Getting your driver’s license is a rite of passage that pretty much all children cannot wait to reach. At age 15 the constant begging begins, let me drive, pleeease! And once their 16th birthday finally arrives, the joy on their faces makes it all worthwhile. Until you see the cost of adding that teen driver to your car insurance, that is. Here are seven tips on how to save money on teen car insurance.
Why Teen Car Insurance Costs So Much
According to a study by Insurancequotes.com, when a married couple adds a teenage driver to their policy, they can expect their annual premium to increase by about 78 percent. That translates to about an additional $671 per year.
In addition, families that put a male teenager on their insurance policy saw an average rate increase of around 89 percent, compared with 66 percent for those adding a female teenager. Plus, insurance costs can vary widely depending on where you live.
So why does it cost so much for teen car insurance? Well, generally speaking, the cost of insurance is based on one simple factor: risk. The riskier the driver behind the wheel, the more you’re going to pay. And teen drivers are quite the risk. They are inexperienced and much more likely than older drivers to get in an accident. In fact, according to the U.S. Department of Transportation, the fatal crash rate per mile drove for drivers between the ages of 16 and 19 is almost three times higher than all other age groups.
Thankfully, there are some steps that you and your teen can take to lessen the financial pain. Here are a few things to keep in mind:
7 Ways to Save Money on Teen Car Insurance
1. Find Out Exactly When Your Teen Needs Insurance
One of the first things you need to do when looking for teen car insurance is to find out what your state’s requirement is. This is because every state has different rules about when newly-licensed drivers need to be insured. For example, in some states, a teen driver must be insured as soon as they get their learner’s permit, while in others you can wait until they are fully licensed.
The easiest way to find out is to talk to your current insurer who can explain the requirements as well as give you a quote. And that brings us to our second money-saving tip.
2. Shop Around to Save Money on Teen Car Insurance
When getting your teen car insurance it’s a great idea to shop around. Every insurance company calculates their rates a bit differently, and savings opportunities will vary from provider to provider. Some insurance agencies will cover a teen with a learner’s permit for free, while others will bump your rates up immediately. Keep in mind that even your current provider may be more expensive than others.
3. Ask About and Take Advantage of Available Discounts
Most insurance companies offer discounts which can help cut the cost of getting your teen car insurance. The type of discount and the amount you can save will vary between companies so remember to ask about it while you are doing your comparison shopping. Three of the most common insurance discounts include:
- Safe Driver or Driver Training Discount
This discount is offered for teens who take a driver’s education class. While this class is required in some states, in others it is not. However, all states offer some type of class that will qualify. As a bonus, aside from the possible savings, these classes can also help your child become a better, safer driver.
- Smart Student Discounts
If your teen maintains good grades at school, it could earn them (you) a discount on their insurance. In some cases, full-time students that hold a B average or are on a dean’s list or have similar honors could get as much as a 15 percent discount. In addition, college students who maintain a certain GPA may also be rewarded with lower rates.
- “Student-away” Discount
Speaking of college students, teens who go to school more than 100 miles away from their home and who won’t be using the family vehicle very often may qualify for a “student away” discount. In some cases, this discount can lower your premium by 35 percent or more.
Other instances where you can prove that your teen will be using the family car far less (or not at all) may also qualify you for a rate drop.
4. Consider UBI or “Pay-as-You-Drive” Insurance Programs
Another way to save money on teen car insurance is to ask your agent about any Usage-Based Insurance (UBI) programs they may offer. Also known as ‘pay-as-you-drive’ insurance, these voluntary programs enable drivers to earn discounts based on how well, how far and how often they drive.
A small device that easily plugs into your vehicle is used to record driver behavior such as miles driven, average speeds, rapid acceleration, hard braking, hard cornering, and even airbag deployment. That data is then transmitted to the insurer who uses it to offer you better rates.
As added bonuses, these devices offer parents a good way to monitor your teen’s driving and can also act as a financial incentive for good driving behavior.
5. Skip Buying the Flashy Car
If you are looking for ways to lower your teen’s car insurance then you may want to steer clear of buying a brand new, pricey, high-risk vehicle for your teen. Instead, when choosing a car for your teen, look for one that has high safety ratings, good crash protection, and some of the latest safety features.
Also, avoid small sporty cars and overly large SUVs, and instead opt for a mid-to-large size vehicle. This is because larger vehicles offer more protection. Many dealerships, such as Miller’s Chrysler, Dodge, Jeep, RAM in Martinsburg, West Virginia, can help you find a safe and reliable vehicle for your teen’s first car.
Another option, although it’s one your teen may not agree with, is to go with a good used car instead of a brand new one. Your collision and comprehensive coverage premiums will be lower if your teen drives a safe car that has a lower value and costs less to repair. However, you don’t want to get an old clunker but instead find a car that is still new enough to offer some of the latest safety features, as these can also lower your premiums.
A third option is to share a family car. Instead of adding another car to your policy, you share one that is already on the policy and make your teen the secondary driver. This can often be less expensive than having your teen as a primary driver on his or her own car.
6. Bundle Policies
Yet another way to save on teen car insurance is to look into bundling your various policies. Many insurance companies will offer lower rates if you use them for all of your insurance needs. For example, we get a discount on our car insurance because we use the same company for our homeowner’s insurance as well.
7. Good Driving Equals Lower Rates
Although this tip will not give you immediate savings, it will save you money in the long run. The longer your teenager drives without incident, the more your family’s insurance rates will drop over the years. Developing responsible driving habits takes a lot of time and practice — far more than your teen will get in his or her driver’s ed courses. That’s why it is extremely important that you continue to teach your teen good driving habits and make sure he or she fully understands why. And remember, our kids learn by watching us, so always lead by example.
With a little research and these seven tips, you can avoid overpaying for teen car insurance and still rest easy that your family is protected when out driving on the roads.