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Insurance for Teen Drivers: Save Money and Your Sanity

Buying insurance for teen drivers can be pricey. Rates for this demographic have been consistently high and we don’t expect that to change any time soon. Teens carry a bit more risk due to their lack of driving experience, so it makes sense that their rates would be higher than someone in their mid-20s. Texting and talking on the phone while driving are also big concerns for this group. Phones are almost always within reach, creating major distractions for drivers who are still learning how to safely operate a vehicle.

So how can you get insurance for teen drivers without breaking the bank? Let’s review a few savings tips and tricks that can help keep premiums to a minimum. While this information might save you money, it can also help prepare your child for the huge responsibility of

Dig for Discounts
Before a teen driver is added to a policy, they should take a formal driving course. Students can typically do this through their high school or a local provider. Most carriers offer a discount if you provide the course’s completion certificate. Another potential policy credit is a “good student discount.” Carriers have varying qualifications, but generally a “B” average or higher receives a premium credit. A copy of your teen’s most recent report card or transcript can get you a policy credit ranging from 5% to 15%. So, if your teen has formal driver training and is a good student, you’re off to a good start!

For college students, many carriers offer a discount if they attend school over 100 miles from home and don’t have a car with them. This distance reduces risk, so insurance companies may offer a break. Be sure to alert your agent in this scenario and don’t hesitate to request a credit. Not all carriers underwrite the same, so your policy may vary.

The vehicle for which your teen is listed as the primary driver is another important variable in the underwriting process. For example, you will get a better rate for a teen on a used, four-door SUV than for brand new sports car. This doesn’t mean they won’t have coverage for additional vehicles in your garage, but the rate will be lower if their designated vehicle is an older model of lesser value. Of course, the most important thing is to ensure it’s a safe vehicle that they feel confident operating.

Adjust Your Policy
If your teen’s grades don’t qualify for a discount and they haven’t had time for driving school, fear not! There are other ways to save on insurance for teen drivers. One of the easiest options is to increase your deductible – but do so with caution! The deductible still needs to be affordable in the event of an accident. These days, a fender bender isn’t just a couple hundred bucks. With all the electronics, back-up cameras and other accessories on today’s cars, repair costs are way up. A “minor” accident isn’t so minor when the bill is several thousand dollars.

However, if your current comprehensive or collision deductibles are $500 or less, inquire about options for a higher amount. A deductible increase can lower your premiums and help offset the cost of adding a teen driver. Your agent will be happy to price out different options for you to consider.

Good Rules of Thumb
While this next tip can help save on insurance for teen drivers, it’s usually good advice for any auto policy. If an accident happens and you can afford the repairs without insurance, go that route. A claim can stay on your underwriting record for three to five years and will negatively impact your premiums. If the car is still operable and the damage won’t result in a ticket (broken tail light, missing mirror, etc.), consider paying it yourself. Since you pay premiums for coverage, your first instinct is to contact your agent / broker. However, you should consider the repair costs prior to filing a claim. If the repairs barely exceed the deductible, it’s best not to file. It doesn’t make sense to pay the bulk of the repair bill and then incur a rate increase for several years. Get estimates before filing a claim and weigh the short- and long-term costs.

It’s also imperative to add your new driver and / or their car to your personal umbrella policy. If you don’t have one, ask your agent for a quote. An umbrella policy provides excess liability coverage above the primary liability limit on your auto policy. A $1 million umbrella can fortify your coverage in the event of any liability claim, not just claims involving your child. Once your teen has a driver’s license, you won’t be in the car with them at all times. Adding to your coverage can provide more protection. Although this isn’t an immediate cost-saving measure, it can be a financial safety net if your teen causes a significant accident.

Last, But Definitely Not Least
Finding savings opportunities when adding insurance for teen drivers is important. But above all else, we encourage you to take the time to teach your child to be a safe driver. Not for the sake of lower premiums, but for their safety (and your sanity). When your teen gets behind the wheel, they are probably taking on the most responsibility they’ve ever had. Distractions will always be present, but you can teach your teen how to safely handle them. This can pay dividends now and down the road.

This article originally appeared in the 2019 | ISSUE TWO of the SilverLink magazine, under the title “Save Money and Your Sanity | Insurance for Teen Drivers” To receive a complimentary subscription to the SilverLink magazine, sign up here.

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