Insurance companies spend countless hours working with actuaries and studying statistics and the results have all shown that teen drivers have a higher risk of being involved in an accident. Because of these statistics, adding a teenager to your car insurance policy can result in a staggering price increase. Here are some things you can do to minimize the impact.
Compare Insurance Quotes
As your teen approaches driving age, talk to your insurance professional about companies who may be more favorable to teen drivers. However, keep in mind that it is usually easier to add a teen to an existing policy than to start a brand new policy with a teenager listed as a driver. That’s not always the case so it makes sense to check.
You may also want to compare quotes where the car your teenager drives is written on a separate policy. This could be cost effective and it will also protect the favorability of the family’s primary policy if the teen is involved in an accident.
Consider Your Vehicle Choices
While a brand new sports car or SUV may seem like a great birthday gift, these types of vehicles are already considered more dangerous and carry a higher insurance premium rate regardless of who is driving the car. This is both because of the type of vehicle and because of the type of coverage you’ll have to purchase if the car is new. Even older sports cars, which may not need comprehensive or collision coverage, will cost more than older sedans or wagons to insure. The difference could mean hundreds of dollars per year in savings.
Look for Good Student Discounts
Good grades and high levels of responsibility seem to go hand in hand, and insurance companies have respect for students who work hard in school. Ask if your insurance company offers a good student discount. Many insurance companies will offer a discount on the liability portion of the policy if your child maintains a B average or higher. You’ll have to submit a report card annually to maintain the discount.
Driver Safety Courses
Many insurance companies will offer a discount on the liability portion of your policy if your teen takes a safe driving course. Some will accept proof of driver’s education in high school and most will accept a DMV or state-run safety course. You generally can’t get a discount for attending a mandatory safety course issued as a punishment for previous careless driving episodes.
Review Your Deductibles
If you must buy a newer car for your teen, consider raising the deductibles for your comprehensive and collision coverage. The premium differences for a $1,000 deductible (or higher) can be significant compared to the premiums for a $500 deductible. Just be sure you’ll be able to cover that deductible out-of-pocket if there is an incident.
Finally, keep an eye on your policy when your teen goes to college. If he or she does not take a car to campus, your insurance company may offer you an “away” discount so that you can keep your child on the policy while home, but not pay as much for a car not in use while he’s gone.
Teen drivers are definitely expensive to insure. Talk to your agent about these and other things you can do to decrease your total premium costs. Even a small change could save you hundreds of dollars per year.