Insurance for teen drivers presents a unique challenge. As parents, we want to know they are safe, but we also want to keep the cost of doing this as low as possible, for their car and the car insurance that protects our assets.
For parents of teenage drivers, it’s best to start planning before they start driving. I recommend the planning start 1-2 years before they are ready to get their learner’s permit. I make this recommendation because companies like Safeco (owned by Liberty Mutual) have “tenure” reward programs that allow you to earn a substantial price break when adding a teenage driver. The only catch is: you have to have been with them for at least 2 years, but then receive up to a 30% reduction in premium for the teenage driver insurance. I’m sure others have something similar, ask your agent or auto insurance company about teenage driver discounts. There several that I will cover in a minute. Every little bit adds up.
We all know that teenage drivers are at a very high risk of accident and death, so I will skip that for this article. If you want to look at those stats, the Insurance Institute has plenty.
Let’s talk more about teenage driver insurance costs. That starts with the vehicle. If you hand over the keys to a car you have financed, you will have to carry comprehensive and collision coverage as part of your agreement with the Bank. Couple that with the high rates for a teenage driver and you easily could be paying $2400 a year ($200 mos) or more for the insurance on just their car. Instead provide them a car that is paid for, either your old car (and you get a new one) OR one that you go out and pay cash for. This can easily get your premiums for their car down to $1200 year ($100 mos.) or less, which is a huge drop.
Now let’s talk about that specific car to get them because you still want to know they are safe in the vehicle chosen. The Insurance Institute has a list of safe cars for teenage drivers. Rest assured if the vehicle rates well for teenage driver safety, the insurance cost will be reasonable as well.
The best insurance for teenage drivers is a Company that has programs set up specifically directed to them. They will offer specific discounts that help lower premiums for the teenage driver. Discounts for driver training, good students, tenure awards (mentioned above), and even a sample teenage driver contract. The best advice is to check around if you experience sticker shock when adding your teenage driver to your auto insurance.
Truthfully, some auto insurance companies do not want to insure teenage drivers and they show you this by charging very high premiums. There are plenty of insurance companies that will gladly insure your teenage driver, no reason to overpay. Just remember that keeping all of your insurance with one insurance company offers discounts for bundling, so if you choose to look around, look for all of your insurance, the rates will be better. Consider bundling with us.
Another important thing to keep in mind, you can have your teenage driver get their own insurance policy once they are 18, but be careful, because you may still have legal liability if they cause damages and you could be the one left to pay out of your pocket instead of the insurance company’s. You may save money in the short term (but usually not), but you could pay a lot more in the end. I’m not an attorney, so definitely consult with one before you go this route.
Teenage driver’s pattern of risk is higher than a more experienced driver, but there are ways to insuring a teenage driver that can lower your costs while protecting your child to the best of your ability. As your teenage drivers’ license date comes closer, be prepared, educate, and choose wisely.