Teens nearly double cost of auto insurance rates

If Ohio teen drivers join their parents’ auto insurance plan, they drive up the premiums by about 84 percent, nearly doubling the cost, according to a new study by InsuranceQuotes.com.

This is partly because teens are statistically riskier drivers than non-teenage drivers, but also because insurance regulation differs state to state.

Laura Adams, senior analyst at InsuranceQuotes.com, said 16-year-old drivers are the most expensive to add to an auto insurance plan, but gender also factors into the numbers, even for older teens. Ohio’s rates are also “right in line” with the national average.

An 18-year-old female driver causes the parents’ premium to go up 67 percent, and an 18-year-old male driver 18 causes it to go up 91 percent,” Adams said. “They tend to be more aggressive and risky on the road compared to female drivers. They’re going to cause your rate to probably double across the board.”

While it is incredibly expensive for parents to add a teen driver to their insurance plan, Ohio teens will pay about 32 percent more if they choose to buy their own insurance plan. For teens, staying on their parents’ plan as long as possible is a better deal, even if it hikes up rates for parents.

Adams said if parents bundle their home and auto insurance, own multiple cars, have a good credit score and a fairly good history of accidents and moving violations, they can get discounts on their insurance plans. Teen drivers with at least a 3.0 GPA may also qualify for discounts.

Mike Barry, president of media relations at the Insurance Information Institute, said states differ on how they regulate auto insurance, so teens in Ohio will pay more or less compared to other states. If Ohio insurers think there will be more claims in a given year, they will charge clients more to compensate the loss.

“Insurance is regulated at the state level, not the federal level, and auto insurers’ rates are set based on the actual and anticipated losses they’re going to have in that state,” Barry said. “It’s a sign that Ohio’s auto insurers have received not only a larger number of claims but claims that also cost more to pay out.”

While this is the first year InsuranceQuotes.com has conducted the study, Adams said she doesn’t expect rates to increase in the future, unless fewer teens start getting their licenses.

“We do see fewer teens getting their licenses early, and since the cost decreases as you get older, it may be that fewer 16-year-olds are going to drive,” Adams said. “There are fewer teens getting licensed, and if that trend continues, we’ll see rates coming down because less teens will be getting coverage.”

Adams suggested social media may be prompting the decline of teen licenses.

“Teens don’t need to go see their friends because they can see them online, and it’s a lot easier to be connected,” Adams said. “But it also could be due to the cost of insurance and the unemployment rate for teens, who may be having trouble finding jobs and paying for it (license and insurance).”

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