Insurance companies more willing to take risks on young drivers

By Mike Copeland

The Wall Street Journal reports that a changing market is behind the way young drivers are viewed today.

Auto insurance premiums have been flat or even down in much of the U.S. because of safer cars, reduced theft rates, better fraud prevention and greater competition. U.S. auto insurance premium rates rose just 0.4 percent in 2007, according to the U.S. Bureau of Labor Statistics.

Tech-savvy youngsters, meanwhile, are more likely to shop the Internet for the best deals on insurance, which is another reason insurance companies are courting them with discounts.

Still, young drivers remain riskier than other groups. Drivers under age 20 were only 6.4 percent of the nation’s drivers in 2006, but they were involved in 13.2 percent of all fatal crashes.

Technology is allowing parents to keep a closer eye on teen drivers.

OBS Inc., a Colorado-based mobile surveillance company, has launched the HD1, a video-camera system for cars that is aimed at parents with teenagers. It starts at $965 and works like a digital-video recorder, filming everything that goes on in and around a car with as many as four cameras. Parents can remove the hard drive from the system using a key and connect it to their TV or personal computer to view the video.

Some programs aimed at keeping young people safe behind the wheel are more geared to personal responsibility.

John E. Fadal, who has a Farmers Insurance Group agency in Waco, said Farmers will give young drivers up to age 21 a 10 percent discount on their liability, personal injury and collision insurance if they maintain a B average in school, complete a driver’s safety course and watch a safety video.

But Fadal said there is “no question” that insuring young drivers remains more risky.

“There are some we have insured for years, and we never hear anything from them. Some we can’t run off,” Fadal said. “I can remember a 16-year-old kid that we had insured only a few weeks when he was involved in a bodily injury accident in which a person was killed. We paid a $100,000 claim.”

Ramona Cunningham, an agent with Germania Insurance locally, said she offers a 10 percent discount on collision and liability insurance to young people who take a driver’s education course.

She said it benefits youngsters to stay on their parents’ policy for six months to a year so they can establish a good driving record. That will help them when they pursue a policy on their own, she said.

Local Allstate agent David Wilson said that company offers a 15 percent discount on collision, comprehensive and liability coverage to young people who maintain a B or better average in school. They can pick up another 10 percent discount by attending driving school.

“That’s a total of 25 percent,” Wilson said.

Wilson said he insures a family with a 17-year-old son who drives a 2002 Ford F-150 pickup. The family pays $439.10 every six months to insure the pickup, but that represents a discount of $102 because the 17-year-old is a good student who has taken driver’s training.

“If that teenager bought insurance on his own, he would be paying twice that rate, I guarantee you,” said Wilson, adding that he and the family benefit from discounts on multivehicle coverage.

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