Teenage Drivers: Keeping Auto Insurance Costs Low

Adding a teenage driver to your car insurance policy can be costly, with premiums increasing by up to 150%. However, there are ways to keep costs down. Firstly, it is important to shop around and compare quotes from different insurance companies. You should also look into what discounts are available, such as good student discounts, driver training discounts, and low-mileage discounts. Another way to save money is to choose a safe and modest car for your teen, as certain vehicles are considered higher risk by insurance companies. Finally, consider enrolling your teen in a safe driving course, which can help to reduce premiums.

Shop around for policies

Shopping around for policies is a great way to keep auto insurance low when you have teenagers. Here are some tips to help you get started:

Start with your current insurance provider

Before you begin shopping around, it's a good idea to contact your current insurance provider to understand their rates and policies for adding a teenage driver. Ask them when you should add your teen to your policy and get an estimate of the cost. This will give you a starting point to work with and help you compare rates from other insurance companies.

Compare rates from multiple providers

Use online quote comparison sites or independent insurance agents to compare rates and policies from multiple insurance providers. These tools can help you find the most affordable option for your teen's driving profile and location. Be sure to compare the same type and amount of coverage and deductibles from one provider to another.

Consider different insurance companies and their discounts

Every insurance company has different rates, discounts, and policies. For example, some companies offer good student discounts, driver training discounts, or distant student discounts. Others may have specific programs targeting young drivers, such as Geico's away-at-school status or State Farm's Steer Clear program. By researching and comparing what different companies offer, you can find the best fit for your teen's needs and your budget.

Choose the right car for your teen

The make and model of your teen's car can significantly impact insurance rates. Sports cars or high-powered vehicles tend to be more expensive to insure. Instead, consider a used sedan, a family sedan, a minivan, or a small SUV, which often have lower insurance rates. Remember to get separate quotes for different vehicles and list your teen as the primary driver to get the most accurate rate.

Review your insurance policy and coverage

When adding a teen driver to your policy, review your current coverage and consider making adjustments. You may want to increase your liability coverage since teens are more likely to be involved in accidents. On the other hand, if your teen will be driving an older car, you might consider dropping collision and comprehensive coverage. Discuss these options with your insurance agent to find the best balance of coverage and cost.

Shopping around for policies can help you find the best rates and coverage for your teenage driver. It's important to do your research, compare options, and choose a policy that fits your specific needs and budget.

Choose the right car

When it comes to choosing the right car for your teenager, there are several factors to consider to keep insurance costs low. Firstly, it is recommended to opt for a family sedan, minivan, or small SUV as these vehicle types typically offer the best insurance rates for teens. Larger vehicles with high safety ratings and crash test scores are ideal.

It is also important to consider the value of the car. A car with a relatively low value but good safety features is a sensible choice. Insuring your teenager with the most expensive car in the household is not advisable, as this will increase the insurance premium. Instead, assign your teen as a secondary driver on the least valuable car in the family, or as the primary driver of the cheapest car on the policy. This will help to keep insurance costs down.

Additionally, consider the cost of repairs, the likelihood of theft, and the inclusion of anti-theft and safety features when choosing a car. Cars that are inexpensive to repair, less likely to be stolen, and have built-in safety and anti-theft features tend to be cheaper to insure.

Before purchasing a car for your teen, be sure to check with insurance companies to see how much different vehicles will cost to insure. This will help you make an informed decision and choose a car that fits within your budget.

Enrol in a safe driving course

Enrolling your teenager in a safe driving course can be a great way to keep your auto insurance costs low. These courses, also known as defensive driving courses, are designed to teach your teen essential skills that will help them avoid accidents and become safer drivers.

Defensive driving courses go beyond the basic rules of the road and focus on collision prevention techniques. They teach your teen how to anticipate and react to dangerous situations, identify risky behaviours from other drivers, and practice courtesy and cooperation on the road. These skills are invaluable in keeping your teenager safe behind the wheel and can help reduce the number of accidents and incidents they may encounter.

Completing a defensive driving course can also lead to significant cost savings on your auto insurance. Most car insurance companies offer discounts to customers who have completed one of these courses, with discounts ranging from 5% to 20% on average. The exact discount will depend on factors such as your insurer, age, state, and driving record. In some cases, these discounts can last for up to three years, providing long-term savings on your insurance premiums.

When choosing a defensive driving course, it's important to select one that is approved by your state or insurer. Courses can be found through local driving schools, organisations like AAA, or even online. They typically range in price from $15 to $100, making them an affordable investment that can pay for itself through insurance discounts.

By enrolling your teenager in a defensive driving course, you are not only investing in their safety but also making a smart financial decision that can help keep your auto insurance costs low. It's a win-win situation for everyone involved.

Take advantage of telematics

Telematics insurance is a usage-based coverage that uses in-car monitoring devices to adjust rates based on policyholders' mileage and driving habits. It is also referred to as "pay-as-you-drive" insurance.

Telematics insurance can be a great way to save money on car insurance, especially if you are a safe driver. The insurance is based on your current driving habits and can give discounts for good behaviour on the road. The better you drive, the more you can save.

Telematics insurance can be a good option for parents of teenage drivers as it can be used to monitor their driving behaviour and incentivise safer driving. For example, if you are the type of driver who maintains a safe operating speed or always keeps a safe distance between your car and the car in front, a telematics-based program might be an attractive option for you.

However, telematics insurance may not be the right choice for everyone. If you have a long commute, regularly drive at night, or drive in stop-and-go traffic that could cause abrupt stops, your insurance rates may increase.

There are several insurance providers that offer telematics programs, including:

• Allstate
• Nationwide
• Geico
• Progressive
• American Family
• Farmers
• Liberty Mutual
• State Farm
• Travelers

When signing up for a telematics program, you will usually get an enrolment discount of around 5-10%. You will then either download an app or receive a telematics device in the mail. During the first policy period, the company will collect information on your driving habits and, when it is time to renew your policy, you will see whether you qualify for a discount.

Look for student discounts

Keeping auto insurance costs low when you have teenagers can be challenging, but one effective way to do this is to look for student discounts. Many insurance companies offer discounts for students who are high achievers, rewarding them for their good grades with lower insurance premiums.

GEICO, for example, offers a good student discount for those who can maintain a “B” average or better. This discount can be combined with their good driver discount for those with a clean driving record, and an affinity membership discount for those in fraternities, sororities, honour societies, or alumni or university organisations. Similarly, Nationwide offers a good student discount for those aged 16-24 who are full-time high school or college students with a "B" average or better. They also require proof in the form of a recent report card or a form signed by a school administrator.

Allstate has a smart student discount for eligible drivers under 24 who are unmarried and meet one of three requirements: maintaining a "B" average or a GPA of 2.7 or above, performing at or above the 20th percentile in the PSAT, SAT, or ACT, or completing the Allstate driver education program, teenSMART®. State Farm also offers a good student discount of up to 25% for those who can maintain a GPA above 3.0.

Other insurance companies, such as Liberty Mutual, Progressive, and Farmers, also offer good student discounts for those with a "B" average or better. Additionally, Progressive offers a distant student discount for students aged 22 or younger who live more than 100 miles from home and don't have a vehicle while at school.

These student discounts can provide significant savings for teenagers and their parents, helping to keep auto insurance costs low.

Frequently asked questions