As a parent of a new teen driver, having your teen get their license is enough to cause you to break into a cold hard sweat. Not only do you now have to worry about the safety of your teen behind the wheel, but your auto insurance premiums could go through the roof.
Why is Teen Insurance so Expensive?
Teens cost more to insure for good reason. The rates are typically higher for teens than other drivers because they pose a more significant risk of accidents than experienced drivers. Teen drivers are also more likely than the average driver to get tickets.
The National Highway Traffic Safety Administration (NHTSA) says that the leading cause of death for teens is motor vehicle crashes and make up more than a third of all deaths of teens between the ages of 16 through 19.
According to the CDC, in 2020, 2,800 drivers between the ages of 13 to 19 were killed in motor vehicle crashes. In addition, male drivers have over three times the death rate compared to female drivers of the same age.
According to CarInsurance.com, your insurance premium will increase, on average, by $3,726 annually when adding a teen to your policy. In some states, the increase could be as high as 150 percent.
What are Parents Required to Do?
Most insurance companies will require that all licensed members of your home be added to your policy, regardless of whether they are driving your vehicle or not. You do not have to add teens if they only have a learner's permit. That does not mean that you do not have to notify your insurance agent when your teen gets their learners permit, you do, but there should be no charges to your policy since your teen is not listed.
Once your teenager gets his license, you have to either take out a separate policy or add them to your own. You also need to contact your insurer to ask about their rules if you are divorced and only have custody part-time. Typically, the parent who has primary custody adds the teenager. That is not always the case, however.
If you have multiple vehicles, you may be able to save money on premiums by limiting your teen to driving only a single car. However, to avoid paying a premium for your teen on other vehicles, you will need a named exclusion. That is where you and your insurance company agree, through an endorsement to your policy, that your teen does not have coverage on those vehicles. As a result, your teen does not get coverage for any claim caused by them either.
How Can I Add a Teen Most Cost Effectively?
It is often less expensive to add a teen to an existing policy instead of buying a separate one, which most parents do. However, there are other things you can do to reduce the cost of adding a teen driver to your insurance. It is also better to add your teenager to your current insurance while sharing a car rather than purchasing them a new car.
Take Advantage of Discounts
Many insurance providers provide discounts. For example, the Good Student Discount is one that insurance providers offer to students who maintain good grades (B average or higher). Others offer programs, such as educational videos, online safety courses, contracts between parents and teens, and driving logs to foster safe driving habits.
Some insurance companies subsidize the costs of electronic gadgets, such as GPS tracking devices, which parents can install in their cars to monitor their teen drivers. Then they offer discounts to the policyholders whose teenagers use the gadgets. That is part of a concerted effort to reduce teen-involved crashes.
Drop Collision and Comprehensive Coverage
You can save some money on your policy by dropping comprehensive and collision coverage on older cars that are not worth that much more than the deductible itself. Chances are, with an older car, you will pay more in the premiums than you would receive from the insurance company if your vehicle is totaled. You can research Kelley Blue Book to see your car's value.
Get a Safe Car
Not only will you be able to sleep better knowing your teen is driving a safe car, but your premiums will be cheaper as well.
Take Advantage of Bundling
You will likely receive a multi-policy discount if you have both a homeowners and auto insurance policy with the same insurance company. By adding an umbrella policy, you can even get another discount, which offers additional liability coverage beyond the limits of your auto insurance.
Consider 'Pay-as-you-go' or Usage-Based Insurance
For this insurance policy, they install a device that monitors the driver's driving behavior. When drivers display good driving habits, they receive a financial reward. That's a positive way to keep an eye on your teen's driving and save some money as well.
The bottom line is this: there are always ways for you to save money on your insurance premiums while keeping your teen safe at the same time. Give your insurance company a call to get a quote and discuss the number of options you can implement to save on adding your teenager to your auto insurance policy. Of course, your main priority is to keep your teen safe while they are behind the wheel; saving money on your auto insurance is a bonus.