Rates cut for young motorists

State Farm offers `Steer Clear' course and lower premiums

September 01, 1999|By Mark Ribbing | Mark Ribbing,SUN STAFF

First, the good news. You've just gotten your driver's license. At last, the mall-lined thoroughfares and open roads are yours to explore. No more pleading for a lift from Mom; now it's your hands on the wheel and your foot on the gas. Happy trails.

Now, the bad news. Look at your auto insurance bill. No, you won't be able to earn that much money by selling a kidney on the black market.

To woo customers in the competitive auto insurance market, State Farm Mutual Automobile Insurance Co. today is announcing an unique pilot program that the company says will reduce insurance sticker shock for young drivers and their parents.

The program, called Steer Clear, will put drivers ages 16 to 24 through up to 60 days of training, which will include an instructional brochure and video as well as 20 to 30 driving trips. Those who complete the program and pass a written test will be eligible for discounts of as much as 30 percent for drivers under 21 years of age, and up to 20 percent for those between 21 and 24.

The free plan will be available here Oct. 1. To qualify, the driver and all motorists in his or her household must have good driving records and have all their vehicles insured by State Farm.

Maryland will be only the second state in the pilot program, which was introduced in Arizona in March. State Farm plans to introduce the plan nationwide but is unsure when it will do so.

State Farm spokesman Charles Ingram acknowledged yesterday that the company was taking a risk by offering discounts to young drivers who have no track records, but he added that the program could prove beneficial if those drivers stay with State Farm.

"We want those very good customers to stay with us for a long period of time. The best time to start that is when they start driving," Ingram said.

Officials at insurance trade organizations and the Maryland Motor Vehicle Administration said plans such as Steer Clear are unusual. One of State Farm's rivals, Allstate Corp., has introduced a similar program on a pilot basis.

"It's a great idea," said MVA spokeswoman Caryn Coyle. "I would think the rest of the insurance companies would take note."

According to the Highway Loss Data Institute, 5,697 teen-agers died in the United States from motor-vehicle crash injuries in 1997, and 36 percent of all deaths of people ages 16 to 19 are related to motor vehicle accidents.

"I'm very intrigued by the [State Farm] program for the simple reason that the highway-safety community is concerned about younger drivers," said Terry Tyrpin of the National Association of Independent Insurers, a national insurance trade group based in Des Plaines, Ill. "The younger age, in tandem with lower experience, adds up to higher risk factors."

Tyrpin said Maryland is an attractive market for a plan targeted at young drivers, because the state is regarded as a leader in graduated driver-licensing programs, in which neophyte motorists go through stages before they are fully licensed.

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