Huge variations in auto insurance premiums for young motorists

All you need to do is to shop around if you are planning to buy a car and if you are below 25 years of age. You can save some mega bucks by spending some time on research.

In general, auto insurance premiums vary from one insurer to another, irrespective of how old you are. But the difference in premium is quite significant especially if you are a young motorist, states Des Toups who is the senior managing editor with a California-based auto insurance website.

However, if you are about 55 years old then you can save around $456 on an average every year by simply shopping around with different insurers, but someone who is below 25 years of age can save a whopping $1,102 each year.

Toups was quoted as saying that the $1,000 per year was the way you measure the differences in opinion between the actuaries, while referring to those insurance executives who are responsible for setting the premium rates.

The driving records of young people say a lot about their driving habits and this seems to be one of the reasons for the rates to vary so drastically. Since this is a critical factor while setting the premiums there seems to be a huge question mark, stated Pete Moraga, spokesman for Insurance Information Network of California, since young drivers don’t actually get enough time to prove how good they are while they are behind the wheel.

Hence, each insurer comes up with the one set of parameters while predicting risk. There might be one insurer who gives a kid with a good grade a better discount, while there might be another insurer who might not bother too much about the grades. Hence there is no consensus on any of these factors while calculating the risks or while calculating premiums for young drivers.

Added to that, there are some insurance companies who simply ward off young motorists by charging them exorbitant rates that are much higher compared to their competitors.

Toups states that the initial years especially the first two years in a driver’s life is generally prone to carry more risk as they are more likely to get involved in accidents. He added that some insurance companies consider young drivers to be a huge risk.