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UPDATED: Mar 13, 2020
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It is well known that younger, inexperienced drivers are among the most expensive to insure. Young men, under the age of 25 are often quoted the highest rates in the industry. Only those drivers who have been convicted of one or more serious traffic offenses such as DWI or those who have been relegated to their state’s assigned risk pool could face higher premium rates for their auto insurance.
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However, all is not lost for there are a number of discount opportunities available for new drivers, especially if they are high school students or currently enrolled full time in a college. As the car insurance industry continues to become more competitive, individual insurance providers are willing to offer more discounts to students to attract new business and keep their current customer base.
According to the National Association of Insurance Commissioners, discounts are available for students in several different categories. First, car insurance providers will give discounts for students who take driver training or safe driving classes or other state DMV-approved educational courses.
At this time, most every state requires some form of classroom driver training before issuing a provisional license.
Additional classes may be taken to offset points received for traffic infractions.
Approved driver safety classes may also be used for car insurance discounts on liability and other coverage. Depending on the insurance carrier, these discounts can average between 10 and 15%!
Many auto insurance providers currently offer good student discounts for those teens and college students who post a B or better average during each academic term. Statistics show that young people who apply themselves in school are generally more conscientious drivers, receive fewer traffic tickets and have fewer accidents than their peers have.
Students who live away from home and do not have access to the family car on a regular basis are also cheaper to insure. Families can keep car insurance in force for those students, so that they may legally drive their parents’ cars when they come home for school breaks or summer vacation. Students who have a car with them at school or live at home will pay sharply higher rates for the privilege of driving year round.
While there certainly are a number of discounts available for student drivers, the larger issue is whether to add a teenage or student driver to the family auto insurance policy or to write a new policy in the student’s name alone. Unfortunately, the second choice is usually a far more expensive alternative for student coverage. In either case, it is important to investigate all car insurance options before adding a student to the family policy.
Things Every Family Should Know
InsureUOnline.org, sponsored by the National Association of Insurance Commissioners provides families with much needed information about auto insurance choices. As this is a big financial decision for a family, it is important that parents have as much current information as possible in order to make a sound financial decision that will also insure the safety and well-being of their student drivers.
If a family intends to add a student driver to their policy, they should plan to pay sharply higher rates. Some states allow for pricing differences according to gender, while others do not. On average, the cost of insuring a young woman under the age of 25 will increase the rates on your family’s auto policy by as much as 50%.
In states that allow pricing differentials based on gender, insuring a young man in the same age category, 16 to 25, may increase your annual insurance premiums by as much as 100%! If your son or daughter is a bit older, leaving home to attend college and intends to take a car with them, you may want to consider buying a separate policy for them.
Something else to consider is increasing your own auto liability coverage amounts.
When children reach their teen years, they require more and more chauffeuring from activity to activity and from home to school. As your family minivan or wagon is likely to be filled on a regular basis with your children and their friends, you want to make sure you have sufficient coverage in case an accident occurs.
Another possible insurance choice for growing active families is an umbrella policy. By tying in coverage for existing auto and home policies, umbrella liability coverage can be added inexpensively. Umbrella coverage will only kick in after original policy limits are reached for a particular auto claim.
The average cost for the first $1 million in umbrella coverage is usually less than $200 per year. Additional coverage in $1 million increments can be added for between $100 and $150 per unit. Another good reason to consider umbrella coverage takes into account your family’s improved financial circumstances and increased net worth.
The more assets you have to protect, the more liability coverage you should have.
Tips to Help Control Car Insurance Costs for Students
Under life changing circumstances like your son or daughter coming of age and qualifying for a driver’s license, it’s important to shop and compare all available insurance carriers to find a policy that will meet your family’s specific needs and requirements.
Make sure to ask if your insurance provider has an accident forgiveness program. Under this clause of your contract, your insurer will forgive a minor accident, even if caused by a student driver covered under your policy.
Another money saving tactic is to raise the deductible amounts on your collision and comprehensive insurance coverage. In addition, you may want to confine your student driver to your oldest, cheapest vehicle, minimizing potential damages in case of an accident. Experts advise families to keep an emergency fund on hand to pay for minor accidents out-of-pocket to avoid costly insurance claims.
If you plan to buy a new car for your son or daughter, remember that some cars cost more to insure than other cars. Used cars are always cheaper to insure than brand new models. Families should pick a car for their student driver that is safe and reliable as well as economical.
Many car insurance companies offer safe driver discounts.
If your driving record has been clean for at least three years, your car insurance provider will reward you with lower premiums. The trick will be to keep your record clean and especially that of your new teen driver. The more you monitor your student driver, the more likely he or she will be able to avoid traffic citations and accidents.
According to statistics provided by the CDC, teen drivers cause 30% of all the injury related accidents each year and nearly the same percentage of property damage claims. Teenagers in this age group, 15 to 19, represent only 14% of the U.S. population as a whole.
If your son or daughter does receive a traffic ticket or is involved in a chargeable accident, make sure they enroll in a state-approved driver safety course. The course once completed, may help reduce the points assigned by your state for a traffic offense and as mentioned above, can lead to significant discounts on your auto insurance policy.
Things to Remember When Shopping for Car Insurance
CNN Money runs a series of articles designed to provide consumers with basic information about financial matters. This article deals with important things to remember when shopping for car insurance.
When you shop online, it’s important to remember that you’re just another set of numbers and computer data, in other words, a statistic. Insurance companies see you as a potential risk and will use your personal information to determine how large a risk you might be and just how much you’ll have to pay them for car insurance.
Every insurance company is different. Insurance products may appear to be similar or even look the same, but they rarely are. When you are shopping, make sure that you compare similar coverage values from company to company. Comparison-shopping will save you time and a lot of money in the long run.
Every state is different.
What a one national company offers in California might be completely different from what the New York State Insurance Commission will allow. Product offerings are different and each state has different mandatory insurance requirements.
Shop for more than the basics and look at more than the price of the coverage you are requesting. Read the fine print and do your homework. Research the company’s claim record and determine how well the company is ranked for its customer service.
Always ask for discounts and negotiate the best price possible. Remember, you are a valuable asset to your insurance company at least until you file a claim. At that time, you’ll need to remember that your insurance provider isn’t necessarily your friend. It becomes their job to pay out as little as possible, while collecting as much as they can in premiums.
When comparison-shopping for auto insurance, make sure you are prepared to make an informed decision.
Read the fine print on the policy documents before you sign on the dotted line. Understand what your new auto policy will cover and what it won’t.
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