Personal lines agents know all too well the financial headache that comes with adding a new, teenage driver on a family policy. After all, teenagers are the riskiest drivers on the road, and insurance rates are calculated accordingly.
Just how much of a difference adding a teenage driver to an insurance plan depends on where your clients live, however. According to a recent study from insuranceQuotes.com, the nationwide average annual premium increase hovers around 79%, but in some states, that figure could be a bargain.
Researchers with Quadrant Information Systems calculated state-by-state rates based on a married and employed 45-year-old male and 45-year-old female who drive 12,000 miles per year and have policy limits of $100,000 for injury liability for one person, $300,000 for all injuries and a $500 deductible on collision and comprehensive.
Adding a teenage driver to this hypothetical couple revealed that the following 10 states charge the most for untested motorists.
1. New Hampshire: 111.12% average increase
2. Rhode Island: 107.35%
3. Maine: 106.93%
4. Wyoming: 105.55%
5. Connecticut: 102.40%
6. Illinois: 101.42%
7. Oregon: 100.72%
8. Minnesota: 96.87%
9. West Virginia: 93.25%
10. Ohio: 93.09%
According to Eli Lehrer, president of the nonprofit group The R Street Institute, unraveling the reasons behind these differing rate increases is complicated. He told insuranceQuotes.com it may have much to do with geography, driving culture and insurance regulations.
Generally, it appears states with less insurance regulation have yielded higher insurance premiums. Wyoming, for example, imposes few restrictions on insurers, which makes for more significant rate increases when teenagers take the wheel.
In Hawaii, however, heavy regulations preventing carriers from considering age, gender or length of driving experience protect clients, with an average increase of 17%.
Other comparatively low increases can be found in New York (52.60%), Michigan (57.11%) and Montana (61.12%).
Producers looking to help clients curb costs can turn to usage-based insurance programs, good student discounts and safer vehicles to score more favorable rates. Regardless, including a teen driver on their parents’ policy is generally less expensive than taking out an individual policy for that child.
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