GAP Coverage Insurance for Young Drivers
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UPDATED: May 25, 2021
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Why Young Drivers May Need GAP Coverage Insurance More Than Other Drivers
The typical new driver is between 16 and 18 years of age, an age not known for making the most sound decisions in the world. In the insurance world, their lack of skills, experience and decision making capabilities means that they are more expensive to insure. Simply put, car insurance for young drivers is more costly because they typically cost more to insure. Here are some statistics to put the need for GAP insurance coverage into perspective:
- Motor vehicle accidents are the leading cause of death for young drivers ages 15-20.
- Drivers who are 16 years old have the highest rate of crashes of any age group.
- In 2008, there were 2739 young drivers ages 15-20 who died.
- More than ten percent of the drivers who were involved in fatalities were 15-20 year olds, and 14% of that same age group made up all reported crashes.
- More than 60 % of all teen deaths happen in a car driven by another teenager. Among deaths that occur in a car for passengers of all ages, 19% happen with a teen driver.
- Young drivers cost the insurance industry roughly $34 billion every year in the cost of medical treatment, property damage and other expenses.
- The rate of cell phone use while driving is highest for drivers who are aged 16-20.
- In the event of a driving fatality involving a young male driver, 37% were speeding.
- 55% of teens involved in fatal car accidents were not buckled up.
- 31% of teen drivers involved in a fatal crash were drinking at the time, and 25% were legally impaired.
- The death rate for 16-17 year olds goes up for every additional passenger that they have in the car.
How GAP Insurance Protects the Young Driver
For the average young driver, the cost of the car is likely to exceed its value by a considerable amount. Whether the driver is paying for his or her own insurance or using a parent’s, it is important that the amount that is covered is enough to protect losses and to help replace the car that the driver has. Here are the facts related to car insurance and car values for young drivers:
- Buying insurance for your young driver is expensive regardless of the type of car, but the right car can make the cost lower as well as making the driver safer.
- Reducing the cost of insurance is vital to making the insurance more affordable. There are a number of discount that are available to lower the cost of insurance.
- GAP insurance coverage is important because it can allow for the lower cost insurance to be used but still provide enough protection for the young driver.
Car Models Considered to Be Safe (and Affordable) for the Young Driver
Before you can make a choice about auto insurance and look for GAP insurance policies, you must first determine the kind of car that the young driver will be using. There are several models that are not recommended including sports cars and large SUVs, which are typically too hard for the inexperienced driver to handle. However, these cars are typically given the green light by experts:
- Acura TSX
- Chevrolet Malibu
- Ford Focus Sedan
- Ford Fusion
- Honda Accord
- Hyundai Elantra SE
- Hyundai Elantra Touring
- Hyundai Sonata
- Hyundai Tucson
- Kia Forte
In addition to avoiding sports cars and SUVs, the young driver should also avoid very small cars, which are typically too light and small to give them a lot of protection in the event of an accident.
An Example of How GAP Insurance Works for the Young Driver
The young driver gets a car priced (but not valued) at $5,000. After paying $250 down, the rest is financed by the car lot’s third party financing company for a fee, interest and taxes. After all is said and done, the financing amount will leave the young driver with a loan that has a balance of more than the original $5,000. For the sake of clarity, the rounded amount is $6,000. Insurance on this car will pay what the book value of the car is. Assuming the following:
- Cars depreciate as soon as they are driven off the lot.
- This car is not a new vehicle, meaning it was already greatly under value at the time of the original purchase.
- Any accident involving a teen driver is likely to cause a total loss of at least one vehicle. That does not include the cost of medical treatments or other expenses involved.
If the insurance policy covers the liability to the amount stated on the policy plus cover the teen’s vehicle, there will be a remaining amount on the loan’s balance. That is what GAP coverage is meant to pay.