Insurance Companies More Willing to Take on Teenage Drivers
Sep. 29--Insurance companies used to avoid teenage drivers, fearing they would prove a costly headache with their accidents and immature driving.
But things are changing.
Insurance agents say they now are offering discounts to teenagers and other young drivers, hoping to attract their business. That's something unheard of a few years ago.
The move comes amid greater competition among insurance companies, and at a time that young drivers are not quite the risk they once were for a variety of reasons.
Many states, including Texas, have placed restrictions on teenage drivers. Some can't drive between midnight and 5 a.m., or they can't have a cell phone or other mechanical device in the car. Others can't pack their cars with other teenagers.
Some parents are getting involved. They're investing in the latest in monitoring systems to watch their youngsters drive.
Something called the DriveCam, for example, can record what's going on inside a car and the view outside through the windshield.
Ricky Palmer sells security and tracking systems at a Waco company called Shades Custom Tint. He offers a GPS-like vehicle tracking system called Street Eagle that monitors the location and speed of a vehicle. It even can be used to shut down a car.
These movements can be watched on the Internet by anyone with the correct log-in information, Palmer said.
"We sell these for a lot of different reasons," Palmer said. "Some parents are looking to track kids, but most of our business involves installing the systems in fleet cars." Palmer said the system costs $350 plus a monthly fee that varies with usage.
State Farm, the nation's largest automobile insurer, has been offering discounts up to 15 percent for drivers under age 25 in most states who take part in its "Steer Clear" safety program that involves keeping a log of driving habits.
"We try to make the program available to everybody we can get a hold of," said Blake Harrell, a local State Farm agent. Harrell said insurance companies indeed are stepping up efforts to get young customers.
"People want future clients," he said. "If Mom and Dad die and Junior is not already on the books, he will go somewhere else. We'll take losses with the idea of getting future clients." Harrell said the log that drivers keep poses questions they must answer after taking trips. They may have to comment on whether they were distracted at any time during the drive, how many passengers they were carrying or whether they used a cell phone.
State Farm also offers a driver's training discount of 10 percent and a good student discount of 15 percent.
Safeco has rolled out its "Teensurance" program for drivers typically up to age 25. It offers as much as a 15 percent discount for participants who pay $15 a month for a satellite- tracking service that traces young drivers. Safeco pays for the equipment.
"We think it's a great idea. It just hasn't taken off in Texas, possibly because they haven't pushed it very hard here," said Don McKinney at Brazos Valley Insurance Agency in Waco.
He offers Safeco products, including "Teensurance." A company called Fireman's Fund has a "Youthful Driver" program for young adult drivers, and it is available in Texas.
It allows young adults to qualify for their parents' discounts and credits until they reach their 27th birthday. By that time, if they have kept their record clean, their premiums should decline.
The Wall Street Journal reports that a changing market is behind the way young drivers are viewed today.
Auto insurance premiums have been flat or even down in much of the U.S. because of safer cars, reduced theft rates, better fraud prevention and greater competition. U.S. auto insurance premium rates rose just 0.4 percent in 2007, according to the U.S. Bureau of Labor Statistics.
Tech-savvy youngsters, meanwhile, are more likely to shop the Internet for the best deals on insurance, which is another reason insurance companies are courting them with discounts.
Still, young drivers remain riskier than other groups. Drivers under age 20 were only 6.4 percent of the nation's drivers in 2006, but they were involved in 13.2 percent of all fatal crashes.
Technology is allowing parents to keep a closer eye on teen drivers.
OBS Inc., a Colorado-based mobile surveillance company, has launched the HD1, a video-camera system for cars that is aimed at parents with teenagers. It starts at $965 and works like a digital-video recorder, filming everything that goes on in and around a car with as many as four cameras. Parents can remove the hard drive from the system using a key and connect it to their TV or personal computer to view the video.
Some programs aimed at keeping young people safe behind the wheel are more geared to personal responsibility.
John E. Fadal, who has a Farmers Insurance Group agency in Waco, said Farmers will give young drivers up to age 21 a 10 percent discount on their liability, personal injury and collision insurance if they maintain a B average in school, complete a driver's safety course and watch a safety video.
But Fadal said there is "no question" that insuring young drivers remains more risky.
"There are some we have insured for years, and we never hear anything from them. Some we can't run off," Fadal said. "I can remember a 16- year-old kid that we had insured only a few weeks when he was involved in a bodily injury accident in which a person was killed. We paid a $100,000 claim." Ramona Cunningham, an agent with Germania Insurance locally, said she offers a 10 percent discount on collision and liability insurance to young people who take a driver's education course.
She said it benefits youngsters to stay on their parents' policy for six months to a year so they can establish a good driving record.
That will help them when they pursue a policy on their own, she said.
Local Allstate agent David Wilson said that company offers a 15 percent discount on collision, comprehensive and liability coverage to young people who maintain a B or better average in school. They can pick up another 10 percent discount by attending driving school.
"That's a total of 25 percent," Wilson said.
Wilson said he insures a family with a 17-year-old son who drives a 2002 Ford F-150 pickup. The family pays $439.10 every six months to insure the pickup, but that represents a discount of $102 because the 17-year-old is a good student who has taken driver's training.
"If that teenager bought insurance on his own, he would be paying twice that rate, I guarantee you," said Wilson, adding that he and the family benefit from discounts on multivehicle coverage.
