Sarasota Insurance Agency >> blog
Handing over your keys to your newly-licensed teen can be terrifying. And rightly so. Teen drivers face a lot of danger and according to the insurance company GEICO, 1 in 15 16-year-olds will get into a car accident during their first year of driving.
You’re more likely worried about your child’s safety than what an accident (or other motor vehicle incident) can do to your insurance premiums. And, yet, when you add that teenager to your insurance policy, you might walk away feeling a bit of sticker shock, as teens—especially young men—are some of the priciest people to insure.
Making sure that your teen is insured properly can help you keep a little peace of mind, as well as a bit more cash in your wallet. Here are eight things you should know about car insurance for teens.
You should notify your insurance company when your teen driver obtains a learner’s permit, as all companies handle that situation differently. But, for the most part, you don't need to add your teen to your policy.
When your teen graduates to a full-fledged driver’s license, then she’ll need coverage, whether on your insurance or her own policy.
Some cars cost more to insure than others—it makes sense, given that it costs more to fix or replace luxury vehicles than a late model vehicle.
If your household has a 2014 Lexus, a 2010 Civic, and a 2002 Pontiac, your insurance company will assume that the teenager is driving that more-expensive Lexus, even if he could only afford to buy himself that Pontiac—and they’ll charge accordingly.
Though not all insurance companies assign cars to specific drivers, you will want to double-check to see if yours does. If so, make sure your teen is assigned to the least-expensive car and that there’s a lower premium to reflect that.
Speaking of cheaper cars, encourage your teen to buy an older used car (or, if you’re purchasing one, take the same advice) rather than something new and flashy.
Of course, you don’t want to put your teen in an old car that lacks safety features, so have a mechanic check out the vehicle before you purchase it to make sure that it’s safe and reliable.
Plus, driving a car with solid safety ratings lowers the cost of auto insurance. Newer safety features, such as airbags, anti-theft devices, and anti-lock braking systems, can also lower the price.
There are exceptions to putting your teen on your policy, but if you have a good policy, it’s typically less expensive to add your child to your policy than to make him purchase his own insurance. If you’re trying to teach your child responsibility by requiring him to pay for insurance, then have him reimburse you by the billing date each month.
If your teen gets into an accident that raises your premiums, you can remove him from your policy and require him to purchase his own coverage. However, you should double-check the rules and regulations—some states have laws that mean you will have to cosign for insurance coverage, even if your teen has his own policy.
The good student discount is exactly what it sounds like—your teen will cost less to insure if he earns good grades. The total amount of the discount will vary from state to state.
Statistics show that teens who get better marks in school are less likely to get into a car accident. That means these students are a lower risk, so they can pay less for car insurance.
For some insurance companies, the savings last through college. You will have to show proof that your teen maintains a 3.0 grade-point average or higher or made the dean’s list or honor roll the previous semester.
If he doesn’t quite reach that goal, encourage him to work harder by reducing the amount he owes you in insurance if his grades are good. You might also get a discount if your teen has completed and passed an approved driver’s safety program beyond driver’s education.
Collision and comprehensive coverage are entirely optional. If the car your teen drives isn’t worth more than the deductible, then there’s no reason to pay the premiums. Even if your teen totaled the car, your insurance payout might not cover the premiums you already paid.
Another option is to consider raising the deductible on these types of coverage. You’ll pay lower premiums by increasing the amount you’re willing to pay out-of-pocket if the car is damaged.
Becoming an empty-nester could save you some money on insurance premiums. If your teen heads to a college that’s more than 100 miles away without a car, the insurance company will drop your premiums significantly.
Your teen may still be covered if she comes home for the weekend—check with your insurance provider for specifics. You will likely need to provide proof of enrollment at the college.
Not every car insurance provider offers the same rates. Get quotes from multiple companies to see which one is best for you and your family.
Try out different scenarios for different quotes, such as which car the teen drives (if you haven’t purchased one yet), if you bundle home and auto coverage or if you have a higher deductible on the car.
The only thing that can stop your teen from causing an accident is his own safe driving. That means no texting or talking on a cellphone behind the wheel, always paying attention to the road, and following all traffic laws.