Adding a young driver to your car insurance policy can double the cost, but there are things you can do to save money. When teens get their driver’s license, they receive the freedom they long for. Parents are also relieved of needing to be the ones to drive their teens to their activities.
The most expensive group of drivers to insure in the U.S. are young adults. A typical policy more than doubles when adding a teen. However, this is still less costly than having a teen get their own insurance policy. There are a few elements that make car insurance for young drivers so pricey that are unavoidable, including the lack of a driving record, but there are still other ways to cut costs.
Remember these factors that can affect your premium:
- The type of car, including any safety features: If there are multiple cars on one policy, don’t add your teen to the most expensive car. The car paired with your teen should be relatively low value, but still safe. (In most insurance policies your child will still be covered when they occasionally drive the more expensive car.
- The gender of your teen driver: Other than living in one of the seven states that prohibit insurers from using gender as a rating factor, you can expect to pay more if you’re insuring a male teen. This is due to the data that shows male drivers tend to be less cautious than female drivers.
- Your deductible: When you have a higher deductible, you will have lower premiums. If it is in your budget you should increase your deductible on the lowest-value car on your policy.
- Your coverage choices: Keep in mind that you don’t need a lot of comprehensive or collision coverage on an older car that’s valued at a few thousand dollars or less. Make sure not to over-insure your teen. A young driver usually only needs to be on one auto policy even in the case of divorced parents. If a teen uses their car in both households, only the primary parent should include them on their insurance.
- Look for discounts: Insurance companies offer various discounts, even for young adult drivers.
The data shows that students who get B’s and above tend to be safer drivers. Enrolling your teen in a defensive driving or safety class can also result in a premium discount. Sometimes you can find these programs through your insurance company. If you send a kid off to college without a car, your premium can also be reduced, since the student isn’t using a car year-round, their risk of accidents goes down.
Also keep in mind these standard discounts that apply for drivers of any age: paying your premium in six- or 12-month increments, bundling multiple policies with the same insurer, setting up automatic payments, or enrolling in paperless statements.
Add Accident Forgiveness
Most car accidents that are “at-fault” raise your insurance premiums. When a new driver on your insurance policy has an incident, the cost for the whole family could be raised, even if you have a teen who is a careful driver. “The more drivers you have in the household, the more opportunities you have for accidents,” Ruiz says. Adding accident forgiveness to your policy allows you to use the benefit once in a three-to-five-year period as a kind of hall pass after an at-fault accident. The accident still shows up on your claims history report and is available to all insurance companies, but your premiums won’t raise in the short term. Some companies even offer accident forgiveness at no cost for their long-time customers or drivers with good records, but most will raise your premium by up to 10% to cover the benefit if you opt-in. That is still a small price to pay when considering that the average car insurance premium raises by nearly 50% following an accident. Keep in mind, however, that some insurance companies won’t sell this benefit to primary policyholders who are under 21 or if the drivers have multiple traffic violations, so a teen with their own policy may not be eligible. This is not available in every state.
Consider An Umbrella Policy
Minimum liability coverage for all drivers is required in most states. This coverage includes medical expenses and lost wages for the victim in an accident and property damage to their car. However, when you add the risk of a teen driver, this minimum coverage may fall short. It doesn’t matter if you’re driving the least expensive car in the household, if you hit somebody who’s in an expensive car and injure them, then you have an expensive claim.
If you run up against your auto policy limits, a separate personal liability umbrella policy can give you extra insurance. This can save you from having to pay out of pocket for damages or injuries (or risk your financial assets in the event you get sued). So-called umbrella policies cost between $150 and $300 a year and start at $1 million in coverage. What’s more, you can buy one policy from any provider and use it to supplement both your auto and homeowners insurance coverage. Typically, when adding teen drivers, it is also a good time to consider an umbrella policy to make up for some of that other stuff that the auto insurance may not cover or to just save you from higher [auto] premiums. Before you shop around, look into what umbrella policy your current insurance provider offers. When a crisis occurs, having all your policies in one place can save time and headaches.
Help Your Teen Become An Informed Driver
It is good to discuss the cost of insurance with your teen whether or not they are the ones paying for it. It’s always important for you to talk with the teenager and really set up what their responsibility is. Help your teen by letting them know the consequences of unsafe driving, and how accidents and tickets can impact your family’s insurance costs.
Rollins Insurance is an independent insurance agency providing our clients the best prices with the most coverage possible since 2008. We represent multiple A-rated insurance companies to make sure we deliver the most competitive rate packages to our clients in Kentucky and Ohio. We find that most people are under-insured and over-paying when we meet them. We love what we do and our primary business is Personal Auto, Homeowners, and Life and Health insurance. We are a family-owned and managed business that specializes in providing needs-based insurance services.
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