Auto Insurance

As Teens Put Off Getting Licensed, How Will This Affect Their Insurance Later On?

A growing number of teens are delaying getting a license and this can have a long-term impact as insurance companies factor in driving experience when they calculate the cost of auto insurance. If drivers wait until 18 or later to get a license, they will still be considered high-risk because they don’t have as much time behind the wheel as an individual who got licensed at 16.

There once was a time when teenagers dreamed of getting their drivers’ licenses and claiming their spots on the road. For many, a license meant freedom, but recent studies show a shift in priorities for teenagers between the ages of 16-18. In fact, a study released by AAA shows that only 54% of teens obtain a license by their 18th birthdays.

There are several theories describing why we see a decline in teenagers getting driver’s licenses. Some believe it is due to the graduate driving licensing programs (GDL) in place across the country. GDL laws require new drivers under the age of the 18 to first obtain a permit, then transition to a restricted license, before receiving an unrestricted driver’s license. But, most of the studies show different reasons for the delay.

Affordability

The original drop in licensing is attributed to the Great Recession. After 2008, it was difficult for teenagers to find jobs and save the necessary amount for a down payment on a car and insurance. The lack of financial resources also made it impossible for them to afford proper maintenance and gas. So, instead, teens decided to wait until they could afford it.

No instant need

Previous generations needed a way to commute to school, work or the mall. Many teens live in areas where they can easily walk or ride a bike to where they need to be. Since they don’t have an instant need for a car, they aren’t in a hurry to get licensed.

Social media

Others believe that the number of social media platforms is the cause because teenagers can connect with friends online. Since they don’t have to travel to interact with friends thanks to Facebook, Instagram or Snapchat, they are content creating digital relationships.

Shared ride options

The recent increase in ride-sharing and the promising future of driverless cars also adds to the decline in licensing. Teenagers realize they don’t need to know how to drive, because there are other appealing alternatives that require less work.

Impact on safety

According to the Centers for Disease Control and Prevention, drivers between the ages of 16 and 19 are three times as likely to be involved in a fatal crash. In recent years, the number of fatal crashes involving 16- to 19-year-olds fell drastically—from over 6,000 to under 3,000 reported crashes from 1996 to 2015—arguably, a result of the decrease in individuals licensed at this age.

Impact on auto insurance

Before deciding to forgo getting a driver’s license, teens and their parents should consider the long-term impact. Auto insurance is a necessary expense for any driver, and rates are higher for younger drivers, with rates slowly declining every year. Waiting to get a driver’s license won’t guarantee lower auto insurance rates, though.

Insurance companies factor in driving experience when they calculate the cost of auto insurance. If drivers wait until 18 or later to get a license, they will still be considered high-risk because they don’t have as much time behind the wheel as an individual who got licensed at 16. In addition, new adult drivers aren’t required to follow the graduated drivers licensing program, which means they won’t have logged practice hours either.

Making the decision

Deciding not to get a driver’s license is not simple for teenagers. There are many scenarios to consider, along with the impact each will have.

  • Who will they rely on for commutes?
  • What happens in the event of an emergency?
  • How will they learn later on?

Deciding to get licensed, but not to buy a car also requires different decisions. It is easy to think that you won’t need insurance if you don’t own a car. But, the truth is, if there is any possibility of driving a car, you will still be better-protected while on the road if you have auto insurance. Many carriers offer nonowner auto insurance that covers you while driving somebody else’s vehicle and assures you meet state minimum limits.

Maxime Rieman

Maxime is a Product Manager at ValuePenguin focusing on insurance. Previously she was the Director of Product Marketing at CoverWallet.