Insurance and Your Teen Driver: Tips to Save Money (Without Compromising Coverage)
Raising kids is full of scary moments, but few are as frightening as seeing your teen getting behind the wheel of a car. While your teen is excited to hit the road, you’ve got new worries on your mind.
Will your teen be safe on the road? Will they obey the speed limit? Can they avoid the temptation to text while driving? Among these big worries is one more: the question of insurance.
While parenting is full of sticker shock moments (preschool costs how much?), the cost of teen car insurance still manages to be a jaw-dropper. Putting a young, inexperienced driver behind the wheel is a big risk, and car insurance companies charge you for it.
We can’t take away all the worries of having a teen driver, but we can help you make those insurance premiums a little more manageable.
Choose a Car Wisely
If you’re buying a car for your teen driver, shop carefully.
The type of car you purchase will have a big impact on how much you pay for insurance. Sports cars, SUVs, and vehicles with a lot of bells and whistles are expensive to insure. That’s because they are expensive to repair. Sports cars also add the risk of too much power for a young driver to handle – and come with the urge to test that power out on the road.
The best car for a teen driver is one with a solid safety rating, a lower value, and less power. Look to four-door sedans and other family cars, and shop a few model years older. They might not be as cool, but they’re cheaper to insure.
Don’t go too small or too old, however. Newer cars have the best safety features, and studies have shown that larger vehicles less than six years old are safer in a crash.
If you’re not buying a car for your teen (and there’s evidence that’s a good call), you can save by having the insurance company rate your teen driver as the driver of the cheapest car you own. They can still drive any vehicle in the household but will be rated on the one that costs the least to insure.
Check Every Discount
There are a lot of discounts available for teen drivers, although they do vary by company.
Nearly every company offers some sort of discount for completing a driver education program. Some, like State Farm (where it’s called Steer Clear), have their own in-house program. Others will give you a discount for any accredited driver education course. Some offer both.
As if you needed another reason to keep your teen on top of their grades, the Good Student discount is often one of the biggest. At most companies, the required grade is a B average. You’ll need to provide transcripts or other proof of the grades – but don’t worry if your kids aren’t in a public school. Companies will accept a variety of grading systems, so home schools and non-traditional schools can also qualify.
You will also run into the Student Away from Home discount. This one applies to teens away at school who haven’t brought a car along.
And don’t stop with the discounts that are just for teens; look at every available discount to see how you can save. Setting up automatic payments and going to paperless billing are just two of the possible ways to bring rates down a little more.
Raise Your Deductibles (Or Consider Dropping Collision)
Insurance companies don’t raise premiums for teens uniformly. Each coverage category has its own premium, and there are two in particular that are hit hard by a young driver. Those are liability and collision.
It’s tempting to drop your liability coverage to a lower level, but don’t do it. That coverage protects you and your teen from what can be incredibly high costs after an at-fault accident.
Instead, look at lowering the cost of collision coverage. That’s the coverage that pays for damage to your own car in an at-fault accident.
The quickest way to do that is to increase the deductible. You’ll pay more out of pocket for repairs, but still, have help with a total loss.
If the car your teen is driving isn’t worth a lot of money (and you don’t have a loan on the car), you can consider dropping this coverage. Of course, that means you won’t get anything back from the insurance company if the car is damaged in an at-fault accident – even if it’s a total loss.
The key here is to look at how much you’re paying to cover it versus how much it would actually cost to repair or replace it out of pocket. Sometimes the math just doesn’t add up to any real value in carrying full coverage.
Bundle, Bundle, Bundle
If you’re not already insuring your home and cars at the same place, now is the time to get that quoted. Bundling discounts are some of the biggest offered by insurance companies. And, as a bonus, you’ll get a discount on your home insurance, too.
Look beyond your home as well; some companies offer a bundling discount for other policies. Life insurance is the most common, but other possibilities include boat, RV, and other specialty vehicles.
Keep It in The Family
Even if your teen has a job and is looking for some independence, you will want to keep them insured on your policy. This will give them access to all of the discounts you are already earning, like loyalty, claim-free, or the bundling discounts we just mentioned.
It’s rarely ever cheaper for a teen to be insured separately. In fact, it usually costs a lot more.
This doesn’t necessarily mean you need to stay with your current insurance company, which brings us to our final piece of advice.
Shop and Compare (For All of Your Insurance)
Getting the best deal on car insurance with a teen driver might just mean the whole family gets a new insurance company.
Some insurers simply have better deals for teen drivers, and bringing all of your policies over means you can still get bundling discounts. Don’t just have the car insurance quoted – request quotes for all of your coverage.
Look at the overall cost of the policies compared to what you are paying now. In some cases, it’s worth making the switch to bring your monthly insurance bill down. Just make sure each company gives you a quote based on the same coverage – sometimes a cheap rate means the company is cutting your coverage.
And of course, don’t jump ship until you’ve done some research on the company’s reputation.
Peace of Mind
You’ll never stop worrying about your child, and driving is just one more thing on your worry list. Your insurance should give you peace of mind on at least one front.
That’s why it bears repeating that of all the ways to save on teen car insurance, cutting liability coverage is the one to avoid. Yes, it will probably save you the most money up front, but that savings is not worth sacrificing the value of peace of mind.
Teens are at a higher risk of an accident, and the last thing you want to worry about if and when that accident happens is whether or not you have enough insurance to cover it.
Find other ways to save, focus on teaching your teen safe driving habits, and hang in there. Those rates will go down with every passing year as long as your teen keeps a clean record.
Leslie Kasperowicz is a former insurance CSR and holds a B.A. in Social Sciences from the University of Winnipeg. She is a staff writer for ExpertInsuranceReviews.com and has been using her insurance knowledge to provide helpful insurance tips for more than ten years. She lives in Minnesota with her husband and two sons.
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