Insuring Your Teen: Auto Coverage Essentials

Auto insurance for teens can be expensive due to their lack of driving experience, and it's important to find the right insurance for peace of mind and financial protection. The cheapest way to insure a teen driver is by adding them to your family's policy, as buying them their own policy can be very costly. However, it's important to do your research, as rates can vary depending on the state and insurance company. There are also ways to save on insurance premiums, such as taking advantage of discounts for good students and those who have passed defensive driving courses.

Adding a teen to an existing policy

Firstly, you should talk to your current insurer to find out when you should add your teen to your policy. Some companies require you to add a teen driver when they obtain their permit, whereas others will allow you to wait until they have a full license. If your teen has a learner's permit, you should still inform your insurance company, as failing to do so could result in your claim being denied or your policy being voided if your teen is in an accident.

Once your teen is licensed, contact your insurance company to let them know your child needs to be added to your policy. You can also increase your deductible to lower your premiums. You may want to increase your liability limits, as teen drivers are more likely to be involved in accidents.

Adding a teen to your policy will increase your premiums, so it is worth looking into discounts to help offset the cost. Many insurance companies offer good student discounts, rewarding teens with good grades or test scores. There are also discounts for teens who complete a driver's education course, and some companies offer discounts for safe driving habits monitored by a phone app or device. If your teen driver is away at college without a car, you may also be eligible for a discount.

Discounts for good students

Insuring a teen driver can be expensive, but there are ways to save money on your auto insurance policy. One of the easiest ways to do so is to take advantage of a good student discount.

A good student discount is an auto insurance policy discount available to young drivers who earn good grades in school. Teen drivers are more likely to get into car accidents and commit traffic violations, which is why insurers tend to charge more to cover them. However, insurance companies assume that young drivers who are responsible when it comes to their studies are more likely to be responsible drivers.

Requirements for a Good Student Discount

Insurers that offer good student discounts set their own rules and requirements. Typical requirements include:

• You must be under 25 years old
• You must be a full-time high school or college student
• You must maintain at least a "B" average or demonstrate a certain level of performance on standardized tests like the SAT or ACT
• You typically need to provide proof of your academic performance to receive or continue receiving a good student discount. For example, the insurance company may require a school transcript or a report card, and may allow alternative proof from homeschooled students.

Examples of Good Student Discounts

• State Farm offers up to a 25% discount on premiums to full-time students up to age 25 who earn good grades.
• GEICO offers up to 15% off certain coverages for full-time students who maintain a B average or better.
• Progressive offers a discount for students under the age of 23 who earn a B average or better. The company states that its average good student discount is 10%.
• Allstate offers the largest good student discount at about 20% off the standard price.

The typical amount you can expect to save with a good student discount is around $22 per month for minimum-coverage insurance, however, good students can save up to $174 per month by shopping around at multiple companies.

Discounts for defensive driving courses

Defensive driving courses are a great way to save on auto insurance premiums, and many insurance companies offer discounts to those who complete them. These courses are designed to improve your driving skills and make you a safer driver by teaching techniques to help you anticipate and react to dangerous situations. They typically cover driving and road safety statistics, accident avoidance techniques, and local driving laws.

The discount you receive will vary depending on your age, state, insurer, and other factors. Some states mandate that insurance companies offer these discounts, while others do not. The eligibility criteria and discount amounts also vary by state and insurance company. For example, in some states, like New York, insurers are required to offer rate discounts to drivers of all ages who complete safe-driving courses. In other states, the discounts are typically offered to teenagers and drivers over 60. It's important to check with your specific insurance company and state regulations to understand the eligibility criteria and discount amount.

The defensive driving courses usually take four to eight hours and can be completed in an afternoon or over a weekend. They can be taken online or in person, depending on your preference and what's available in your state. Online courses tend to be cheaper and offer more flexibility, while in-person courses may include behind-the-wheel instruction and provide opportunities to ask questions of a qualified teacher.

