Lowering Your Child's Car Insurance: Tips For Parents

Adding a child to your car insurance policy can be expensive, but there are ways to reduce the cost. While it's usually necessary to add a minor child who lives with you to your policy, there are discounts available for teen drivers, and it's worth shopping around for the best rates. When your child moves out or buys their own car, you can remove them from your policy, but they may benefit from remaining on it for longer, as they'll lose the advantages of factors such as your insurance history and driving experience.

Discounts for good students, driver education, and safety features

When it comes to lowering insurance costs for your child, there are several discounts available for good students, driver education, and safety features. Firstly, if your child is a good student, you can often get discounts on car insurance. Many insurance companies offer discounts for students with good grades at the high school or college level. For example, State Farm offers a good student discount of up to 25% for full-time students with a GPA of 3.0 or higher, or those ranked in the top 20% of their class. Similarly, Progressive offers a 10% discount to good students, although this is not available in California.

Secondly, driver education can also help lower insurance costs. Some insurance companies offer discounts for teens who complete a driver's education course or a defensive driving course. For instance, State Farm offers a discount for those who complete an approved driver education course, while Liberty Mutual has a defensive driving course on its website that can earn drivers in your family a percentage off.

Lastly, safety features in your vehicle can also help reduce insurance costs. State Farm, for instance, offers discounts for vehicles with factory-installed airbags or other passive restraint systems, as well as for cars with alarm systems or approved anti-theft devices. Additionally, older, simpler cars with high safety ratings can often get better insurance rates since they are cheaper to repair in case of a collision, and safety features decrease the likelihood of accidents and serious injuries.

It is important to note that insurance rates and discounts can vary by state, so it is always a good idea to shop around and compare quotes and discounts from multiple insurance carriers. By combining good student discounts, driver education discounts, and safety feature discounts, you can significantly lower your child's driver insurance costs.

Shop around for the best rates and discounts

Shopping around for the best rates and discounts is a crucial step in lowering your child's driver insurance. Here's a comprehensive guide to help you navigate this process effectively:

Understanding the Market

Firstly, it's important to recognize that insurance rates can vary significantly across different providers. This variation is particularly prominent when it comes to insuring new and young drivers, who are often deemed to be high-risk due to their inexperience. As a result, it is advisable to explore a range of options to find the most suitable deal.

Comparing Quotes

A smart way to shop around is to compare quotes from multiple insurance companies. This allows you to get an idea of the average rates offered and to identify which companies provide the most affordable coverage for your child's specific circumstances. Websites like The Zebra and Insurify offer tools to obtain personalized insurance rate quotes from top insurance companies.

Discounts and Special Offers

When comparing insurance companies, it's essential to inquire about available discounts and special offers. Many insurers provide discounts for young drivers who maintain good academic records, complete defensive driving courses, or enrol in safe driving programs. Additionally, some companies offer discounts for paperless billing, anti-theft devices, or automatic payments. These discounts might seem small, but they can accumulate substantial savings over time.

Optional Coverages

In addition to mandatory coverages, insurance companies offer a range of optional coverages. These can include collision, comprehensive, and uninsured/underinsured motorist protection. While these options enhance your overall protection, they also increase the cost of your premium. Therefore, it's worth considering your specific needs and choosing coverages accordingly.

Bundling Policies

Another strategy to obtain better rates is to bundle your child's car insurance policy with your own or with other policies, such as home or renters insurance. Many insurance companies provide discounts when you purchase multiple policies from them.

Choosing the Right Company

Finally, selecting a suitable insurance company is crucial. While price is an important factor, it's not the only consideration. Opt for a company that specializes in insuring new drivers and offers various discounts and benefits tailored to their needs. For instance, Erie, Auto-Owners, USAA, and Geico are known for offering competitive rates for teen drivers.

By following these steps and staying informed about the latest offerings in the market, you can effectively shop around for the best rates and discounts, ultimately lowering your child's driver insurance costs.

