In 2016 alone, the overall premium charged by the UK’s motor insurance industry was 20.4 Billion EUR. In the same year, over 16.5 million pounds were paid off by the auto insurance industry due to claims made. As per the global insurance trends of 2017, motor insurances have the highest rate of increasing premiums in a lot of countries.
Did you know that the premium young drivers pay for insurance is considerably higher than what older adults pay? Well, in the UK the average cost of auto insurance for young adults is 1036 GBP. Meanwhile, a sixty-something individual pays an average of 657 GBP.
You might wonder, why are premiums charged to young drivers high? Well, here are some of the reasons.
Young drivers don’t have records
Just like car buyers check your driving record when you decide “I want to sell my car,” the insurance company does so too. After all, they need to gauge how safe a driver you are, before they decide to provide you with coverage. However, in the case of young drivers, this record doesn’t exist since they are starting their driving journey. This is why they are unable to benefit from the break that comes from having driving records.
Tied with the previous reason is the apparent lack of driving experience of young drivers. Since it is understood that the younger you are, the lesser time you have spent behind the wheel, naturally you are viewed as a risky investment. You haven’t faced different driving situations, and hence there is no guarantee that you are ready for them either. For instance, while an experienced driver can avoid accidents on rainy days, the same cannot be said with certainty about young drivers. Hence, a high premium is charged to make up for the risk.
Higher probability of indulging in distracted driving
Did you know that most car accidents occur because of distracted driving? Over 18% of crashes are attributed to this single behavior. Millennials are known to be distracted. It is widely observed that their attention span is very less and they try to juggle multiple things at once. Whether it be texting when behind the wheel or having an intense discussion with someone, young drivers are more likely to be distracted when driving. This makes them more prone to accidents. Thereby auto insurance companies charge a higher premium. You must prove that you are a safe driver via your driver record and experience to combat this bias eventually.
Statistics are against them
Insurance companies love stats. It is how they decide on their premiums and packages. Sadly, the statistics are against young drivers. They have a significantly higher proportion of accidents. They are known to be involved in DUI and reckless driving. Let’s just say their track record isn’t good at all. Insurance companies have the stats to prove it and justify their high premiums.
If you are a young driver, you will have to deal with high premiums. There is no way around it. As you grow old and gain the road experience, you will find your premiums decreasing. Buckle up. Be safe. Be patient.