Factors Influencing Insurance Rates for Young Drivers
While age is the primary factor insurance companies consider when determining rates for young drivers, there are also several other important personal and financial components insurance companies take into account. Below are additional factors that influence insurance rates for young drivers:
Gender
Female drivers tend to pay less than men, as insurers believe women practice safer driving habits than men. As a result, female drivers may enjoy lower rates compared to male drivers.
For example, studies have shown that 20-year-old male drivers pay around $255 more than their female counterparts. Nonetheless, the difference becomes less significant throughout the years. For instance, after five years, male drivers end up paying around $40 more than female drivers.
Location
Drivers who live in highly-populated areas like urban areas tend to pay more for their policies. This is because urban areas typically have higher rates of accidents, theft, and vandalism. In addition, auto insurance premiums are regulated at the state level. This means that each state sets its own price based on factors like traffic density, road conditions, weather conditions, and the likelihood of natural disasters.
As such, states prone to natural disasters will likely have higher premiums than states not prone to harsh weather conditions. For example, Louisiana is the most expensive state for full and minimum auto coverage as it is prone to natural disasters like hurricanes, tornadoes, and flooding.
Marital Status
As young drivers age and get married, the change in their marital status can also affect their insurance rates. Married couples are often seen as financially more stable and safer drivers. Hence, they may enjoy more affordable premiums. According to our research, married drivers pay around $160 less on their premiums than single drivers.
Homeownership
Like getting married, buying a home can also open up car insurance savings possibilities. This is because most insurance companies allow people to bundle their auto and homeowners insurance policies and receive a multi-policy discount. When bundling their home and auto insurance policies, homeowners save around 5% to 25% on their premiums.
However, if you’re not a homeowner, you’re not completely out of luck. Some insurance companies also offer insurance bundles for auto and renters’ insurance. This option can help young drivers save money on both policies.
Credit Score
Again, as young drivers age, their credit scores are also likely to change, which can impact how much they pay. Insurance companies use a variation of your credit score, called credit-based insurance score, to determine the likelihood you may file a claim. This score considers a person’s length of credit history, payment history, amount of debt, recent credit inquiries, and accounts in good standing. For instance, drivers with poor credit pay around 93% more than those with good credit.
However, California, Hawaii, Maryland, Michigan, and Massachusetts do not allow the use of drivers’ credit scores when calculating car insurance rates.
Driving Record
Car insurance companies rely heavily on your driving history to determine your car insurance rates. For instance, drivers with safe habits and clean driving records are more likely to pay less for coverage than those with a history of speeding tickets, traffic violations, and at-fault accidents.
In addition, each violation has a unique set of consequences. For instance, some insurance companies might forgive a minor traffic violation but won't be as forgiving with an at-fault accident. Also, insurance providers check your driving history when your policy is up for renewal. As a result, your premium will only increase due to a violation or accident when you renew your policy.
Here is a list of the most common traffic violations and their impact on your car insurance rate:
Minor Moving Violations: Relatively minor incidents like speeding, rolling through a stop sign, or running a red light are considered less severe violations. Nonetheless, the driver still risks others when committing these violations, as it can lead to accidents and other damage. Depending on the type of violation, the consequences of those actions greatly vary.
For instance, receiving a speeding ticket for going more than 20 miles per hour over the limit is more likely to result in an insurance rate spike than a ticket for a lower speed. However, as a teen or young driver, even minor violations can significantly impact your rate as you don’t have years of driving experience.
At-Fault Accidents: At-fault accidents are more severe violations than most traffic tickets since the extent of the damage is more severe. As a result, insurance companies see you as a risky policyholder and increase your rate. In addition, at-fault accidents stay on your record for three to five years, resulting in potentially expensive insurance rates for several years. Nonetheless, you may reduce your insurance premium and receive a discount if you enroll in a safe driving course and maintain a clean driving record after an accident.
Driving Under the Influence: A DUI violation is one of the most significant violations you can commit. It can result in hefty fines, alcohol education programs, misdemeanor or felony convictions, imprisonment, and a substantial increase in your insurance rates. You may also risk losing your driver’s license and have to file for SR-22 insurance to reinstate it. Note that an SR-22 isn't an insurance policy but a form of proof that a driver carries the state's minimum required liability insurance.
However, not all insurance companies offer SR-22. We encourage you to take advantage of TrySmartly’s free online request to search for insurance policies for young drivers with a DUI.
