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Archive for April, 2011

This post attempts to clarify the reasons why teenagers pay a increased premium for their auto insurance; it’s not a how-to guide on lowering your auto insurance bills if you’re a teen or a young male under the age of twenty-five.

It truly is no secret that young people today pay more for their auto insurance which is odd because it can be this precise group of people that are the least most likely to have the ability to afford to pay these varieties of bills. This frequently translates into anger towards insurance providers for discriminatory practices against young drivers.

Is this discriminatory? Is charging increased insurance rates for teenage drivers and categorizing them can be a class that must pay larger discriminatory? The short answer is “no.”

It would enable to explain the cause that this group of drivers pay a lot more. It really is critical to 1st explain one of the fundamental tenets of insurance. Insurance is based on the law of massive numbers. What this suggests for insurance is that premiums are based on the characteristics of sure market segments. For example, based on historical statistical information, insurance firms uncover that drivers below the age of 25 will get into additional accidents and make more claims, on the entire, than drivers over the age of 25. Thus, drivers under 25 pay extra.

This group of drivers could have a lot more accidents for any number of reasons which include inexperience or a increased propensity for recklessness. Either way, it doesn’t matter. All that matters is that young drivers have much more claims. And they do. That’s a reality.

Now, if young drivers have much more claims, would you nonetheless believe that charging them greater insurance premiums is discriminatory? Maybe, maybe not. If not, then the larger rate of claims would need to be paid some other way. Possibly, the higher premiums will need to be shared amongst all drivers? If that were the case, drivers over the age of 25 could be compensating young drivers for their claims by means of their very own larger premiums. Now, that wouldn’t be fair, would it?

Some teenage drivers may perhaps say that they have never had an accident and, for that reason, should not pay as considerably as other young drivers do. This is faulty reasoning. Most teenage drivers really haven’t had a vehicle accident. It’s just that a greater percentage of them have. It truly is that increased percentage that makes it a higher probability that a young driver will have an accident. Your insurance rates are based on this probability for a future accident.

Teenagers do pay a increased premium for insurance since they’re a greater danger. No matter just how much you think that this is unfair or discriminator it will not change. It won’t change so long as other young drivers keep having accidents. So, your anger ought to be directed at reckless young drivers. Get them to behave although behind the wheel and your own insurance rates will drop as a result.