Assign your child to the cheapest car on the policy

Adding your child to your car insurance policy is a fairly simple process, but it can be costly. The average cost to add a driver under the age of 21 to an existing car insurance policy is $2,411 per year. This is because teens and new drivers are considered high-risk due to their inexperience.

One way to lower the cost of your child's insurance is to assign them to the cheapest car on the policy. If your insurance company allows you to assign drivers to specific cars, you can save money by assigning your child to the cheapest car. This means that your child will be primarily assigned to one car and be secondary to other cars, but they can still drive all household vehicles.

It's important to shop around and compare quotes and discounts from different insurance carriers. Some companies, such as Nationwide, Auto-Owners, and Geico, are known for offering cheaper rates for teens on their parents' policies. You should also ask your current agent about any available discounts, as these can help offset the price increase.

In addition to assigning your child to the cheapest car, there are other ways to lower your rates. Many insurance companies offer discounts for good student grades, safe driving records, and completion of defensive driving or driver education courses. You can also lower your rates by increasing your deductible or dropping comprehensive and collision coverage, especially if your child is driving an older car that is not worth much.

Remember, as your child builds a safe driving record over time, your premium may decrease. So, while adding your child to your policy can be expensive at first, it may become more affordable as they gain experience and maintain a clean driving record.

Delay getting your teen a license

Delaying getting your teen a license is a surefire way to lower insurance costs. As teens are inexperienced, insurance companies see them as a risk and this is reflected in the price. In fact, adding a teen driver to your policy can cause your rate to jump by 70% to 150%. The average cost for adding a teen between the ages of 16 and 19 to your policy is $299 per month. If your child is on their own policy, this cost rises to $468 per month.

However, parents might not incur higher insurance costs when their teen is practicing driving without a driver's license. Most companies won't charge an additional premium until the teen is a licensed driver. Therefore, delaying getting your teen a license can save you a lot of money.

If your teen is 18 or older, they could purchase a policy in their name, but this is generally very expensive, with an average annual rate of $7,367 per year for full coverage. It is much cheaper for them to stay on your policy, so delaying getting your teen a license until they are older and more responsible can be a good idea.

If your teen is a good student, you may be able to take advantage of a "good student discount", which averages 8%-20%. If your child took a defensive driving course before getting their license, you may also be able to get a discount.

Remove your child from your policy when they move out

As a parent, you can keep your child on your car insurance policy for as long as you want. However, it is essential to consider the financial implications of doing so. When your child moves out, you can remove them from your policy. Here's what you need to know about removing your child from your car insurance policy when they move out:

When to Remove Your Child

You can remove your child from your car insurance policy when they move out of your home permanently or are no longer dependent on you financially. If your child is a full-time student, some insurers may allow them to remain on your policy even if they don't live with you, but this varies by state and insurer. Check with your insurance provider to understand their specific requirements.

How to Remove Your Child

The process of removing your child from your car insurance policy is straightforward. Contact your insurance company by phone or online and inform them that you need to remove a named insured driver from your policy. They may ask for proof that your child has a new insurance policy or no longer lives with you, such as a utility bill in their name at their new address. It is recommended that you coordinate the last day of coverage under your policy with the start date of their new insurance plan.

Financial Considerations

Removing your child from your car insurance policy can result in significant savings. The average cost of adding a driver under 21 to an existing policy is $2,411 per year, and teenage drivers can even double the cost of your insurance. By contrast, insurance for 18-year-olds on their own averages $7,367 per year. However, insurance for your child will be more expensive if they purchase their own policy, as they will lose the benefits of factors such as your insurance history, driving experience, homeownership, and marital status.

Teaching Financial Responsibility

Encouraging your child to purchase their own insurance policy can help teach them financial responsibility. Shopping for insurance, comparing coverage, and paying their own premiums will help your child develop important adult skills. Additionally, paying insurance premiums on time can help improve their credit score if they sign up for a service like Experian Boost.

Frequently asked questions