Your teen is excited to get behind the wheel. You, however, are probably worried, and wondering how this new driver will affect your auto insurance premium. And for good reason: For a married couple, adding a teen to your policy may substantially increase your premium.
Insuring your teen: Why so costly?
According to the American Automobile Association (AAA), teenage drivers are involved in collisions four times more often than adult drivers.1 The Centers for Disease Control and Prevention (CDC) also report that teens are more likely than older drivers to take risks such as speeding, running red lights and making illegal turns.2 Insurance companies often use statistics like these in combination with internal loss data as a basis for their premium rates.
Look for the ‘good student’ discount
Fortunately, you may be able to reduce your premiums if your child performs well in high school or college. Some insurers will offer a discount when a full-time student maintains at least a B average (3.0 grade point average), or is on the honor roll or dean’s list.3 If you homeschool your child, SAT scores may also be acceptable, depending on the company. Your teen must also provide written proof of their grades. With most policies, drivers between the ages of 15 and 25 are eligible for this discount.
Buying a car? Safety saves
If you’re buying a car for your new driver, keep in mind that vehicles with the highest safety ratings likely will have newer, pricier features. However, they may cost less to insure. To help weigh the expense of these features with the security benefits, the Insurance Institute for Highway Safety (IIHS) offers a list of top safety picks by year, along with a searchable database of safety ratings for specific make and models.
Increase your deductibles
If your insurance premium still doesn’t work with your budget, you could consult with your insurance company to discuss increasing your deductibles to reduce your monthly bill. Just remember, if you or your teen have an accident, your out-of-pocket expenses will be higher.
Get a monitoring device
Teens tend to be more careful when they know they’re being monitored.4 Since you can’t always be with your child, you can place monitoring devices in the car that will watch for dangerous habits, such as speeding or overly aggressive driving. You also can choose a mobile app – Drivemode, LifeSaver or TrueMotion Family being great options – that tells you the vehicle’s location and tracks its mileage. LifeSaver and TrueMotion Family will even send you notifications.
Your insurance costs will change again
As your teen drives, gains experience and shows that he or she is a good driver, your insurance company may charge you less by the time your child turns 19. For example, if your child completes an approved driver training program, you can receive a discount.5 You can also save when your child is away at school full-time and without a vehicle, depending on the distance. Again, be proactive. Keep in touch with your insurer to make sure you’re saving as much as you and your family deserve.