Having a teenage driver in your house can be a mixed blessing. Many teens appreciate the added independence they gain once they pass their driving test. Teen drivers may help the family by running errands, picking up siblings from practices or school, or getting a part-time job. However, inexperienced young drivers are at higher risk for auto accidents compared to adults with longer driving records. Because of this added risk, adding a teen to your auto insurance policy can cause your family’s car insurance rates to skyrocket. While your teen gains experience on the road, you can take some steps to help reduce your auto insurance premiums and keep your family safe.
What Determines the Cost of Auto Insurance?
Insurance companies look at a variety of factors when determining the cost of an auto insurance policy. These factors include your previous auto accident history, your driving record, and your age and gender, along with where you live, how you drive your car, and what kind of vehicle you drive. The insurer compiles all of these data points and extrapolates your likelihood of getting into an accident and the potential cost if you do. Policy premiums are typically less for drivers at lower risk for getting into costly accidents.
1. Help Improve Your Teen’s Reputation
Since teenage drivers do not have a driving history, it is difficult for an insurer to evaluate how risky it is to insure them. Will they be aggressive behind the wheel, speeding and disregarding the rules of the road? Or will they drive defensively, taking steps to avoid accidents and dangerous situations? If you can help your insurance company feel more confident that your teen is generally a responsible individual, it can help reduce your costs. This is why many insurers offer discounts for drivers who earn good grades. Talk to your insurer about this and other ways your teen can demonstrate responsibility as they gain experience on the road.
2. Bundle Your Policies
Many auto insurers offer discounts if you also purchase homeowners insurance or renters insurance policies, life and health insurance, umbrella coverage, professional or malpractice policies, small business insurance, and other specialized coverage needs. If adding a teen driver has caused your auto insurance rates to climb, it may be time to consider bundling your policies with one insurer to get the most competitive premium costs.
3. Have Your Teen Take a Driver Safety Course
Driver’s education programs are a good start, but additional training in real-world driving situations can be incredibly helpful for young drivers. Even experienced drivers can benefit from classes that teach defensive driving and driver safety. (There are even courses in driver skills like parallel parking and driving in wintery or icy conditions!) Many insurance carriers offer discounts for drivers who take safety or skills courses. Investigate whether having your teen driver take one of these programs (and maybe completing one yourself) could reduce your insurance rates and help make the roads safer for everyone.
4. Consider Your Teen Driver’s Vehicle
One factor that influences the cost of an auto insurance policy is the type of vehicle your teen will be driving. Will your young driver be cruising to school in a sporty late-model convertible or a twelve-year-old station wagon? Does the vehicle have sidewall airbags, backup cameras, parking assistance, and other advanced safety features? Is there an onboard monitoring system that can be enabled to record the vehicle’s speed and location? All of these factors may impact your premiums. Minivans and small SUVs frequently top the list of least expensive vehicles to insure, and used vehicles are usually cheaper to insure than new. If you haven’t already decided on a vehicle for your teen driver’s use, it may be beneficial to talk to your insurer about what features will decrease and which will increase your coverage costs before doing so.
5. Compare Policies and Insurers
Because car insurance rates take so many variables into consideration, comparing quotes between multiple insurers can give you a wide range of policy and premium options. Car insurance coverage options vary widely, and the cheapest car insurance is not necessarily the best choice. If your young driver causes an accident and you have inadequate coverage, you may end up responsible for medical costs or property damage above and beyond your coverage limits. Compare policy limits, coverage options, premium costs, and deductibles to make sure you are getting the right coverage for your family’s needs.
Not FDIC Insured | No Bank Guarantee | May Lose Value | Not a Deposit | Not Insured by any Federal Government Agency
