Some families can't afford to let their teens drive

Here's a troubling statistic for teens who are eagerly awaiting their 16th birthdays: A recent poll from Nationwide Insurance found that many young people are waiting longer to get their driver's licenses.
The poll, conducted by Harris Interactive, sampled nearly 1,500 Texas teens and their parents between December 2010 and January 2011. Researchers found that the bumpy road to economic recovery, along with high costs for insurance and other extras, is leading families to cut back. Auto insurance, gas prices and the cost of a car for the teen to drive all put financial pressure on families -- meaning many teens are waiting longer to get in the driver's seat.
According to the data, American families are doing a lot of the following:
  • Cutting back on other kinds of household purchases to buy auto insurance for teen drivers.
  • Delaying teens' access to family vehicles.
  • Not buying a separate car for a teen driver.
  • Relying on income from a teen's job to fund insurance or vehicle purchases.
In many cases, parents pay more than half of a teen's car-related costs during the first years of the young driver's experience, but that may be changing as families struggle to deal with loss of income, unemployment, loss of home equity and higher costs for basic necessities. The Nationwide/Harris poll reports the average family pays a staggering $4,000 to let a teen drive.
One particularly expensive cost is auto insurance. Teens present a greater risk for insurance companies than adults do because of their lack of driving experience. The Insurance Institute for Highway Safety (IIHS) points out some of the top reasons why teens behind the wheel mean bigger risks -- and bigger premiums:
  • Teens can be immature and often lack the judgment of adult drivers.
  • When they drink and drive, teens are more likely to crash than adults who've consumed alcohol.
  • Technology and texting are a part of teens' lives. Their lack of behind-the-wheel experience makes distracted driving particularly dangerous.
  • If friends are in the car, teens may face peer pressure to drive recklessly.
In general, IIHS has found that teens between ages 16 and 19 are four times as likely to crash a car as older drivers are. All of this leads to high insurance rates for the youngest drivers. To counter these costs, the Insurance Information Institute offers parents a few ideas:
  • Pick a safe car. Many auto insurance companies offer discounts for vehicle safety features. If the teen will be driving one of your cars, choose the one that's the least valuable. An expensive car plus a driver who's more likely to wreck typically equal higher premiums.
  • Enroll teens in a driver's education course. If your teen completes a course recognized by your insurer, it may offer a discount.
  • Add additional ground rules for teen drivers, and explain that if they cause an accident, it means higher insurance costs that you might not be able to afford.
  • Give teens a financial incentive to be safe by making them pay for insurance or other costs.
  • Encourage good grades. With some insurers offering good student discounts, a report card full of A's and B's actually can lower your teen's insurance costs.

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