving, experience matters. Insurance companies know this. And it’s why auto insurance rates spike when they’re insuring a younger driver with less experience behind the wheel.
“From 16 to 18 years old, that’s the number one time,” said Phil Derksen, a licensed independent insurance agent. “Insurance companies are looking at that’s when the accident is going to happen. So you do see a higher tick in rate.”
On a recent early morning at Osseo High School, Derksen gave a small group of students some auto insurance basics in an eight-week series sponsored by Topline Federal Credit Union.
The focus of Derksen’s presentation was on the cost of auto insurance for young drivers. For example, does it make most sense for a student to carry his or her own insurance or is it best to be on a parent’s policy.
“[It’s a] completely different ballgame. You’re looking at on your parents, a 40 to 50 percent increase on your own,
300 percent to 400 percent increase, I mean a massive, massive difference on that level.”
There are ways students can save on auto insurance, starting with good grades. A 3.0 or “B” average will earn a 10–15 percent discount on insurance or more, depending on the carrier, for each year up to age 23.
Successfully completing a driver’s education course can also earn an additional 5 percent discount.
The best way to insure good rates is to be a good driver: taking caution behind the wheel, putting the cell phone away and watching speed. Paying attention in parking lots can also help avoid fender benders and other accidents that hike up rates.
“You have 2, 3, 4 claims, you’re going to see that rate just skyrocket. Every at–fault accident, it’s a 30–40 percent increase on the rate,” said Derksen.
Assuming a clean driving record, the good news is rates will come down for young drivers with a few passing birthdays, age 25 is when insurance companies typically consider the driver an adult.
Alexandra Renslo reporting
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