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Why Is Auto Insurance So Expensive for Young Adults?

Insurance companies give the best rates to those who pose the least risk. There are a variety of ways they determine these risk factors. The inexperience of teenagers and young adults creates a scenario where it is hard for them to get good insurance rates. 

Is this fair for everyone in this age group, though? It would seem every person should be evaluated based on their own personal merits. Insurance companies do take every driver’s record into account, and if a young driver has a clean one, they are more likely to get discounts on their policy than a typical young adult. 

The best auto insurance for 20-year-olds will be policies that look at a driver’s experience and reward them for the years they have already been safe drivers. If someone has been driving since they were 16, and they have never gotten into an accident or gotten a ticket, they may receive discounts on their insurance. We’ll talk all about auto insurance for young adults. 

Decision-Making on the Road

One of the reasons that young people don’t get good insurance rates is because insurance companies don’t think 20-year-olds will make good decisions on the road. The human brain is not fully developed yet at this age. This means they are more likely to make rash decisions or not think logically while behind the wheel. 

Young people also have a lot of friends they drive with. The risk of getting into an accident goes up when there are more people in the car. Young folks also cave to peer pressure more often. Others in the car might encourage young drivers to operate a car when they are drunk. 

They might encourage their friends to drive over the speed limit or run a red light. Risk-taking is fun for people in their youth, but not for insurance companies. Even when a person has graduated high school and is in college, they are a risk because they have just exited adolescence. There is a lot of development left waiting to happen. 

Even the most mature young adults make mistakes and have to learn from them, especially on the road. 

Gender Differences in Driving

Boys especially have a hard time getting decent insurance rates. Young women get discounts  their male counterparts don’t. This is for a variety of reasons based upon years of data and research.

All these factors are left up to the insurance companies, though. If they feel it is time to move past using gender as a reason for insurance pricing, there will be fewer differences between male and female pricing. There are no signs of this happening soon because the data still shows men make more mistakes on the road than women. 

Why Women Get Better Rates

Women get better rates because there is some proof women are more conscientious in young adulthood. They think clearly compared to men and they will make more logical decisions when they are driving. 

Women may also be more interested in the basic reasons for driving. This means simply getting from point A to point B. There won’t be any reason to drive more than is necessary to get to their destination.

Men and Cars

Men buy sports cars at a higher rate than women. This often means increased speeding or maneuvering with the sports car and it will put the driver at risk of crashing. They may also drive more often if they are interested in the car industry at large. 

Men want to learn how cars work, and whether they want to go into a career in the auto industry, which is still dominated by men. 

Men who drive responsibly might feel these high insurance rates aren’t fair. It’s frustrating to be penalized for others’ actions on the road, but individual men need to put forth their best effort to improve their driving skills. The more people start to drive responsibly, the less total accidents there will be on the road. 

There are even more factors that can contribute to these increased rates, like lack of sleep. The life of a young adult is very demanding and can lead to exhaustion behind the wheel.

Miscellaneous Factors to Consider

Gender and experience may not be the only things that make insurance rates jump for young adults. There are other things that get forgotten about the young adult lifestyle behind the wheel that are important to consider. 

Young people are more likely to engage in drowsy driving than the rest of the population. No demographic is more sleep-deprived than 18-24-year-olds. This group sometimes juggles going to college with taking care of kids and working on the side, and they get into sleep-deprived accidents 80% more often than 40 years olds. 

They drive to jobs, school, and other obligations on less-than-ideal sleep schedules, and their ability to operate a vehicle is severely impaired. 

Young people socialize a lot. This means that alcohol may be involved more often than in other demographics, and the risk of them getting a DUI is higher. Insurance companies, both auto and even life insurance, look closely at these types of risks, and they definitely are in tune with the high rate of drunk driving crashes that occur with young drivers. 

Some Solutions for Young Drivers

All a young person can do to get better rates on their insurance is control what they can control. 

Make great decisions when behind the wheel. Kids can’t gain experience overnight, but they do start out with a completely clean record. This gives a young person one of their only advantages over an older driver. Middle-aged people have more time to make mistakes. Young people get a pristine slate to paint a great driving picture for their insurance company. 

If all else fails, young people can try to stay on their parents’ insurance for as long as possible. Not every parent will allow this. Still, if the parent owns the car, and the young adult is a great driver, it makes sense for the parents to support this great driving by paying for the insurance. 

Hopefully, every young person can take responsibility for the actions they make on the road, and with some good insurance shopping online or in-person, they’ll be able to find an affordable policy. 

About the author: Shawn Laib writes and researches for the auto insurance comparison site, AutoInsurance.org. He wants to help young drivers find the best ways to get cheap insurance.