Cheap Auto Insurance for Your Teen, or Maybe Not!

Have you received the quotes to insure your teen driver and felt your jaw drop when faced with hikes of up to 96%?  This hike may be alarming, but you are in the same position as thousands of parents across the country when their teen prepares to take the wheel in the family car. So you may well be wondering – why the hike?
When this question was put to Property Casualty Insurers Association of America spokesman, Joe Annotti, his response regarding teen drivers was that “The first month, they’re fine, then they think they know everything about driving and safety . . . (and) pretty soon they’re flying 60 mph down a back street to get to school.”

The bottom line is that these actions are likely to be behind the dire statistics on teen crashes. This remains the #1 killer of kids 15 to 20, and youths under the age of 25 are still three times more likely to die in a car crash than older drivers.

Little surprise that these statistics see car insurance rates jump 50% to 200% the minute you add a teen driver to the vehicle insurance policy. Auto insurance companies simply won’t accept the level of risk without seeking financial recompense.

If you are wondering how on earth to manage the steep increase in your car insurance cost, then consider some of the following options to reduce your rates before the teen gets behind the wheel.

1. Consider the means by which your insurer assigns drivers to vehicles. You’ll find that this can vary from one insurer to the next, making a big difference on premiums. One possibility is to get a cheap car for your teen to drive. Old vehicles that sit in the driveway can actually work out to cost less the double or triple premiums you may face on your luxury or new car if your teen is to be insured to drive it. Alternatively, if you already have an older car as a second vehicle, then insure this one for your teen to drive. If the insurance company will accept this option, then you could cut costs by making this the car your teen drives, thereby slashing insurance costs. As a last option, you may even want to look around for a different insurance provider.

2. Is your teen a straight-A student? You may be surprised to know that a number of insurers will give 10 – 25% discount for teens with a B average or better. This is not necessarily because they drive better, but because as Joe Arnotti explains, “Long-term, they want the A student as a customer,” because they are seen as a better risk for the future.

3. Did your teen complete Drivers Education rather than the short driving course. Insurance companies may take this into consideration when calculating your premiums, as the American Journal of Preventive Medicine has done research showing the short-term doesn’t reduce future accidents. This means a potential saving on auto insurance of 5% to 15%.

4. Look at options to raise your insurance deductibles. If you increase this you can reduce your premium by around 35%. As Ron Lovatt of the Automobile Club of Southern California retold, by boosting the deductible from $500 to $2,000 he saved a lot of money on ongoing premiums when his teen daughters began driving. You might also find this a good option if you are finding insurance payments tight in these tough times, irrespective of whether you have teenage drivers.

5. Make sure you take your teen off your policy if no longer driving your car. If you kids are away at college and don’t have a car, then don’t miss out on the saving by leaving them on your policy. If your child will not be driving at all during this time, then you can safely remove them you’re your policy and save yourself some cash. However, if they are going to drive then it is far better to maintain the insurance, irrespective of whose car. You could risk being sued if they are uninsured and cause a crash.

6. Avoid making insurance claims, if you have minor fender-benders. When you report every little thing to your insurance company you risk increasing your premiums, so it could work out much cheaper to cover the costs of minor repairs yourself rather than lodging claims. You may also want to have your teen driver pay to help them understand the consequences.

By being a smart shopper you’ll find the best rates and be able to pick out a quality insurance policy that will fit your needs without breaking the bank.  A little knowhow will also help ensure you find the best rates and the most suitable insurance coverage to fit your needs.

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