The average cost of car insurance for drivers aged 16 to 25 has me sweating bullets
My husband and I have a seven-year-old and a five-year-old. With the youngest heading to Kindergarten in the fall, we’re looking forward to certain relief from years of daycare expenses. Of course, sweet solace won’t last forever. If you’re getting ready to insure a teenager, you should probably sit down first. An analysis from a personal finance company breaks down just how brutal car insurance costs can be for first-time drivers, and how long it takes for those sky-high rates to chill out.
At 16, the average annual car insurance premium clocks in at $3,192
That’s not a typo. It’s more than a decent used car.
By 17, the rate dips slightly to $2,647, and by 18, it’s still a steep $2,325. Parents footing the car bills, including any financing, repairs, fuel, etc., might feel like they’re financing a second mortgage.
WalletHub’s numbers show a steady drop each year as drivers age, gain experience, and hopefully avoid fender benders. At 21, the average rate drops to $1,217, and by the time a driver turns 25, it’s finally under the thousand mark at $815 per year.
By the way, these estimates are for drivers with a clean record, maintaining minimum car insurance coverage, and “good” credit ratings.
A company analyst recalled that premiums for teens are high because, well, insurers consider them high-risk
Most are inexperienced and statistically more likely to get into a car accident. In any case, good behavior pays off. Drivers with clean records can expect a rate cut of up to 20% when they hit 25.
In the meantime, there are ways to avoid financial whiplash
Experts recommend shopping around for quotes, considering adding the young driver to an existing policy, and not overlooking good student discounts. And while dropping extra coverage might shave off a few bucks, it’s a gamble drivers should weigh carefully.
Another money-saving move is to bump up your deductible. Well, as long as you can afford to cover the difference if something goes wrong. Above all, WalletHub stresses one golden rule for new drivers: keep it safe out there. Fewer tickets, fewer claims, and a few years of clean driving can lead to real car insurance savings. And maybe, just maybe, a dry forehead (fingers crossed in our house).
