It is a known fact that the teenagers are required to pay an auto insurance premium that is generally higher than the others. Furthermore, the insurance premium charged from a teen who is male or if you are a young male who is under twenty-five years of age, is more than young female drivers. Let us examine what forces the insurance companies to make this segregation.
Many young drivers detest the fact that the auto insurance companies impose these higher premium charges on them in spite of them being unable to afford to make the payment. Even though these teen drivers are dead against this discrimination, the auto insurance companies have their own reasoning for forcing the teen drivers to pay these huge amounts.
So, now the question is, ‘who is right?’ Is there any need for the auto insurance companies to make a higher claim from the teenagers? The logical reasoning provided by the companies mentioned below throws light on why the insurance companies have every cause to make this discrimination between the teenage drivers and the older adults.
With the statistics revealing that the number of road accidents being generally higher amongst the teenagers than the adult drivers, it is no wonder that the insurance companies force them to pay a higher premium. The claims submitted to the insurance companies by the teenagers are quite frequent. To meet this rising costs, the insurance companies have to resort to a higher premium rate. Also, the insurance is based on the law of large numbers. This law states that the average result reflected by the past records tend to get mirrored in the future trends. Therefore, it is inevitable that these insurance companies charge more on the teenagers and young people below twenty five years of age than those aged above twenty five.
Another cause for the higher premium on the teenagers is that they have the penchant for speed and love the thrill from this experience. It is the immaturity of this group of drivers that make them more susceptible for accidents.
For some, this may not hold as a valid reason for discrimination. But, if this category of people is not charged higher, the insurance companies will pass on the responsibility on the others who are known for the greater effort taken by them to minimize accidents. So, is this a fair practice?
Higher premium does not mean that all the teenagers have accidents. Some percentage of teenagers never had a car accident all these years; but the greater percentage reveals an irresponsible behavior that results in rising accidents. The insurance rates are typically based on the probability these teenagers hold for an accident.