Keep Auto Insurance Low When Adding Teen Drivers

Adding a child to your car insurance policy is a straightforward process but can be costly. The cost of adding a child to your car insurance depends on various factors, including the child's age, gender, driving history, and the state you live in. On average, you can expect to pay around $2,718 per year to add your child to your policy, while the cost of getting them their own policy is around $5,108 per year.

There are several ways to keep the cost of your auto insurance low when adding a child to your policy:

- Take advantage of student discounts: Many insurance providers offer discounts for students who maintain a certain GPA or complete driver's education courses.

- Choose the right car: Opting for a safer or older vehicle for your child can help reduce premiums. Sports cars or new models may increase your insurance rates.

- Increase deductibles: Raising your collision and comprehensive deductibles may lower your annual premiums, but it will also increase your out-of-pocket expenses in the event of a claim.

- Bundle policies and stick to one insurer: If you have multiple insurance policies, such as home, boat, or multiple cars, bundling them with the same insurer can often result in cost savings.

- Encourage safe driving: Educate your child about the importance of safe driving and maintaining a clean driving record. This can help keep insurance premiums low.

- Shop around: Compare rates from different insurance providers to find the most cost-effective option for your family.

Discounts for good grades and driver's ed

When adding a child to your car insurance policy, it is important to be aware of the various discounts that can help you save money. Two of the most common discounts are the good student discount and the driver training discount.

Good Student Discount

Many insurance companies offer a good student discount for young drivers who are full-time students and can maintain good grades. The specific requirements for this discount vary by company and state. Some companies require a minimum GPA of a "B" average or higher, while others may accept a certain level of performance on standardized tests such as the SAT or ACT. It is important to provide proof of your child's academic performance, such as a school transcript or report card, to receive this discount. The discount can range from 5% to 25% or more on premiums.

Driver Training Discount

Another way to save on car insurance is by enrolling your child in a driver training course or defensive driving course. These courses teach young drivers safe driving habits and can result in a discount of 5% to 15% or more on premiums. Some insurance companies, such as Geico, State Farm, Allstate, and Travelers, offer premium discounts upon completion of approved driver safety training courses. Additionally, some companies may offer a discount for enrolling in their monitoring program, which tracks your child's mileage and provides tips for safer driving.

By taking advantage of these discounts and comparing rates from multiple insurance providers, you can help keep your auto insurance costs lower when adding a child to your policy.

Combine policies for multiple insurance types

Combining policies for multiple insurance types is a great way to keep auto insurance costs low when adding a kid to your policy. Here are some key points to consider:

Benefits of Combining Policies

Combining multiple insurance types, such as home and auto insurance, under one provider can often lead to significant cost savings. This is known as a multi-policy or multi-car discount, and it can save you up to 25% on your overall insurance premiums. By having all your insurance needs met by a single provider, you also benefit from the convenience of a single bill and a common renewal date for all your policies. Additionally, some insurance companies offer a single insurance deductible for all vehicles damaged in a single incident, further reducing your out-of-pocket expenses.

Requirements for Combining Policies

To qualify for a multi-car insurance policy, the basic requirement is that all insured vehicles be kept at the same address. Some insurance companies may also require that the vehicles be owned by related parties and insured under the same policy. However, other insurers may offer the discount to non-related people living together. It's important to note that there may be a limit to the number of cars you can insure under a single policy, typically four to five vehicles.

Customizing Coverage Levels

When combining policies, you can generally customize the coverage levels for each vehicle. While liability and uninsured motorist coverage limits are usually set at the policy level, you can often choose different deductibles for collision and comprehensive coverage for each vehicle. This allows you to tailor the insurance coverage to the specific needs of each car.

Shopping for the Best Rates

Before combining policies, be sure to shop around and compare quotes from multiple insurance companies. Rates can vary significantly between providers, so it's important to find the one that offers the best rates and coverage options for your specific situation. Online tools and apps can assist in comparing rates and finding the best deal.

Adding Teen Drivers

When adding a teen driver to your policy, be prepared for an increase in premiums. Teen drivers are considered high-risk due to their lack of driving experience, resulting in higher insurance costs. However, you can often find discounts specifically for teen drivers, such as good student discounts and driver training discounts. Additionally, some insurance companies may allow you to exclude your teen driver from the policy if they are away at college, provided they are not driving any of the insured vehicles during that time.

