The stress of having a teenage driver goes beyond the white-knuckled driving lessons; it also pounds your wallet in the form of skyrocketing insurance rates. Teenagers have more accidents than any other age group, and, insurers reflect the higher rate of claims in the cost of premiums.
Taking proactive steps, before your teen passes their driver’s license test, can soften the rate increase.
You Must Insure Teenager Drivers
Most policies do not require you to carry insurance for teen drivers until they graduate from a learner permit to a license, however, you must list all licensed family members in a household on your policy, whether they drive the car or not.
In the case of divorced parents, most companies only require you to list the teen on one policy, and, they can drive a vehicle in either household.
Having a named exclusion is the only way to avoid paying a premium for the teenager. The insurer and parents agree that the policy will not cover the teenager, creating an endorsement to the policy. The insurer will not pay any claims involving the teen.
At times, you can save money if the teen insures their own car. Ownership of vehicles varies by state because minors typically cannot sign contracts without the parent’s consent.
Type of Car They Will Drive
One of the first decisions affecting the insurance rate of a teenager is the year, make, and model of the car they will drive. Consider a car with higher safety ratings rather than a faster, smaller car.
IIHS’s website can help you compare insurance losses by make or model for vehicles newer than 2010. The lower the auto insurance losses, the cheaper the auto insurance rates.
School Performance Impacts the Cost of Car Insurance
When students do not have a driving record, insurers must look at other factors to weigh the risk of the child. Grades in school are one commonly used parameter. An honor student maintaining a B average can receive a discount up to 25%.
Insurers offer a range of discounts to lower rates for teenagers. A few of the most common include:
- Completing a driver’s education course.
- Driving with no accidents or tickets for five years. Regardless of when they begin driving, the first five years you will pay a premium on insurance rates.
- College students, without access to a car, living over 100 miles away, get a discount because they are not driving a vehicle most of the year. They can still drive when they are home or on school breaks.
- Monitor driving. Plug in devices can track vehicle driving and might qualify you for additional discounts. New technology can provide notifications and video through two-way cameras, allowing parents to monitor teen driving habits.
Monitored behaviors include speeding, seat belt usage, braking hard, cornering, arrival, and departure times. Devices often come with a monthly monitoring fee, but can lower premiums by as much as 15%.
Another technology blocks phone calls and text messages while the vehicle is in motion, reducing distracted driving. Ford offers the MyKey, which will limit the vehicle speed along with the volume of audio devices.