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Article Number 7
GetCoveredUSA.com
June 21, 2007

Why Do Auto Insurance Rates Decrease When a Driver Turns 25 Years Old?

Actuaries are to insurance as a Vegas odds maker is to a sports bet. They analyze statistics and risks and come up with a number that represents how likely a person of any given age will statistically have an insurance loss. 16 year old drivers, according to research, have the highest rate of fatal crashes in the United States. Male drivers account for 64% of fatal crashes in this age bracket and Females the remainder.

As a person ages, chemical changes occur in the brain that alter the way they think and act upon situations. Young drivers of course have the fewest number of miles driven under their belt, which is a definite factor. Several studies indicate that the connections or synapses between brain cells and neurons that store new information continue to change from birth to age 25. MRI scans show a significant difference between young drivers and those of a more mature bracket in the frontal cortex of the brain. This is the area that processes cognitive reasoning and other executive functions. The studies also show that until the brain matures, that person more likely to take risks because their brain does not process information in the same manner.

Armed with this data and previous statistical data based on actual losses sustained across the spectrum of the age bracket of 16-25 year old drivers, Insurance Companies adjust their rates upwards for these younger drivers.

Other Interesting Statistics:

• Male Drivers have a 77% higher risk of dying in a car accident based on miles driven
• Cautious 82 year old women have a 60% higher death rate on the highway than 16 year old boys
• The safest passenger is a child buckled in a car seat during rush hour
• Males between 16-23 have a 4x higher fatality rate than average
• The lowest risk of dying in an automobile is in the 40 and 50 year old age bracket
• Graduated Drivers Licenses or also GDL's for drivers between 16 and 18 have so far shown a 20% decrease in casualties on the road.
• Fatal crashes are twice as likely for a 16 year old driver with multiple teen passengers then an alcohol-impaired driver
• A driver talking on a cell phone is more likely to have a crash than an alcohol-impaired driver

Most crashes among drivers 16-24 overwhelmingly indicate that the main cause was inexperience and not in the pursuit of a thrill. The factors include inattention, failure to search for and recognize risks and failure to use safe operating procedures. Teens also have the lowest rate of usage for seat belts, 2/3rds of teen occupants killed in a crash are not wearing one. In contrast, occupants age 35 and older who were killed or severely injured in a crash, 48% were not buckled.

GetCoveredUSA.com TIP: Youthful drivers under the age of 25 can get be eligible for a large array of discounts such as:

• Good Student discount - 3.0 GPA or higher and enrolled in school full time
• Drivers Education - Driving classes can give up to 20% off
• Bachelors or Graduate Degrees - Some companies offer discounts for higher education degrees
• Teensurance - A program offered by Safeco that tracks driving history and alerts parents to violations

Another way a young driver can save a large amount of money on insurance is by driving an inexpensive car and carrying a Liability Only Policy on it. The Comprehensive and Collision coverage needed for more expensive cars can easily double the rate of a youthful drivers' insurance.

For example:

16 Year old driver, the household has a Mother and a Father, each owns a car and wants to add their newly licensed driver to the policy. Both existing cars are less than 3 years old and require Full Coverage due to loan requirements. The insurance rate to add the 16 year old to the policy would increase by $250/month with the existing cars.

Added up over the next 3 years, this comes to $9,000 in insurance just for the young driver alone.

If the family purchases a 3rd car for say $2500 and puts liability only coverage on it, the rate would decrease to $125/month saving $4,500 over the next three years and essentially paying for the car and having an additional $2,000 in savings left over!

Dont forget to ask how much insurance would cost for the Teen driver if there were an accident or ticket on their driving record. Expect to see the monthly insurance rate double for the next three years! Theres no better warning for the new drivers on the road to be safe than to know that they might not be able to afford to even drive if something were to happen. Not to mention possible injury or death.

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