Teenage Driving: what does it REALLY cost?

According to the Insurance Information Institute, in 2002, the estimated economic cost of police reported crashes involving young drivers between the ages of 15 and 20 was $40.8 billion.

Putting a teenager on the road is more expensive that you probably realize. Along with the cost of a car, gasoline and upkeep, consider these facts:

  • Insurance rates for teenage drivers are always higher than for other drivers because they pose a higher risk for vehicle crashes. Adding a teenager to the insurance policy means a 50 to 100 percent increase in the parents’ insurance premium (Insurance Information Institute, April 2004).
  • When adding a young driver to your automobile insurance policy, you are assuming responsibility for their actions. It is important to review your liability limits at this time to make sure you are adequately covered by insurance.
  • Typical costs for vehicle title, license plate and registration are $185 (Leon County, Fl) but vary by state.
  • The cost of obtaining a driver’s license varies by state but is $20 in the state of Florida. Our survey of four major insurance companies found the following: a family with two vehicles (mid-priced, 2001 and 2002 models) will pay about $1,824 a year for automobile insurance. By adding a young driver with a clean driving record as an occasional driver on one of the parent’s vehicles, the premium will rise by about 65 percent to $2,888.

    If the parents decide to purchase a vehicle for the young driver (a 2000 4-door Ford Focus, for example), the premium rises to a whopping $4,361 for the year, an almost 250 percent increase! If the young driver with a car receives a moving violation and is involved in an at-fault collision, the premium will increase by another $1,440, which raises the family automobile insurance premium to $5,801 for the year.
  • Families can save money on insurance by having multiple lines with the same company (homeowners and auto), keeping clean driving records, applying “good student discounts” for young drivers with a “B” or better grade point average and having safety features on vehicles such as anti-lock brakes and anti-theft devices.
  • New AAA data states that for every mile you drive in 2004, it will cost you 56.2 cents. This includes variable costs such as gas and maintenance as well as fixed costs such as insurance, taxes, license, depreciation and finance charges.
  • The Bureau of Transportation Statistics estimates the annual mileage driven is approximately 14,500 miles per person.
More on the cost of teenage driving:
a budget analysis

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