Buying Car Insurance for Teens
Most people learn how to drive as teenagers and earn their driver’s licenses around 16. Insurance companies set prices for their policies based on a policyholder’s perceived level of risk, and a new driver obviously presents more of a liability on the road than a seasoned driver.
As such, insurance for teen drivers is typically expensive, and parents should have an idea of their options concerning such an important purchase.
Teen Insurance Options
There are generally two main options for purchasing car insurance for a teen driver. Either the parents may add the teen to their existing policy or purchase an individual policy for the teen driver alone. Generally, it’s much cheaper for parents to add their teen drivers to their own insurance policies. While this will cause the parents’ premiums to increase, it is generally less expensive than purchasing a solo policy for a teen driver.
A teen driver may be a bigger liability than his or her parent’s in the eyes of an insurer, but there are several steps you can take to possibly secure a more reasonable premium rate, including:
- Good grades. Some auto insurers offer good student discounts that reward teens who get good grades in school. Students typically need to earn a specific grade point average to qualify for these discounts.
- Driver safety courses. Many public schools offer driver’s education courses, and there are many private driving tutors available virtually everywhere. If you show an insurer proof that a teen driver has completed driver’s education or a driver’s safety course, you may qualify for a discount on your premium.
- Buying an inexpensive car. The more expensive a car is, the more expensive it will be to insure. If your teen drives a preowned or older car that didn’t cost much, it will probably lead to a lower premium rate. Try to encourage your teen to purchase a sensible vehicle instead of a luxury vehicle or flashy sports car.
- Agreeing to a higher deductible. Your deductible is the amount you need to pay out-of-pocket before insurance applies. A higher deductible will generally lead to less expensive premiums, but it is up to you how much risk you are willing to shoulder.
- Good driver discounts. Many car insurance companies incentivize good driving by offering bonuses or discounts for a clean driving record. If your insurance carrier offers such a perk, your teen can maintain lower premiums by driving safely and avoiding accidents. If your insurer offers such a benefit, your teen’s good driving will benefit him or her later in life when it’s time for him or her to purchase an individual policy.
- Multi-vehicle discounts. If you plan to add your teen to your existing insurance policy, check if your insurer offers any discounts for insuring multiple vehicles.
- Consider your coverage options. More coverage will cost more in premiums, so determine what types of coverage your teen really needs to possibly secure a cheaper policy. If you don’t think your teen’s car justifies collision coverage or comprehensive coverage, you may be able to skip these options if your state allows it.
- Other discounts. Your insurer may also offer discounts through your employer, military service, or your loyalty to the insurer.
Ultimately, a teen driver will almost always incur higher premiums than more experienced adult drivers. Parents have many opportunities to save money on their teen drivers’ policies by exploring discounts and carefully determining which types of coverage are most important. Teens that start strong with a clean driving record are more likely to have more reasonable premium rates as adults, and you can start building a good reputation with your insurer early with good driving.