Smart Ways To Reduce Auto Insurance For Teen Drivers

Adding a teen to your car insurance policy can be expensive, but there are ways to reduce the cost. Here are some tips to lower the cost of auto insurance for teen drivers:

- Shop around and compare quotes from different insurance companies.

- Increase your deductible.

- Choose a safe and low-value car for your teen to drive.

- Look for discounts, such as good student discounts or those offered by insurance companies for taking driver training courses.

- Add your teen to your existing policy instead of purchasing a separate policy.

- Consider accident forgiveness or an umbrella policy to protect against high costs in the event of an accident.

- Encourage safe driving habits and maintain a clean driving record.

Encourage good grades

Good grades can help lower auto insurance costs for teen drivers. Insurance companies like State Farm, Progressive, Nationwide, Geico, and USAA offer premium reductions of up to 25% for students up to age 24 who maintain good grades. The threshold for "good grades" is typically a B average or above.

The reasoning behind this discount is that data shows students who get B's and above tend to be safer drivers. For example, Kevin Payne, a father of four, saved nearly $30 a month on his premium by adding his two teens to his State Farm auto policy and taking advantage of the good student discount.

In addition to insurance discounts, good grades can also help teens qualify for lower insurance rates when they become young adults. This is because insurance companies consider the driving records of young adults when determining their insurance premiums, and good grades can be indicative of safer driving habits.

Therefore, encouraging your teen driver to maintain good grades can not only help reduce insurance costs in the short term but may also have long-term benefits when they purchase their own insurance policies.

Choose a safe car

When choosing a car for a teen driver, safety is the top 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. Here are some tips for choosing a safe car for a teen driver:

Avoid smaller vehicles

Smaller vehicles are not the best choice for teen drivers. While they may be more fuel-efficient, they will be outmatched in a collision with a larger, heavier car. Even if the small car has a high Insurance Institute for Highway Safety (IIHS) rating, that score only holds when compared to other cars of the same size. A mid-size sedan or small SUV will provide your teen with more protection.

Pick a mid-size car

Mid-size sedans strike the perfect balance of safety and maneuverability for teen drivers. They are big enough to protect the occupant in a crash, but small enough to be easy for a novice driver to handle. A mid-size car also offers plenty of room for school gear and athletic equipment.

Avoid large vehicles

While you may want to provide your teen with as much protection as possible, it's best to avoid the largest vehicles, such as trucks, full-size sedans, and large SUVs. These vehicles can be unwieldy and difficult to manage, especially for a new driver. Trucks and large SUVs also tend to have higher centers of gravity, making them more susceptible to rollovers if the driver loses control.

Choose a car with safety features

When choosing a car for a teen driver, look for one with modern safety features. Enhanced safety features common on modern vehicles have saved an estimated 600,000 lives between 1960 and 2012. Outside of standard features like airbags and seatbelts, make sure the car has some of the following features:

• Autonomous Emergency Braking (AEB): AEB systems automatically detect if you're approaching a car too quickly and safely slow you down.
• Lane Assist or Lane Departure Warning: Lane assist helps keep you in your lane, while lane departure warning alerts you if you start to swerve out of your lane.
• Blind Spot Monitoring: This feature lets you know if another vehicle or person is in your blind spot, preventing collisions.
• Electronic Stability Control (ESC): ESC helps a driver maintain control of the vehicle on curves and slippery roads. It detects when the car is losing traction and automatically makes adjustments to keep the car on the road.

Stick to a smaller engine

It's important to choose a car with a smaller engine for a teen driver. They are still gaining experience behind the wheel and won't be able to handle the torque and quick acceleration of a high-powered engine. A 4-cylinder engine is plenty for anyone still learning to drive.

Choose a newer model

Newer vehicles are more likely to have important safety features and be designed to reduce the likelihood of serious injuries in a crash. While age is not the only factor, it's important to consider when choosing a safe car for a teen driver. Additionally, newer models will likely offer more advanced safety features and driver assists than older models.

Raise your deductible

Raising your deductible is a great way to lower your auto insurance rates. A deductible is the amount you pay out of pocket before your insurance coverage kicks in. Typically, the higher the deductible, the lower the insurance premium. This is because the insurer takes on less risk and charges a lower rate. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage costs by 15 to 30%. Increasing it to $1,000 can save you 40% or more.

However, it's important to ensure you have the financial means to cover the higher deductible in the event of a claim. While a higher deductible can reduce your premium, you may end up paying more in total if you have to make several claims. Therefore, it's a good idea to have enough money set aside to cover the deductible if needed.

When choosing a deductible, consider your financial situation and driving habits. If you can afford a higher out-of-pocket cost and want to lower your premium, a higher deductible is suitable. On the other hand, if you prefer lower out-of-pocket expenses at the time of a claim, opt for a lower deductible.

