Teen drinking is not only dangerous, it’s expensive
By Gary Tribbey
Personal Lines Business Analyst
The next time your teen-ager heads out for the evening, remind him about the costs of drinking and drug use. Beyond the obvious health and safety hazards, your teen should also know that his behavior could affect his auto insurance as well.
Alcohol and drug violations can have a significant impact on teens’ auto insurance premiums, even if they weren’t driving or even near a car at the time. That’s because insurance costs are based on probability. According to actuarial analysis by the insurance industry, risky behavior, like underage drinking and drug use, increases the likelihood of drinking and driving in the future.
In fact, just one alcohol or drug violation could make a teen ineligible for standard auto insurance. If the youth is forced to switch to a nonstandard insurer who handles high-risk drivers, annual insurance premiums could more than double. That means a 16-year-old male with one drinking violation could end up paying almost $4,000 a year just for car insurance.
In addition to alcohol and drug violations, another factor that affects how much your teen-ager pays (or in many cases, how much you pay) to drive is how well she performs in school. Typically, most insurance companies offer a good student discount of 25 percent if proof from the school is provided showing that a teen has maintained a B average or better.
The kind of car your son or daughter drives also makes a difference. Sometimes financially successful parents are tempted to buy their teen-agers the kind of car they always wanted when they were 16. But consider this: A 1998 Firebird Trans Am can cost $1,300 more each year to insure than a 1998 Pontiac Grand Am SE.
That’s because insurance companies rate youthful drivers with sports cars higher because data shows they are statistically more likely to drive faster and more recklessly.
And sports cars alone aren’t the culprit. Some sports utility vehicles, sportier two-door cars—anything with a high performance image, a higher price tag, or a less-than-stellar accident rating—will increase the amount you pay for insurance.
If you’re looking for a safe car that’s inexpensive to insure, consider an older model, four-door sedan.
While your son or daughter may not like the vehicle choice, a sturdier vehicle that’s not as "cool" to drive could prevent the temptation to drive fast, will keep your teen safer in the event of an accident, and will also make insurance that much more affordable.
Your auto insurance agent can give you additional details on how your child’s car type, academics and past violations will impact their individual rates and coverage options. You may also want to shop around to ensure that your teen is getting a competitive rate from an established, reputable insurer, just in case they would need to file a claim in the future.
About the author: Gary Tribbey is a personal lines business analyst for General Casualty Insurance Companies and has 30 years of insurance experience. He speaks regularly at a Sun Prairie program for drivers education students and their parents, with whom he discusses the factors affecting auto insurance rates for teen drivers.
For more information please contact Anne M. Smith.