How much does adding a teenager increase my car insurance rates?

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Asked June 9, 2016

1 Answer

If you add a teenager to your policy, then technically your rates do not increase. Adding a teenager doesn't effect your individual rate, but it does increase the policy premium overall because the teenager who was just added will have their own (typically much higher) rate. The technical terminology, however, is that adding a teenager does not increase rates, it increases overall premium.

Why Is This Important?

Rates are the amount of money for you to drive. Rates are determined by your specific history. Do you have a good driver history? Do you have accidents and speeding tickets or are you clean? Also, what is your credit history like and are you considered a responsible risk? These are the questions an insurance company will ask you and this is what makes up your "rate." If you add a teenager, they do not change your rate. What does happen is they have their own rate.

How Much for the Teen?

When you think about the general rate calculation for a teenager, you can see they have little to no driving history, they don't have a significant credit score. They also have a younger age. All of these things go into the rating models and determine the teenager to have a much higher level of risk. This is why a teenager's rate may be as much as two or three times that of their parents. It wouldn't be a surprise to see parents insurance premiums at half (or less than half) of their newly added drivers.

Why Do Rates Differ?

When you consider the fact that teenagers being added to the policy actually represent a significant risk to the company, then it makes sense why rates can be so high for those teenage drivers compared to the rates of adults and parents. When you think about the general inexperience, all of the potential problems that occur with friends and distractions, and even the case that many young drivers are out in the evenings and at night, it only makes sense why they are a risk.

Why Do Insurance Companies Charge So Much?

Insurance companies need to charge enough money for insurance premiums so that when accidents occur they have enough cash to pay to replace a car and fix the damages. They also need to have enough money to pay lawyers and attorneys to defend you if you are ever sued over an accident. When you think about all of these potential costs then it only makes sense why teenagers can be charged so much more.

Answered June 11, 2016 by kai127

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