Additionally, consider the value of your vehicle. It may not be prudent to have a high deductible on a car valued at only a few thousand dollars, as the deductible could end up being a significant portion of the car's worth in the event of a total loss.

By raising your deductible, you can substantially lower your auto insurance costs. Just make sure you are financially prepared to cover the deductible amount if needed.

Shop around for the best rates

Shopping around for the best rates is a key part of the process of finding the best car insurance for teen drivers. Without comparison shopping, it’s impossible to lock in the most affordable rates for your situation with a reputable insurance company.

The best way to get the best rates is to get multiple quotes from multiple insurance companies. This will help you find the lowest rates for your situation.

Online quote comparison sites can help you find the least expensive policy for your teen’s driving profile and location. The Zebra, for example, runs your profile through over 100 insurance companies and sends you price estimates within a few minutes.

When seeking the lowest price on car insurance for a teen driver, start with your current insurance provider. Your insurance agent can suggest ways to reduce your costs while providing the coverage your new driver needs. Once you know what type of coverage your current company recommends, shop around to see if you can get a lower rate. Be sure to compare the same type and amount of coverage and deductibles from one provider to another.

You can go online to research car insurance and get a quote, either from specific insurance company websites or from a site that compares coverage from several companies at once. An independent agent is another option. Independent agents sell insurance from a variety of insurance carriers, so they can help you compare multiple policies and offer expert advice on ways to save.

Before making a decision, gather quotes from a minimum of three insurance companies. If you find a company that offers a lower rate than your present insurer, don't make a move until you weigh the cost of switching insurance companies against the savings. For example, if you're currently bundling your home and auto insurance, you will lose your bundling discount unless you also move your homeowners insurance to the new provider. If your existing insurance company offers accident forgiveness, which usually requires going three to five years without an accident to take effect, you'll have to start all over with a new provider.

Add your teen to your existing policy

Adding your teen to your existing auto insurance policy is usually more cost-effective than purchasing a separate policy for them. Here are some tips to help you navigate this process and lower your insurance costs:

Contact Your Current Insurance Provider

Get in touch with your current insurance company to understand when you will need to add your teen to your policy. The timing of this can vary depending on state regulations and your insurance company's policies. Some states require teens to be insured when they obtain their learner's permit, while others allow you to wait until they have a full driver's license. Ask about their rules regarding assigning a teenage driver to a specific car in the family. Ideally, you want your teen to be a secondary driver on all vehicles or the primary driver of the least valuable car.

Understand the Cost Implications

Adding a teen driver to your policy will likely cause your premiums to increase due to their higher risk profile. However, it is still generally more affordable than purchasing a separate policy. Contact your insurance agent to understand the specific cost increase for your situation and to explore ways to reduce these costs.

Explore Discount Options

Insurance companies often offer various discounts that can help offset the additional cost of insuring a teen driver. Here are some common discounts to look out for:

• Good Student Discounts: Many insurance providers offer premium reductions for students who maintain a certain grade point average, typically a B average or above.
• Defensive Driving Course Discounts: Enrolling your teen in a defensive driving or safety class can lead to a discount on your premium. Some insurance companies even offer their own virtual training programs.
• Student Away at School Discounts: If your teen attends college more than a certain distance away from home (usually over 100 miles) and doesn't take a car with them, you may be eligible for a discount since their risk of accidents decreases.
• Multi-Policy Discounts: You can often get a discount if you bundle your auto insurance with other types of insurance, such as homeowners insurance, from the same provider.

Choose the Right Vehicle

The type of car your teen drives can significantly impact your insurance costs. Opt for a relatively low-value but safe vehicle for your teen to drive. Insurance rates are typically higher for more expensive cars, and vehicles with better safety features and ratings tend to be more affordable to insure.

Adjust Your Coverage and Deductibles

Consider adjusting your insurance coverage and deductibles to strike a balance between cost savings and adequate protection. You may want to increase your comprehensive and collision deductibles, which will lower your premiums. Just make sure to have enough funds set aside to cover these deductibles in case of an accident.

Additionally, if you have older cars with low market value, you may want to drop comprehensive and collision coverage on those vehicles. In the event of a total loss, the payout from the insurer may not exceed the cost of premiums you've been paying.

Shop Around and Compare Quotes

Finally, don't hesitate to shop around and compare quotes from multiple insurance providers. Costs can vary significantly between companies, even for teen drivers added to an existing policy. Online quote comparison sites or independent insurance agents can help you find the most cost-effective option for your teen's driving profile and location.

Remember, while adding your teen to your existing policy is usually the most affordable option, it's important to weigh the cost implications and explore ways to reduce these costs through discounts, vehicle choices, and coverage adjustments.

Frequently asked questions