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Understanding Auto Insurance for Teen Drivers One of the scariest days for parents is when their little babies get their driver’s license. It seems as if just yesterday they were pedaling along on their big wheels, but now they’re getting behind the big wheel of an automobile to hit the open roads on their own. Of the many considerations that parents have to contend with and of the most important and potentially most expensive is that of auto insurance now that you have a teen driver in the household. Many people are unprepared for the price shock that often accompanies adding your child to your insurance policy and it almost always results in a significant rate increase. The reasons for this are simple in that younger drivers account for the highest percentage of automobile accidents. While rate increases are likely, there are some things you can do to mitigate the severity of them and help to keep your rates under control while still providing more than adequate protection for your teenage driver as well as you and your family’s assets. One of the first considerations that parents may look at is purchasing a used inexpensive car for the brand-new driver. Purchasing a reliable but affordable vehicle can help to keep costs down in several ways. First of all, by buying a used car you may be able to pay for it with cash out right rather than have to finance it over several years. The discount you will receive on the used price coupled with the savings you won’t pay on interest on a loan can be significant indeed. In addition, because you purchased an inexpensive car and don’t have a bank loan on it, you may want to consider waiving collision coverage on the auto insurance policy for your teen driver. Collision coverage usually represents the highest expense on an underage driver’s policy because of their propensity to cause damage to the car by their own doing. Waiving this coverage can often save hundreds of dollars per year off the normal price of the policy. If going the used is not your plan of action but instead you want to add your teenage driver to an existing vehicle in the household or perhaps buy them a brand-new vehicle, there are still some things that you can do that will help to generate savings. If opting for a full coverage policy including collision, it is wise to keep a high deductible on this coverage for several reasons. The first one is that the higher the deductible is the less expensive the policy will be. The deductible represents the amount you agree to pay in the event of an at fault accident. For instance, if your collision deductible was $1000 and your teenage driver damages your vehicle, the insurance would pay the difference of the damage over and above the $1000 mark. The next and oftentimes the most significant reason to keep a high deductible on a teenage driver policy is to help protect the insurance rating of the driver. By keeping a high deductible, you are lessening the chances of turning in any at fault claims that would fall below the deductible amount. In this scenario above, if you’re deductible was $1000 and your teen caused $700 damage to your vehicle, there would be no reason to contact the insurance company at all. This would help to keep their insurance claim record clean and prevent any rate increases that could result from at fault claims. Finally, there are usually some pretty nice sized discounts available to teen drivers as well, if they qualify. The first of these and probably the most popular with insurance companies is a good student discount. If your child receives a B or higher average and is attending school full-time either high school or college, they may be eligible for this discount. This provides a fantastic incentive for your child to keep and maintain excellent grades, especially if you are making them pay at least part of the insurance premiums. Another popular discount involves completion of some type of safe driving program. This may involve your child filling out a logbook of their driving experiences, completing a video safe driving course, and sitting down with your insurance agent to discuss the safety issues pertaining to driving. Depending on the company that your insurance policy is with, the actual discounts offered may vary so it is important to sit down with your insurance agent and discuss all the options available and how you and your teen can qualify for these discounts to ensure the best possible savings. One additional area to mention is liability coverage. While it doesn’t involve saving money on the premium necessarily, it can save you an enormous amount in the event that a catastrophic accident does occur. The liability portion on your teen’s insurance policy is the most important coverage that exists. This is the portion of the policy that will pay for other parties in an accident where your teen is at fault. Because your teen is at a much higher risk to have an at fault accident than most other age groups, you will want to maximize this coverage to make sure that there is plenty of money available from the insurance company in the event of one of these accidents and that someone else does not come after you or your assets should one occur. This is absolutely not an area where you should try to save money on your insurance premiums, but instead, purchase the highest amount of liability coverage you can afford at the time. Watching your teen drive down the road for the very first time can be truly a bittersweet experience indeed but if you follow the suggestions above and schedule an in-depth insurance review with your insurance agent, you can help to reduce the cost of adding your teen to your insurance policy while still protecting both them and you in the event of an at fault claim.

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