Adding a teen to your policy can boost your rates by thousands of dollars. Here's how to snare great coverage at a reasonable cost.
Yay! Your teen has passed that driver’s test!
She or he is celebrating a big step towards adulthood, and you are excited by the break from constant chauffeur duties.
But one call to your insurance agent will likely dampen your celebratory mood. That’s when you discover that it can cost upward of $6,000 a year to have a male teen added to your policy. In some cases, adding a teen of either gender costs about 227 percent more than it would to add an adult, according to Insure.com.
The good news is that there are ways that you can lessen the cost of your teen’s auto insurance according to Penny Gusner, consumer analyst for Insure.com.
1. Raise your comprehensive and collision deductibles
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That saves you money on your premium and will make you or your teen think twice before submitting a claim for minor damage. “Making claims, especially multiple claims, will raise your future rates,” says Gusner. “Paying out-of-pocket for minor incidents is a wise move.”
2. Insist your teen strive for at least a B average in school
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High school and college students under the age of 25 may be eligible for “good student” discounts if they maintain grade of B or a 3.0 GPA. Making the Dean’s List or Honor Roll may also result in a discount, too. The discount varies among companies but generally is between 5 percent and 15 percent, says Gusner.
3. Set limits
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A few insurers offer discounts if you have a teen-parent driving contract that sets up basic rules, Gusner says. Rules might include the allowable maximum number of passengers, mandatory seat belt use, and a ban on texting and other mobile phone use while behind the wheel.
4. Choose the car wisely
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A teen who drives a four-door sedan will pay less for insurance than a teen who drives a sports car. If the car is older, you may want to remove collision and comprehensive insurance coverage, says Gusner. Considering paying a few dollars more for extra liability insurance, though, because teens are more apt than adults to crash.
5. Ask about driver training discounts
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Some insurers, including Liberty Mutual and Farmers, give discounts to young drivers who complete designated courses, says Gusner.
6. Get a break on driving breaks
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Is your teen at college without a car? Is your teen on a European trip sans car? Tell your insurance agent, and you may be eligible for an “away student” discount.
7. Enroll in monitored driving
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Some insurers offer discounts to those deemed safe drivers through monitoring of their driving, says Gusner. The industry calls these “telematics,” according to Fortune magazine. Their use is fairly simple. Some companies have hardware that plugs into the car’s steering column. Others monitor the driving via the car’s factory-installed on-board communication system. Whatever the transmittal method, the car’s speed, time of travel and braking pressure are monitored and transmitted to the insurance company.
8. Shop for insurance
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Your insurance rates may be low, but your rates may skyrocket if a teen is added, notes CBS News. Check prices with various insurers and consider having a teen 18 or older secure their own insurance.
What’s your experience getting family members insured for driving? Share with us in comments below or on our Facebook page.