Apr 2010
6
Luckily, there are ways to insure your teenaged driver without going broke.
Reevaluate your Auto Insurance Policy
Before you even start thinking about your teen, make sure you are getting all the discounts you deserve. These can include:
- Multi-auto discounts
- Multi-policy discounts: Home and auto policies with one company, for example
- Safe driver discounts: Some companies offer discounts for every year a driver goes without filing a claim
- Safety features discounts: Most insurers offer discounts for certain safety features in your car, such as anti-lock brakes, automatic seat belts and air bags
If you are not receiving all of the discounts you believe you should be, make sure to ask about them at the same time you ask about insurance for your teen. Some of these discounts may also apply to your teen's coverage.
Shop Around
Don't assume you will get the best rates with your current insurer, even if you've been a loyal customer with no claims. Insurance rates for teens can be highly variable between companies.
Talk to at least two companies other than your current insurer. Get a list of all the discounts they offer and how much you can save on each. Also, get quotes both for adding your teen to your policy and for getting a separate policy.
Your Policy vs. Your Teen's Own Policy
In most cases, it's probably cheapest to add your teen to your policy, rather than your teen getting a separate policy. This is probably your best option if your cars are safe and relatively inexpensive to insure, or if you buy your teen an older, safe car.
Some companies will allow you to assign specific drivers to each car, rather than assume all drivers have access to all cars. If yours will allow this, you may be able to assign your teen to the car that is cheapest to insure.
If, however, your cars are expensive to insure and you cannot assign drivers to specific cars, the cost of adding your teen could be prohibitively expensive. You might be better off buying your teen a car and a separate insurance policy, if you can afford it.
Your Teen's Car
As mentioned, the type of car your teen will be driving will affect the cost of insurance. Remember that extra safety features can qualify you for discounts, so if you are buying a car, look one with a good safety rating as well as air bags, anti-lock brakes, automatic seat belts and head restraints.
Driver Education
Some insurers offer discounts, often up to 15%, for additional driving education, beyond what's offered in high school. If yours does, find out which programs qualify. For instance, Farmers has a program called the You're Essential to Safety (Y.E.S.) Program. In some states, successful completion of this online program qualifies for a discount.
Good Grades
Many insurers also offer discounts for teens who maintain good grades, because they are seen as more responsible and thus present a lower claims risk. In most cases, a B average is required, although the specific GPA could vary. Ask for specifics, as well as how often you will need to supply proof of your teen's grades. Discounts for maintaining good grades range from 10% to 25%.
Low-Mileage Discounts
If your teen only drives around town and to a part-time job, the miles driven may be lower than average. Many companies offer discounts for drivers who log a low number of miles per year. These discounts can range from about 5% to 15%, depending on miles driven.
Deal With Tickets Promptly
It's not just an accident that can cause rate increases; speeding tickets can, too. If your state offers ticket forgiveness for attending traffic school, make sure your teen attends. This is usually only allowed for one or two tickets in a 12-month period, so emphasize to your teen that it's not an unlimited privilege. Obviously, this does not save you money up-front, but can prevent future premium increases.
Raise Your Deductible
Of course, you know you can raise your deductible in order to lower your premium payments. You do want to consider if the savings will be enough to cover the increased deductible should you or your teen be in an accident. Depending on how much you raise your deductible, as well as the type of car, this one change can save you 15% to 35%.
Cover Minor Damage Yourself
Even one small accident can raise a teenager's insurance premium significantly. If the damage is minor and nobody was hurt, just repair it yourself. Especially if you have raised your deductible, you'll likely end up paying out of pocket anyway. By not reporting it, at least you won't also pay higher premiums.
Drop Coverage For Your Non-driving College Student
If your teen is away at college without a car, suspend insurance coverage. Just make sure your teen really won't be driving, because an accident while not insured can cause more trouble than it's worth. You will also need to be prepared to be chauffeur during school breaks, so this option may not work for everyone. If you can do it, though, it will obviously save you the entire cost of insuring your teen.
Do Not Lower Liability Insurance
While it might be tempting to lower your liability coverage in order to save money, this could backfire. Remember, your teen is more likely to be in an accident, so you are more likely to need that coverage. Carrying too little liability coverage could cost you much more than you save if an injured person sues.
When insuring your teen driver, your actual costs, as well as your actual savings from applying these tips will vary based on many factors including your location, your insurer and your vehicles. As a simple example, though, if it costs $1000 to insure your teen and you are able to take advantage of discounts for additional driver education, good grades, and low mileage, you could save from about $250 up to $500.
Always ask for specifics when requesting quotes and inquiring about discounts. In addition, consider having your teen pay at least a portion of your increased insurance cost as a way to encourage safe driving and responsibility. If your teen’s safe habits result in lower future premiums, pass on the savings to your teen.
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