While teenagers react with glee when they get their driver’s license, for parents it is a time of angst and the specter of higher insurance premiums.
Sticker shock is not uncommon when parents receive that first quote for coverage, but there’s a reason for those higher rates. Teen drivers are unproven and due to their lack of experience behind the wheel, insurers try to protect themselves with higher premiums.
And they do so for a valid reason: statistics show that teenagers are involved in a higher number of accidents with fatal or critical injuries than more experienced older drivers.
But don’t fret. There are a number of ways to reduce the cost of teen drivers’ insurance costs. Here are seven of them:
- Choose an older model car. Less flash will save you money. Two measures of insurance costs are horsepower rating and the theft rate. Older cars also have a lower book value, which in turn reduces the insurance premium.
- Consider raising your deductible. A higher deductible results in lower monthly premiums.
- Good student discount. You don’t need to have an honor student in your household to qualify, but every insurer has its own definition of a good student.
Teens may still qualify even if they aren’t at the top of their class, and some discounts carry over to college.
To qualify for a discount of up 20%, the student would typically need a B average or higher for all subjects combined. Many insurers offer discounts to students up to 25 years old.
- Drop some coverage. Consider dropping collision and comprehensive coverage on older cars that are worth little more than the deductible. You may be paying more in premiums than you could ever get back from the insurer, even if the car is totaled.
Whatever you do, don’t cut back on your teen’s liability coverage in your drive to reduce your insurance premiums. Try to aim for the following liability limits at a minimum:- $250,000 per injured person,
- $500,000 per accident, and
- $100,000 for property damage.
- Buy a safe car. Your teen’s insurance rates will be lower, and you will be less worried about your child when they are driving solo. You can check vehicle safety ratings at www.iihs.org.
- Discounts for safe drivers. Some insurers offer discounts for driver-safety programs, cutting costs for kids who take a special class, watch a DVD or read a driver safety book and take a test.
- Explore multi-policy discounts. Many carriers will give a discount if you insure both your home and car with them.
You may get an additional discount if you include an umbrella policy. This provides extra liability coverage beyond your auto insurance limits and can be particularly valuable when you have a teenage driver.