Some popular choices for defensive driving courses include those offered by AAA, AARP, the American Safety Council, and the National Safety Council. GEICO, for example, offers its customers a defensive driving discount course that is licensed by California and the DMV. Their course can be completed at your own pace and provides instruction for traffic school laws and California DMV lessons.

It's important to note that even if you're not eligible for a discount, taking a defensive driving course may still be beneficial as it will improve your driving skills and help keep you safe on the road.

Raising your deductible

Adding a teen driver to your car insurance policy can be expensive, so it's important to explore ways to save on costs. One way to do this is by raising your deductible.

A car insurance deductible is the amount of money you pay "out of pocket" before your insurance covers the rest. For example, if you have a $500 deductible and $3,000 in damage from an accident, your insurer will pay $2,500, and you'll be responsible for the remaining $500. Typically, you can choose between a low and high deductible. A low deductible means a higher insurance rate, whereas a high deductible means a lower insurance rate. Deductibles usually range from $250 to $2,000, with $500 being the most common choice.

By increasing your deductible, you can reduce your insurance rate. For example, if you increase your deductible from $500 to $2,000, your insurance company will pay out less if you make a claim, but your overall insurance rate will be lower. This is a good option if you want to keep costs down and are confident you can afford the higher upfront cost in the event of an accident.

However, it's important to note that if your deductible is higher than the cost of the damage to your vehicle, you'll have to pay for the entire cost out of pocket, as the insurer will only cover damages above your deductible amount.

Before raising your deductible, consider the following:

• Can you afford the new, higher deductible?
• Do you need immediate insurance savings, or can you wait for the long-term savings of a higher deductible to pay off?
• Is the risk of a higher financial obligation after a claim worth the reward of a lower insurance rate?

Additionally, different insurance companies will offer varying savings for raising your deductible, so be sure to shop around and price out the savings at different deductible levels before making a decision.

Choosing the right car

When choosing the right car for your teen, safety should be the number one priority. According to the United States Department of Transportation, teen car crashes are the leading cause of death for 15- to 18-year-olds in the U.S.

Vehicle Safety Features

Look for vehicles with advanced driver-assistance features such as anti-lock brakes, traction control, stability control, forward collision warning, lane-keeping assist, blind-spot monitoring, and automatic emergency braking. These features can help prevent crashes and reduce the severity of injuries in the event of a collision.

Vehicle Size and Weight

While larger vehicles like SUVs and trucks offer more metal and weight to protect occupants in accidents, they don't necessarily make them safer. Taller vehicles have higher centers of gravity, which may make them more prone to rollover accidents. Smaller vehicles, on the other hand, offer less protection in crashes than larger ones. The sweet spot is usually in compact or midsize sedans, hatchbacks, or SUVs.

Reliability and Affordability

Look for vehicles with good reliability ratings and low maintenance costs. Sites like J.D. Power and CarMD provide information on vehicle reliability and dependability. Additionally, consider the overall cost of ownership, including insurance, fuel, maintenance, and repairs.

Avoid High-Performance Vehicles

Sports cars and vehicles with high-performance features, such as turbocharging, can encourage speeding and reckless driving. Opt for vehicles with more modest engine power that won't tempt your teen to drive beyond their skill level.

Consider a Used Car

If buying a new car is not within your budget, consider a used car. Look for vehicles that are one to three years old, as they are likely to have more advanced safety features than older models. Have a certified mechanic inspect the car to ensure it is in good condition and that all safety systems are functioning properly.

• Honda Civic (sedan or hatchback)
• Honda Accord
• Mazda 3 (sedan or hatchback)
• Toyota Corolla (sedan or hatchback)
• Subaru Impreza (sedan or hatchback)
• Ford Fusion
• Hyundai Ioniq 6
• Mazda CX-50
• Chevrolet Volt
• Toyota Prius
• Volkswagen Jetta
• BMW 3 Series (specifically the 320i trim)
• Honda Ridgeline (if your teen prefers a truck)

Frequently asked questions