Choose the right car

When it comes to choosing the right car to help keep auto insurance low when adding a kid, here are some key considerations:

Vehicle Type

Selecting a vehicle that is considered lower risk can help reduce insurance costs. Instead of a sports car or high-powered vehicle, opt for a family sedan, minivan, or small SUV. These vehicles typically have better insurance rates for teens due to their safety features and lower horsepower.

Sharing a Vehicle

Instead of adding a new car to your insurance policy, consider sharing an existing vehicle with your teen. This can help keep costs down, as having multiple vehicles on a policy can increase premiums. If possible, make your teen a secondary driver on one of the family cars, as they are expected to drive less than the primary driver, resulting in lower rates.

Assigning Your Teen to the Cheapest Car

If your insurance company allows you to assign drivers to specific cars, assign your teen to the cheapest car on the policy. This means they will primarily drive that vehicle but can still occasionally drive other household vehicles. This arrangement can help keep insurance costs down, as the riskiest driver is not assigned to the most expensive car.

Delaying Getting a License

The younger the driver, the higher the insurance costs. Consider delaying when your teen gets their license. For example, if your teen starts the licensing process at 15 but waits until they are 17 to get their license, you can avoid paying insurance costs for those two years and benefit from lower rates when they turn 17.

Dropping Comprehensive and Collision Coverage

If your teen's car is not worth much, consider dropping comprehensive and collision coverage. While it's important to maintain high liability limits to protect against injury or property damage claims, comprehensive and collision coverage may not be necessary for an older, low-value vehicle.

Raising Deductibles

To keep premiums lower, consider raising your deductible. This means you'll pay more out of pocket if a claim is made, but it can result in significant savings on your monthly or annual insurance costs.

Increase your deductible

Increasing your deductible is one way to keep your auto insurance low when adding a kid. The deductible is the amount you pay out of pocket before your insurance policy starts paying. By agreeing to pay a higher deductible, you can lower your monthly premium. This is because choosing a higher deductible reduces the risk for the insurance company and translates to lower costs for you.

However, it is important to remember that if you do need to make a claim, you will have to pay more upfront. For example, if you raise your deductible from $500 to $1,000, you could save anywhere from $50 to $200 a year or more, depending on your insurance provider.

It is also worth noting that this strategy may be more suitable for comprehensive and collision coverage, which covers damage to your vehicle. In contrast, liability coverage, which covers damages and injuries to a third party, typically has a set deductible.

Additionally, some insurance companies offer discounts for safe driving. You can monitor your teen's driving behaviour and lower your premiums by signing up for a pay-as-you-drive (PAYD) telematics program. These programs use a telematics device to track and transmit driving behaviours, such as braking, speed, and miles driven. If the insurance company deems your teen's driving behaviour to be safe, you may be eligible for a discount.

Shop around for the best rates

Shopping around for the best rates is a great way to keep auto insurance low when adding a kid. It is important to compare rates from different insurance companies to find the most affordable option for your family. Each insurance company has its own criteria for setting rates, so by shopping around, you can find the company that best suits your needs and budget.

When looking for the best rates, it is also essential to ask about discounts. Many insurance companies offer various discounts that can help reduce the cost of your premium. For example, good student discounts are often available for students with a certain GPA or those who rank in the top percentile of their class. Additionally, if your child is away at college without a car, you may be eligible for a "student away" discount.

Another way to save money is to bundle your policies and stick to one insurer. If you have multiple insurance policies, such as home, boat, or multiple cars, you can often get a discount by bundling them with the same insurer. Being a loyal customer or having multiple cars on the same policy may also qualify you for loyalty or multi-car discounts.

It is also worth considering the type of car your child will be driving. Opting for a safer, older vehicle can sometimes result in lower premiums. Sports cars or new models may increase your insurance rates.

Finally, you can increase your deductibles to lower your annual premiums. However, keep in mind that this will result in higher out-of-pocket expenses during claims.

By following these tips and comparing rates from different insurance companies, you can find the best rates and keep your auto insurance low when adding a kid.

Frequently asked questions