Drivers can get their licenses at age 16 in most states. That means learning to drive is probably one of the first big steps a young person will take on the road to independence. However, just because they are able to drive independently, that doesn't mean teenagers have their financial freedom. Therefore, young drivers likely have cost at the forefront of their minds when looking for car insurance. If you're their agent, what can you do to help them get the most cost-effective policy for their needs?
The Risks Of High Premium Costs To Young Drivers
Most insurers base premiums on the amount of risk a driver poses to them. That is, they want to know the likelihood that someone will file a claim against their policy.
Young drivers often look much riskier in the eyes of their insurers. Because they don't have years of experience behind them, they have higher risks of having accidents (that the insurer will have to pay for). Furthermore, because they might not have a lot of money in the bank just yet, the young driver might actually have to call you more often if their car sustains damage. Again, that's more of a risk that you will have to pay on their behalf.
A young person's relative financial instability might also mean they have a higher risk of not making their premium payments, particularly if they have a high insurance cost. But, if you have to cancel their coverage, then this might actually cause them to face higher rates down the road.
These are just a couple of examples of why you should help first-time insurance customers try to get the most affordable policy they can.
Tips To Help Clients Save On Their Rates
There are many steps you can take to assist your young clients in getting an affordable car insurance rate. These might include:
- Comparing multiple policies from multiple insurers. Since different insurers offer different rates, even for nearly-identical policies, just choosing one over the other might help a driver save a considerable amount of money.
- Recommending the driver join a multi-vehicle policy. In a multi-vehicle policy, you can insure numerous people and vehicles under similar coverage parameters. For example, you might be able to add the young driver, their parents and their respective vehicles to the same policy. In many cases, the individual's premium (within the group premium) will be lower than it would on a separate policy. This is a good step to take if a young person doesn’t own their own vehicle, which is instead titled to their parents.
- Advising higher deductibles. If a driver decides to increase their collision and comprehensive policy deductibles, they might qualify for a lower rate. A higher deductible switches a bit of the cost burden of a claim from the insurer to the policyholder. However, do not advise a client to arbitrarily increase their deductible. If they do, this might mean they could face a high personal cost for a claim that they can't afford to pay.
- Seeing which discounts can apply to the driver. Qualifying drivers can often save on their rates through numerous discounts. For example, one discount that many young drivers qualify for is the good student discount. If the driver is enrolled in school and they maintain good grades (for example, a B average or above) then they can qualify for this discount for as long as they meet those conditions.
Regardless of whether you are working with a first-time driver alone, or with their family as a whole, remember that cost is important to these parties. Do what you can to help them get a policy premium that is reflective of their cost needs.