Youth Auto Insurance Discounts: Unlocking Affordable Coverage

Young drivers are considered high-risk by insurance companies, and for good reason: they have less experience, are more likely to be distracted, and are prone to reckless behaviour. As a result, insurance premiums for teens are higher than for any other group of drivers. However, there are ways for young people to reduce the cost of their insurance.

One way is to be added to a parent's policy, which is usually cheaper than buying a standalone policy. Many insurers offer multi-car discounts, and parents' perks such as the Good Driver discount can also be applied to their child's premium. Young drivers can also benefit from good student discounts, with insurers like State Farm and GEICO offering up to 25% and 15% off, respectively, for students with good grades. Enrolling in a safe driving course can also help to reduce premiums, as can taking advantage of telematics, which monitor driving habits and reward safe practices.

Safe driving courses

In some states, insurers are required by law to offer discounts to those who complete defensive driving courses, and these can be up to 15% in some cases. The discount you receive will depend on your age, state, and insurer, but it can last for several years. If you still qualify for the discount after this period, you may be able to retake your defensive driving course to maintain the savings.

Defensive driving courses are typically four hours long and can be taken online or in person. Online courses offer the benefit of learning at your own pace, without having to attend lectures or go to a classroom.

GEICO, State Farm, Allstate, and Travelers are examples of insurers that offer discounts upon completion of approved defensive driving courses. GEICO offers discounts to drivers over 50 who have completed a course voluntarily and not as a result of a court order. State Farm's Steer Clear program is specifically designed to help young drivers improve their skills and offers an online course alongside on-the-road training and mentoring.

As well as being a way to secure cheaper insurance, safe driving courses are a great way to improve your driving skills and make the roads a safer place.

Good student discounts

Young drivers are considered high-risk, so car insurance premiums tend to be higher for teens than for any other group of drivers. However, insurance companies assume that young drivers who are responsible when it comes to their studies are more likely to be responsible drivers. As a result, they are less likely than teens with poor grades to file claims on their car insurance, so they deserve to pay lower insurance premiums.

To qualify for a good student discount, the student must be a full-time high school or college student and under 25 years old. The student's most recent report card may be required to lower the premium. Homeschooled students may also qualify by submitting evidence of certain national standardized tests administered within the past 12 months and ranking in the top 20%.

Some insurance companies that offer good student discounts include:

• State Farm
• Allstate
• GEICO
• Progressive
• Nationwide

Telematics

Mileage-based insurance

This type of insurance bases rates on the number of miles driven. It is also known as pay-as-you-drive insurance. The more miles driven, the higher the insurance rate. This type of insurance is ideal for those who work from home, use public transport, or drive fewer than 35 miles per day.

Behaviour-based insurance

This type of insurance offers discounts on insurance rates if you drive safely. It is also known as safe driving programs or pay-per-mile programs. Insurance companies use telematics technology to track and score driving habits. Drivers can use this feedback to improve their driving and build better habits.

Pay-per-mile programs

These programs operate on the idea that if you drive less, you should pay less for car insurance. Instead of paying a consistent rate every month, you pay a base rate plus a per-mile fee. Insurance companies consider your age, driving record, and the car you drive to set the base rate. The per-mile rate is usually just a few cents.

Behaviour-based programs

These programs use telematics to track and reward safe driving behaviour with discounts. Drivers can download a telematics app or install a device in their car that scores their driving habits.

Pros and cons of telematics insurance

Pros

• Large discount potential
• Get rewarded for being a good driver
• Gives insights to improve personal driving habits

Cons

• Some programs can raise your base rate if you're a bad driver
• Discounts fluctuate based on driving habits
• Mobile apps can't always tell if you are a driver or a passenger
• Loss of privacy

Distant student savings

A distant student discount is a type of savings offered by auto insurance companies when a student on the policy attends college full-time at a certain distance from their primary residence, usually at least 100 miles away. The student typically must not have access to a vehicle while at school, and there may be age restrictions, such as being under 22 or 23 years old. This discount recognises that the student won't be driving as frequently and may only drive during school vacations when they are back home.

The amount of savings offered by a distant student discount can vary depending on the insurance company. Some companies may offer a small discount of around 7%, while others, like State Farm, offer up to 25% off monthly rates for students away at college. It's important to shop around and compare rates to find the best deal. Additionally, you can often bundle a distant student discount with other discounts, such as a good student discount, to maximise your savings.

Insurance Companies Offering Distant Student Discounts

Several insurance companies offer distant student discounts, including:

• Progressive
• State Farm
• Geico
• Nationwide
• Allstate
• Liberty Mutual
• USAA
• Travelers

Tips for Distant Student Savings

• Keep your student on your policy: It's usually more affordable and convenient for college students to remain on their parents' policy, especially if they return home during breaks and drive their parents' cars.
• Notify your insurer: Be sure to notify your insurance company about your child's college attendance, especially if they are taking a vehicle with them. This ensures they are properly covered and can help you take advantage of any available discounts.
• Compare rates and discounts: Shop around and compare rates and discounts offered by different insurance companies to find the best deal for your situation.
• Maintain good grades: Many insurance companies offer good student discounts for full-time students who maintain good grades. Combining a distant student discount with a good student discount can further increase your savings.

Choosing a safe car

When it comes to choosing a safe car for a young driver, there are several factors to consider. Firstly, it is important to understand that insurance companies view youth as a risk due to their lack of driving experience and tendency to engage in reckless behaviour. As a result, insurance premiums for young drivers are typically higher.

To mitigate these risks and potentially lower insurance costs, consider the following factors when choosing a car for a young driver:

• Opt for a used sedan over a new, sporty coupe: While a used car may lack certain safety features, it can help reduce insurance rates due to its lower value.
• Compare insurance quotes for different vehicles: Get separate quotes for all the vehicles you are considering and list the young driver as the primary driver to get the most accurate rate.
• Choose a vehicle with safety features: Look for cars with anti-theft devices, anti-lock braking systems, backup cameras, and other advanced safety features. These features can help reduce the risk of accidents and lower insurance premiums.
• Consider the cost of repairs: More expensive cars, such as luxury or sports cars, will typically have higher insurance rates as they are more costly to repair or replace.
• Research insurance company discounts: Some insurance companies offer discounts for certain vehicle features or safety ratings. For example, State Farm offers a good student discount of up to 25% for students with good grades.

Remember, the make and model of the vehicle can significantly impact insurance rates. By considering the above factors and comparing insurance quotes, you can make an informed decision when choosing a safe car for a young driver.

Frequently asked questions