If you’re the proud parent of a 14 or 15-year-old, you may be counting down the days until they get their license. Maybe you’re apprehensive about them driving, or you’re eager for them to have more independence (no more soccer practice drop-offs, finally!). Either way, it’s a huge milestone in your teen’s life, one that often comes with a hefty price tag.
When it comes to insuring your teen driver, it’s important to know when you have to add them to the policy. They usually don’t need to be rated when they only have their permit. As soon as they get their license, you’ll have to add them to the policy as a rated driver.
Adding a teen driver to your auto insurance will increase the cost of the policy, even if you don’t add an extra car. The simple truth is that teenagers pose an additional risk. Since insurance is all about rating for risk, that generally comes with a higher price.
Luckily, there are a few things you can do NOW to help lessen the financial blow.
1. Some insurance carriers provide a discount for new teen drivers if you’ve been a client for at least a year.
Call us a year before your teen gets licensed so we can look at carriers that offer that discount. Even if you pay slightly more for the policy now, it will more than make up for it once you add your teen.
Here is just one real-life example of this discount:
Annual premium for 1 adult driver and 1 car: $1,548.40
Annual premium after adding a 16-year-old driver (without adding another car): $4,937.60
Annual premium for the same policy if it was in place for a year before adding the teen driver: $2,654.30
That is a savings of $2,283.30 just for having the policy in place for a year before adding the teen driver.
2. Telematics programs are a great way to help offset the future increase for adding your teen.
Most telematics programs are now as simple as downloading an app and driving for the specified amount of time. And you can end up with a discount of up to 30%.
The apps are pretty good at differentiating when you’re driving and when you’re the passenger. But in case the app marks you as a driver when you’re actually a passenger, you can correct it.
It’s important to make sure you understand the risks and benefits of any telematics program before you sign up. Every program is different when it comes to the requirements, discount and potential consequences. Some of them can result in your rates going up if the results aren’t good.
It may be best to complete the program before your teen starts driving. Teens are known for hard braking and quick accelerating, thanks Grand Theft Auto!
Or, you can enroll your teen in the telematics program with you. It’s a great way to see how they drive when you’re not around and correct any bad behaviors early on.
3. If you plan on buying a car for your teen, get a quote beforehand.
If there are a few cars you have in mind, get a quote for adding your teen and each car you’re considering. That way you can see which will be most cost-effective to insure before you’re stuck with it.
Your kid may think you are parent-of-the-year if you buy them a brand-new BMW, but you’ll be paying an arm and a leg to insure it.
That’s not to say that you can’t buy your teen a new car. But you get what you pay for, and you pay for what you get. A new car likely has better safety ratings, but it also has a higher value and more technology. That makes it more expensive to insure.
4. Require a 3.0 GPA before your teen gets their license.
Having at least a B average qualifies your teen for a good student discount with most insurance companies. Some carriers offer up to a 30% discount for having good grades, which can have a big impact on your premium.
It can also be a good way to teach your teen responsibility. If they have to earn their independence before you let them drive alone, they may take it more seriously.
You’ll have to send in their report card to get the discount. Make sure you have that handy when you call to add your newly licensed teen to the policy.
5. Enroll your teen in a driver safety course.
Not only will a safety course help teach your teen safe driving practices, it can also get you a discount. Most companies offer a 5-10% discount if your teen has completed a driver safety course. Anything helps when your premium is increasing by hundreds or thousands of dollars.
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