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Getting your first driver’s license is an exciting time filled with fun, freedom, and don’t forget, responsibility. Teen drivers need to really pay attention to car insurance requirements, because they are so much more likely to use their insurance coverage to file a claim.
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While there are far fewer additional insurance requirements for teenagers than you would think, the smartest move is to make sure that teens have enough coverage. Teens are more likely to be in an accident, so they need to have the insurance to handle any eventuality.
Parents and Insurance
Another requirement that very young drivers will find is the need for a parent to obtain insurance for them in the first place. A car insurance policy is a contract and teens under the age of 18 cannot legally sign a contract.
Until a teenager becomes a legal adult, they need a parent to buy car insurance.
Parents and teens have two choices. A parent can add a teen driver to a current auto insurance policy or they can purchase a separate policy for the teen driver. Generally, it is less expensive to add a teen driver and their vehicle to an existing policy. It usually enables a discount for multiple vehicles on a policy if the parent didn’t qualify for it prior to adding a teen’s car.
Licensing and Education
One requirement that teen drivers do have is elevated licensing requirements. Many states have enacted a graduated driver licensing system as recommended by the National Highway Traffic Safety Administration (NHTSA). While not all states follow all of the guidelines recommended for graduated driver licenses by the NHTSA, most adhere to the basic elements of the program.
The focus of the graduated driver licensing (GDL) program is to extend the time between turning 16 and holding a full-fledged driver’s license without any restrictions. This gives teens more time for experience and there are certainly opportunities for more driving practice.
The general requirements include a three-tiered licensing phase. First, young drivers get a learner’s permit after passing a written driving test. Then there is an intermediate or provisional phase where teen drivers must log so many hours of practice driving with a licensed adult who is at least 21 years of age. The provisional stage may also include taking and passing a driver’s education course. Last, full licensure is achieved after fulfilling all stage two requirements or reaching the age of 18.
Every state that has a GDL program has their own variation on the three stages of licensing for teen drivers. The Governor’s Highway Safety Administration outlines the licensing requirements for teens in all 50 states and U.S. territories.
Common restrictions include the:
- Length of time that must pass between phases
- Amount of hours that must be logged with an experienced driver
- Necessity of taking a driver’s education course
Generally, driver education courses must be offered by a school or approved by the state’s department of motor vehicles. Other restrictions include driving after dark, how many other teen passengers can be in the vehicle and extra laws against texting while driving.
The focus of the GDL program is to lower the high rate of accidents and deaths among teenage drivers. Young drivers have a higher rate of accidents and fatalities of any other age group, which is why teen insurance is so much higher. Insurance companies, parents, state governments, and teens need to all be invested in lowering the tragic rate of teen deaths from auto accidents.
The first area that needs to be addressed in terms of the actual car insurance coverage is mandatory liability insurance. Liability insurance pays for damages and injuries that are caused to other drivers in an accident, and just about every state requires at least a minimum amount of liability insurance.
Each state has its own minimum amounts of liability insurance and the minimums vary greatly. When it comes to covering a teen driver’s liability, it is always a good idea to get as much coverage as possible. For instance, Florida only requires:
- $10,000 of coverage to pay for the injuries of each person not at fault in an accident
- $20,000 for the entire accident
- $10,000 for damages to a vehicle
If a teen driver causes an accident that includes damages and injuries beyond those amounts, the parents of a teen driver will be responsible for additional costs.Another option is to get an umbrella policy, advise the experts at the Insurance Information Institute. An umbrella policy covers many different types of liability just as an umbrella covers you from rain. It can protect a teen driver, homeowner, and parents’ driving liability all at the same time.
Furthermore, states might also require a driver to purchase other kinds of insurance, such as Personal Injury Protection (PIP) or uninsured/underinsured motorist coverage. Again, when it comes to teen drivers, you want to have an adequate amount of coverage.
Optional insurance is another area that requires careful consideration when it comes to teens and driving. Optional coverage includes collision, comprehensive, towing, and rental car reimbursement.
Statistics show that teenage drivers are four times more apt to be in an accident, so collision is the only coverage that will pay to repair the vehicle’s damages.
If a teen’s vehicle still has a lien, then the lender likely requires collision and comprehensive coverage. However, many people drop optional coverage after a vehicle is paid for in an effort to save money. When it comes to teen drivers, dropping optional coverage is probably not a smart move.
Comprehensive coverage is not as important, but it is useful to have to protect against damages not related to an accident. Towing is very important as it can be costly to tow a vehicle after an accident, but rental car insurance might not be as essential for a teen driver as it is for an adult.
It is important to weigh the worth of the vehicle against the cost of collision coverage and a deductible. If a teen’s vehicle is worth $1,200, and the deductible is $1,000, then the payout from an accident where the vehicle is totaled will only be $200.
Teen Driver Discounts
Discounts are a great way to lower the cost of car insurance and providers are offering more and more discounts aimed at young drivers than ever before. While teen drivers are more likely to cause an accident not all young drivers are reckless and irresponsible. Those younger drivers who have proven to possess good driving judgment should be rewarded with lower premiums.
The most common discount for teen drivers is the good student discount. Generally, car insurance companies offer the good student discount for both high school students and college students. Good grades, usually those at a B or higher, show responsibility and attention to detail.
The Good Student Discount can be as high as 25% off.
Insurance providers believe those characteristics carry over into driving, lowering a young driver’s risk of causing an accident. Another common discount that young drivers can generally find is one for taking a driver’s education course.
One teen discount that is relatively new utilizes GPS tracking technology. A device is attached to a car’s computer module and it records driving statistics such as speed levels, how often the driver must jam on the brakes, and how hard the driver takes curves and turns in the road.
The information is then transmitted back to the insurance company, giving them an overview of how safely a teen driver is operating the vehicle. Those who practice safe driving habits are awarded with discounts and lower rates.
Other Ways to Save
Good grades and driver education classes are not the only way to lower the car insurance costs of young drivers. Teen drivers can also find savings through other methods. Young drivers can usually get a discount for low mileage driving, driving a safe vehicle, and installing anti-theft devices.
Furthermore, savings can also be found when any driver shops around, getting multiple quotes from a variety of different auto insurance providers. This is also one way to find if it will be cheaper to add a young driver to a parent’s policy or to get them one of their own.
All car insurance experts recommend that any driver compare coverage quotes prior to buying insurance coverage.
For instance, the Maine Bureau of Insurance assures that getting quotes is the only way for any driver to ensure that they are not paying too much for car insurance coverage.
Decide on coverage amounts for your teen driver and then get quotes from many different providers for exactly the same amounts of coverage. Even teen drivers can find quotes that vary by hundreds of dollars for the same amount of coverage between different auto insurance providers. The more companies that are queried for quotes, the more likely you are to find an affordable car insurance policy.
Remember to get as many discounts as possible, such as the good student discount and discounts for driver education courses. Of course, it is up to the teen driver to maintain a good driving record so that auto insurance rates stay as low as possible.
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