Seeing the potential rate increase when you consider adding your child to your auto insurance plan can be shocking; since younger drivers are more prone to accidents, your auto insurance company will require you to pay quite a bit more in premiums in order to cover the additional risk. However, adding your child to your insurance plan will result in lower household-wide premiums overall than if your child purchases insurance on his or her own.
It's recommended to shop around at different carriers to see who will give you the lowest rates when you add your child to your auto insurance plan. You'll also want to review your desired level of coverage; younger drivers are more likely to drive with friends in the car and likely need more liability insurance than the state minimums in order to cover any injuries to passengers in the event of a collision.
Young Drivers Purchasing Auto Insurance On Their Own Enter A High-Risk Pool
There are a number of issues facing young drivers that cause them to pay high premiums when they attempt to purchase auto insurance. The first is just a matter of simple statistics; young drivers get into more accidents and these accidents tend to be more expensive as well. This is due to the fact that young drivers are less experienced and are more likely to drive with friends in the vehicle. Auto insurance companies will charge young drivers more for insurance simply because they are more likely to actually need it.
However, there are some other factors working against young drivers as well. Having no prior insurance and having little or no credit history also cause auto insurance companies to consider you a higher risk. There are also few deductions to be had; you can't get a safe driving record deduction if you have no driving record and you cannot roll your home and auto insurance into the same plan for that deduction either if you don't own a home. Both of those are major sources of deductions for older drivers. Overall, any young driver who wants to immediately purchase insurance on his or her own will face very high premiums.
Adding Your Young Driver To Your Own Auto Insurance Plan Saves You Money Overall
The solution is to add your young driver onto your current auto insurance plan; even though your premiums will go up, the premium increase in your plan will far outweigh the premiums your child would pay on his or her own plan due to the above-mentioned factors.
Adding your child to your auto insurance plan is a great time to shop around for different insurance companies; adding a young driver to a current insurance plan is one of the situations in which the amount your premium rises will vary quite a bit among different insurance companies due to the way different companies calculate risk. For example, some auto insurance companies allow you to assign a vehicle in your home to a certain driver whereas others pool all the vehicles and drivers in the home together – in the latter case, this may mean that the insurance company is assuming that your child, the riskiest driver in the household, is able to drive the most expensive vehicle that you own. Assigning the least expensive vehicle to your child will decrease your premiums, but it also means that he or she will not be covered while driving any of your other vehicles.
Rates For Young Adult Drivers Decrease Rapidly Until The Age Of 25
Age-based auto insurance premiums begin very high at the age of 18 and decrease rapidly until age 25; after this, the rate of decrease is much slower. Adding your child to your insurance plan for the first few high-risk years will result in the lowest premiums paid overall. At this point, your child will not be subject to high age-based premiums and will have prior insurance history along with some credit history as well. This allows him or her to enter into a much lower risk pool than attempting to purchase auto insurance on his or her own.
Contact a company like LA Insurance for more information and assistance.