The milestone of your teenager getting their driver's license is exciting, but it also brings new responsibilities—especially when it comes to auto insurance. Adding a teen driver to your policy typically means a significant increase in your premium. Understanding why, and knowing how to navigate this change, can help you manage costs while ensuring your young driver is adequately protected.
Fast Auto Quote provides this roadmap for parents embarking on the journey of insuring a teen driver.
Why Do Premiums Increase So Much for Teen Drivers?
Insurance companies base premiums on risk, and statistically, teen drivers are among the highest-risk groups on the road. This is due to several factors:
- Inexperience: New drivers lack the years of experience that help older drivers anticipate and react to hazards.
- Higher Accident Rates: Per mile driven, teen drivers have crash rates nearly three times higher than drivers aged 20 and older, according to the CDC.
- Riskier Behaviors: Teens may be more prone to distractions (like phones or passengers), speeding, and not using seatbelts consistently.
Because of this increased risk, insurers charge higher premiums to cover the greater likelihood of claims.
Steps to Take When Adding a Teen to Your Policy
1. Notify Your Insurer Immediately
As soon as your teen gets their learner's permit, contact your insurance company. Some insurers require permitted drivers to be listed, while others may not charge until the teen is fully licensed. Once licensed, they must be added to your policy or have their own (which is usually far more expensive).
2. Understand Coverage Implications
Adding a teen driver is a good time to review your overall coverage. With a higher-risk driver in the household, you might consider increasing your liability limits to protect your assets in case of a serious accident. Ensure you have adequate collision and comprehensive coverage if they'll be driving a valuable car.
3. Explore All Available Discounts
While premiums will rise, several discounts can help offset the cost:
- Good Student Discount: Most insurers offer discounts for full-time high school or college students who maintain a "B" average (or equivalent GPA) or better.
- Driver Training Discount: Completing an approved driver education course or defensive driving program can sometimes earn a discount.
- Distant Student Discount: If your teen attends school over 100 miles away from home and doesn't take a car with them, you might qualify for a discount.
- Multi-Car Discount: If you're adding another vehicle for your teen, ensure you're getting any applicable multi-car discounts.
- Safety Features: Ensure your insurer knows about any safety features on the car your teen will be driving.
4. Choose the Right Car for Your Teen
The type of car your teen drives significantly impacts insurance costs. Opt for a safe, reliable, and modestly priced vehicle. Avoid sports cars or high-powered vehicles, which are expensive to insure for teens. Cars with good safety ratings and features can also help lower premiums.
Consider assigning your teen to the least expensive car on your policy if your insurer allows specific driver-vehicle assignments.
5. Set Clear Driving Rules and Expectations
Establish firm rules about when and where your teen can drive, passenger restrictions (especially for new drivers), curfews, and consequences for unsafe driving or traffic violations. Many parents use a parent-teen driving agreement. Emphasize the importance of avoiding distractions like cell phones.
6. Consider Usage-Based Insurance (UBI)
Some insurers offer UBI or telematics programs that track driving habits (like speed, braking, mileage, time of day) via a device or app. Good driving behavior can lead to discounts. This can be a good option for responsible teen drivers to prove their safety and potentially lower costs.
Tips for Managing Costs
- Shop Around: Rates for teen drivers can vary dramatically between insurance companies. Get quotes from multiple insurers.
- Increase Deductibles: If you can afford a higher out-of-pocket cost, raising your collision and comprehensive deductibles can lower your premium.
- Maintain a Clean Record: Stress the importance of safe driving. Accidents and tickets will significantly increase your already high teen driver premium.
- Delay Licensing (if appropriate): While not always practical, some parents choose to have their teens wait a bit longer to get licensed, allowing more supervised practice.
Ensuring Safety and Affordability
Insuring a teen driver is a significant expense, but it's a necessary one for their protection and yours. By understanding the factors involved, actively seeking discounts, and promoting safe driving habits, you can navigate this period more effectively.
Fast Auto Quote can help you compare options to find the most affordable and suitable coverage for your family with a new teen driver.