Adding a teen to your car insurance policy is sure to boost your rates. But here are some good ways to keep those premiums lower.
If your teen has turned 16, you’re probably nervous — both about the prospect of your child getting behind the wheel and all the costs associated with that new reality.
Having a teen on your car insurance policy is likely to boost your premiums. But there are ways to make the hike less painful. Here are 10 of them.
1. Invest in a good driver’s training program
It could be reckless behavior or it could be inexperience, but the fatal crash rate per mile for drivers ages 16 to 19 is three times that of drivers age 20 and older, according to the Insurance Institute for Highway Safety.
That means insurance companies are automatically going to see your teen as a claims risk and raise your rates. If your child starts racking up tickets or gets in a fender bender or two, watch your rates head to the stratosphere.
You might be able to keep your premiums lower by helping your teen avoid risky behavior behind the wheel, and that means getting him or her into the best driver’s education program possible.
2. Embrace your state’s graduated driver licensing program
Since the 1990s, states have enacted graduated driver licensing programs that gradually ease teens into independent driving. Typically, the programs require 30-50 hours of supervised drive time before a restricted license is issued.
The IIHS says graduated licensing programs are associated with fewer teen fatalities and fewer insurance claims. But the programs can work only if you enforce them at home. Don’t fudge numbers on the drive-time log, and don’t turn a blind eye when your teen blatantly violates the restrictions on his or her license.
Sure, it can be a pain to spend 50 white-knuckled hours in the car with your teen while he or she is learning. But hopefully your reward will be lower insurance premiums and a child who makes it to adulthood.
3. Avoid letting your teens have their own cars
It can be tempting to buy teens their own vehicles. That way, they won’t be constantly borrowing yours and potentially making a mess of it.
However, there are good reasons to resist the temptation:
- Having a teen drive your car would make him or her a secondary driver rather than a primary one, a designation that can keep your premiums lower.
- Having a teen share the family vehicle may limit his or her driving time, which could be a good thing for young drivers who are prone to getting in accidents.
- Buying another car means you’ll be paying insurance on another car. Need I say more?
4. Or make sure theirs will be cheap(er) to insure
But maybe you’re in a situation in which you really need your teen to have a separate vehicle. For example, perhaps your household only has one vehicle currently.
In that case, be smart about the type of car you get your teen. Some vehicles are safer and, in turn, cheaper to insure. The IIHS has recommendations as to what it considers the best cars for teens.
5. Don’t make your teens get their own policies
Assuming you will be paying the premiums, it is almost always the better deal to add your teen to your policy rather than to purchase a separate one.
The insurance company takes into account the driving record of each person listed on a policy. Your good driving should partially offset your teen’s potentially risky driving. Plus, your account might come with discounts not available on a teen’s policy.
6. Look for teen driver discounts
When you add your teen, ask the insurance company about discounts for new drivers. Students with good grades might be eligible for discounts. Those who take an approved safety course might also be eligible. If your teen goes away for school and doesn’t take the car, you might be able to get a discount for that, too.
7. Let the insurance company spy on your teen
Usage-based insurance is one of the latest fads in the world of automobile insurance. If you’re not familiar with the term, you might at least be familiar with the concept.
Auto insurance companies send you a device that you plug into a port under the dashboard. It records how fast you drive, how fast you accelerate and how fast you brake, among other things. Then, if the auto insurance gods say you’ve been a good driver, you’re rewarded with a discount on your premium.
These discounts are available to all drivers, but parents might find they are useful for monitoring their teens. Some companies issue reports grading driving skills, and some teens might be inclined to lay off their lead foot if they know someone, somewhere is watching.
If you like the idea of monitoring your teen but aren’t thrilled with the idea of letting an insurer inside your dashboard, you could also try spying yourself.
8. Consider a higher deductible or lower coverage
One surefire way to reduce your premiums is to raise your deductible. Just make sure you have enough in the bank to cover it if needed. Similarly, you could see how much it saves to drop collision or comprehensive coverage.
However, do the math before making any rash decisions. Unless you can afford a new car, dropping comprehensive coverage can mean you’ll be without a set of wheels if your vehicle gets totaled.
9. Shop around for better rates
Before you automatically add your teen to your existing policy, shop around for better rates. Underwriting policies vary by company, and some may have better pricing for young drivers. In addition, teen discount programs can differ among insurers.
10. Consolidate all your coverage with one insurer
Finally, when you find the right car insurance company, consider moving all your policies to that provider. Virtually all insurance companies offer multipolicy discounts, and the more you insure, the greater your discount might be.
Do you have a teen driver in the house? Tell us how you keep your insurance costs down by leaving a comment below or on our Facebook page.