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Insuring teen drivers can be a tricky proposition when you consider a number of factors including their age, the car they will be driving, and their history behind the wheel. That makes it difficult to say exactly how much you can expect to spend on insurance for your teen. But we do know that car insurance for teens is significantly more expensive than their older counterparts.
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According to NJ.com a news aggregation site for the state of New Jersey, the average cost to add a teen driver to an existing policy in 2009 was just over $2,100 annually. Car insurance rates have not fluctuated much since then, so it’s reasonable to believe the average is about the same. Keep in mind it may be more or less depending on where you live and the insurance company you use.
Why Teen Drivers Cost More
If you’re a middle-aged parent with a good driving record, you might be able to get top-of-the-line coverage for your car for about $1,000 per year. So why does it cost more than twice that amount for your teen driver? It all comes down to one word: risk.
As the Texas Department of Insurance explains, insurance companies determine rates largely based on the likelihood an individual driver will have an accident. They go on to further explain that statistics show young drivers are more prone to accidents than older drivers are. Teen drivers are more prone to accidents primarily to two factors: lack of experience and a misplaced attitude of invincibility.
Unfortunately, statistics provided by the California Department of Motor Vehicles via the National Highway Transportation Safety Administration clearly show that drivers between the ages of 16 and 19 have the highest crash rates among all drivers in the country. Furthermore, crashes involving young drivers tend to be more serious due to speed, driver distraction, and other factors.
All of this adds up to the reality that teen drivers cost insurance companies a lot more financially. The only way for them to control their costs and keep from going out of business is to charge them more. That’s just good business.
Violations and Minor Accidents
Violations and minor accidents cause rates to go up regardless of the age of the driver. But where teens are concerned, those rate increases will probably be more pronounced. Again, it all comes down to the amount of risk a teen driver is posing to his insurance carrier.
This is one of the reasons why it is so important for teen drivers to take a driver safety course prior to getting their licenses. If a teen can receive driver’s education classes through a public school, that’s even better. Such education won’t prevent all careless driving, but they can reduce it significantly.
Driver safety courses go a long way in reminding teens that driving is a privilege with a tremendous amount of responsibility attached.
If your teen gets a ticket or is involved in a minor accident, this should be an immediate wake-up call to change his behavior behind the wheel. If he continues to drive unsafely, it’s likely his insurance rates will continue going up due to successive violations and further accidents. However, if he changes his habits, he can see a rate drop once his record is clean again.
Educating Teenagers on Insurance Responsibilities
As a parent, one of the best ways to encourage your child to drive safely and legally is to make him responsible for his own insurance payments. Unfortunately, many parents pay to insure their teenagers while also handing them the car keys without any responsibility. This is a recipe sure to invite your teen to drive recklessly. If it costs him nothing, what is his motivation to drive as he should?
On the other hand, requiring a teen driver to pay for his own insurance and contribute to the gas and upkeep of the family car makes him much more likely to be responsible. If your teen needs his own car, let him pay for it on his own either in cash or through a scheduled loan from you. Once he has the debt of the car hanging over his head he is less likely to drive in a way that would risk his financial investment.
One other thing you can do to educate your teen driver regarding responsibility and insurance is to search for specific resources that address the topic. For example, the state of Louisiana’s Insurance Department publishes something they call their “Teenager’s Guide to Auto Insurance.” This publication answers most of the common questions surrounding teenagers, car insurance, and the proper use of a motor vehicle. It’s a great training resource parents can put to use in educating their kids.
Excluding Your Teen from Your Policy
In some states, it is possible to get a car insurance policy that explicitly excludes coverage for a specific person. Hopefully it never comes to that, but you could exclude your teen driver from your policy if he has an extremely poor driving record and your state’s laws allow it. Doing so would keep your policy at a more reasonable level while forcing your teenager to purchase insurance that more accurately reflects his poor driving.
Keep in mind that most states have in place what are known as passive coverage laws.
Passive coverage is a principle that suggests you are giving consent for a driver to be covered by your insurance policy whenever you hand him the keys to your car. These laws vary from one state to the next, so the coverage may not extend to every driver in every situation.
We bring this up in light of the fact that you might want to exclude your teen driver from your policy. Simply not reporting him to your insurance company does not constitute an exclusion. If you don’t report him, yet he still uses your vehicle, your insurance policy may be forced to cover him after an accident based on passive coverage. If you want your teen excluded from your policy, you will have to specifically notify your insurance carrier to do so.
Keeping Rates As Low As Possible
Despite the fact that car insurance rates for teens tends to be significantly higher than what their parents pay, there are some things that can be done to keep the price as low as possible. The first thing, as previously mentioned, is to have the teen driver complete a driver’s education course. Insurance companies are more than happy to grant discounts that can be as high as 10% to 15%.
In addition, many insurance companies offer discounts for teenagers who maintain good grades in school. The rationale behind this lies in the fact that a student who studies hard enough to get good grades is unlikely to be the type of teenager who routinely engages in reckless behavior. That teen is also less likely to be involved in an accident due to drunk driving, texting, or cell phone use, and so on.
Your teen might be eligible for other discounts if your insurance company offers them. Examples would be discounts for safe driving, maintaining a self-imposed curfew, and agreeing to never drive with friends in their car unless adults are present in the vehicle. Such discounts all come down to employing simple safety practices known to reduce car accidents among teens.
Don’t Forget Make and Model of Car
When you’re insuring a teen driver don’t forget that the make and model of car are both important. You can expect to spend more on teen car insurance if your child is driving a brand-new car with a high street value. You can also expect to pay more if his car is classified as a sports car, luxury vehicle, or off-road vehicle.
It’s best if your teen drives an older vehicle with a good safety record.
Used family sedans and minivans are good choices for teenagers because they are among the least expensive vehicles to ensure. Your teen may not be happy tooling around town in what he considers an old man’s car, but if you make him responsible for his own insurance and car payments, he will quickly realize the value of driving such a vehicle regardless of what his friends might think.
Once you have that older family sedan for your teen to drive, make sure you inform your insurance company that the vehicle is his primary mode of transportation. Otherwise, they are likely to assign your teen to the more expensive vehicle while assigning you to the older sedan. Always remember that you have the right to assign various drivers to your family’s vehicles as you see fit.
Lastly, whichever vehicle you assign your teen needs to be the one he drives most often. That’s not to say he can’t drive your brand-new BMW, it’s just that he’ll be using the older sedan to go to and from school every day. If you assign him to the least expensive car even though a more expensive one is his primary mode of transportation, you are increasing the likelihood your insurance company will deny a claim based on misrepresentation.
It goes without saying that insuring a teen driver is much more expensive than insuring his parents. While it can cost up to twice what the parent pays, the cost can be contained using the simple tips we provided in the previous paragraphs. As long has your teen keeps his nose clean he will see his insurance rates plummet when he reaches age 25.
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