How brokers can navigate the insurance risks of teen driving

Teenagers are among the riskiest drivers on the road – and that risk may be increasing.

A recent study by MyChoice found that Ontario's accident rates for novice drivers rose from 9.59% to 10.34% after essential skills like parallel parking and three-point turns were removed from the G driving test to address pandemic backlogs.

This increase in accidents not only raises insurance premiums but can also heighten claims potential, posing challenges for insurers and families. For brokers, providing strategic advice to families with teen drivers is essential for risk mitigation and fostering long-term relationships.

The risks of teen driving

Statistically, teen drivers account for a disproportionate share of motor vehicle accidents. Factors such as inexperience, distractions (like smartphones), peer pressure, and reckless behavior contribute to a higher likelihood of collisions.

“Most adults drive during the day. Kids stay up later and drive at night more, often on unfamiliar roads, experiencing curbs and intersections, which can lead to problems,” stated Andy Siegel, (pictured above left), president of Siegel Insurance.

Consequently, insurance rates for teens tend to be substantially higher. According to a report from insurance brokerage Thinkinsure, the average cost of car insurance in Ontario is $1,927, but for teens, this figure can soar to approximately $3,550 per year, exacerbated by the rising number of teen accidents.

Encourage clients to opt for extra coverage

To help mitigate risks for teen drivers, Alex Gemmiti, (pictured above right), service manager at Mitch Insurance, emphasizes the importance of brokers recommending additional endorsements, like collision coverage, to clients with teenage drivers.

Although not required in Ontario, this extra layer of protection offers financial coverage in the event of an accident. “Being in an accident is overwhelming for anyone, but especially for a teen who might not know how to get their car off the road. Ensuring they have basic collision coverage will provide clients with peace of mind,” Gemmiti said.

How brokers can help mitigate teen driving risks

Despite the higher risks associated with teen drivers, brokers play a crucial role in helping their clients manage these hazards through proactive education and the promotion of responsible driving habits. By providing practical strategies, brokers can assist families in better managing risks and potentially lowering premiums.

1. Early Licensing: Gemmiti recommends that clients list their teens as drivers as soon as possible to begin building a clean driving history. He said, "Our strong recommendation is to list teens as drivers immediately to help them build a driving history. Optimizing their driving record early, can significantly reduce long-term insurance costs.”
2. Promote Safe Driving Apps and Telematics: Siegel explained, “Telematics products can really help parents monitor what their kids are doing. Whether it’s through an insurance company’s program or apps like Life360, these tools help parents set boundaries, monitor if their teen is speeding or using their phone too much, and make sure they are staying within guidelines.”

For careful teen drivers, telematics can provide significant advantages, with Gemmiti estimating potential savings of up to 20% on premiums.

“Telematics not only allow for monitoring but also offer opportunities to correct behaviour,” Gemmiti said. “This can motivate teens, as they tend to respond well to challenges and may appreciate the opportunity to earn savings with good driving behaviour.”