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UPDATED: Mar 13, 2020
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Cheap car insurance and teenagers do not necessarily go together. During teenage years, drivers fall into the high-risk driver category based on numerous accident and crash fatality statistics. Automobile crashes kill more young people between the ages of 15 and 20 than any other cause, and younger drivers are approximately three times more likely to be involved in a fatal crash than people in the 25 to 64 age group. Moreover, not surprisingly, the younger the driver, the more accidents they have. Drivers aged 16-years-old have a crash rate per million miles driven of almost three times higher than the same statistic for 19-year-olds, and almost 6 times higher than drivers in the 20 to 24 age group. Due to the increased risk that comes with young, inexperienced drivers, insurance premiums are not cheap.
Car Insurance for Teenager Drivers
However, not all is lost and several ways exist to reduce the costs of auto insurance for teen drivers. The first one is easy: car insurance comparison. Every insurance company has its own way of calculating premiums, based on complex algorithms that factor in several different variables. Each insurer places a different weight on these variables, so the same type of coverage may be surprisingly different in price from one insurance company to the next. Almost all auto insurance companies offer online tools to get immediate quote comparisons. In less than the time it takes to make a quick dinner, parents can plug-in their information and have insurance quotes from several companies.
Change an Existing Policy
Adding a teen driver to the parent’s policy is another easy way to save money. Doing so will increase the total insurance cost, but will still result in a much lower price than a teen who gets his own insurance policy. For more discounts, switch to an insurance company that provides several different types of insurance products, including homeowners, health, life and any other insurance products the family might need. Then, bundle different types of coverage together, and enjoy savings across all policies.
Another way to cut costs is to remove college-aged children from an insurance policy while they are away at school. This might mean somebody needs to ferry them around while they are home on break, but could be well worth the cost savings. However, letting a child drive without insurance just once could result in a big disaster, so this one warrants caution.
The Drivers Permit
Many teens are excited once they receive their driving permit, and want to drive all the time. One of the best things about a driver’s permit, from a financial perspective, is that a teen is usually covered under her parents’ insurance policy while she drives under her permit. As long as an adult is available to drive with the teenager, the purchase of extra car insurance can be delayed while at the same time giving the teen more driving practice and experience. Some states have implemented legally-mandated programs to phase in driving privileges for young drivers, restricting full driving rights until age 18.
Should a teen driver buy a new car or used car?
This choice has two sides to it. On the one hand, newer cars have the latest safety equipment including antilock brakes, airbags and electronic stability control. These features usually qualify policyholders for discounts on their insurance. However, older cars always cost less to insure than newer ones. Perhaps the happy medium is an older car model with a good safety record. Insurance companies look at every car’s performance in crash tests as a measure of the probability of damages, injuries and possible death that might need to be paid out in the case of an accident. The Insurance Institute of Highway Safety rates cars each year and provides statistics on the safest cars to drive.
A little-known fact about insurance policies and cars is that some insurers, to better cover the added risk of a teen driver, will assign the teenager to the newest, most expensive car to insure. This will push premiums up, and some parents have made the choice to not buy any new cars until all their children have passed the teen years. Parents should check with their insurance company to see if the teen driver can be assigned to a specific car, namely the oldest and cheapest-to-insure car in the family. Of course, it is important to make sure this car is actually driven by the teen. If the teenager drives a more expensive car that she is not assigned to on the insurance policy, and has an accident, the claim will probably be denied by the insurance company. Not all insurers will allow the assignment of specific cars to individuals; this question needs to be asked when shopping for policies.
Good Grades Discount
Discounts on car insurance policies for good grades have become quite common. As long as a student maintains at least a B-average, they can often qualify for discounted car insurance. This discount applies to drivers in high school and college. It may require students to have a form signed by a school representative to document the grade point average, but the cost savings are well worth the small administrative hassle.
Sending a teenager to driving school can reduce his risk in the eyes of an insurance company. The driving school will be in addition to the teen’s initial drivers training program. Whether the additional schooling actually decreases teen accident rates is yet to be seen; however, in addition to lowering insurance premiums, the pay-off is a teen that possesses more knowledge and experience about how to drive safely.
Teens on the Road
Once a teen is insured, licensed and driving her car, a few other important precautions can help maintain low insurance rates. Once a teen is added onto her parents’ policy, any tickets or accidents raise the cost of everyone’s insurance, so encourage teen drivers to follow traffic and safety rules religiously.
Imposing a curfew keeps teens safe by protecting them from the most dangerous driving times. According to the Insurance Institute for Highway Safety, accident studies have shown that more teen drivers are involved in crashes between 9 PM and 6 AM than any other time-period. In fact, 41 percent of teen fatalities due to car crashes happen during this time. This is also when the most drunken driving deaths occur as well.
New drivers are especially vulnerable to distractions, and parents can play an important part in keeping those distractions to a minimum. Teens who drive with one extra passenger, especially male, almost double their chance of a fatal accident, according to the Journal of the American Medical Association. The same study showed that, with each additional passenger in the car, fatality risk increased exponentially.
Cell phone use while driving is illegal in some states, but not all. Parents can help enforce this by asking teens to place cell phones in the trunk while driving, to remove all temptation. Texting while driving accounts for a substantial and growing cause of teen crash deaths. Additionally, stereos serve as another distraction and some parents choose to remove them from the car temporarily, until their teen becomes more comfortable and can handle the slight distraction.
Raising the deductible on an insurance policy can substantially decrease premiums. Going from a $250 deductible to $1,000 or $2,000 makes a big difference. Additionally, although insurance companies do not like this, parents may fare better with premiums by not reporting minor fender-benders that cost less than the deductible to repair. Even a minor accident, once reported to the insurance company, mars the record of a teen driver and may cause an increase in insurance premiums.