How To Save Money On Insurance When You Have A Teenage Driver

According to recent studies, up to 40% of teens are waiting to obtain a driver’s license until they turn 18.  Why?  It can cost $200 or more per month for insurance, not to mention to soaring price of gas.  What can you do to keep the costs down when your teen gets their driver’s license?

1.  As with all insurance coverage, it really pays to shop around.  You may think that you already have a great deal with your current insurance company, but after you add a teenage driver, your policy cost will likely double.  The difference in cost when adding a teenager driver can vary dramatically from one company to the next.

2.  If your teen has good grades (a B average or better), this may lower insurance costs by up to 20%.  Be sure to ask about discounts for good students and encourage your teen to keep those good grades (or you have my permission to threaten to take away the driving privileges).

3.  Consider purchasing an older car for your teen and obtaining insurance coverage for them to drive just that car.  It will be far less expensive to insure your teen if they are driving an older car with just basic liability coverage.  Consider the risk that the insurance company has if your teen is driving the $40,000 to $50,000 family vehicle.  What you should be looking for is a used vehicle that has a value of $2,000 to $3,000 or less.  You will not need collision or comprehensive coverage (the coverage that protects your vehicle from damage), but you will need liability (coverage for damage to other people and their property).  Additionally, you should consider a higher deductible of $1,000 which will bring the cost down even more. Some people also suggest that on your designated teen vehicle that you place only the teen’s name on the title.  This would protect you from being sued as the owner of the vehicle if your teen is in an accident.

4.  It probably goes without saying, if your teen is cited for traffic violations or is the cause of an accident you will be paying much more.  Teens need to be put on a strict zero tolerance policy and required to drive safely and within the speed limit.  You should point out to them that insurance at affordable rates may not be an option if they cause even one traffic accident.  A little tough love here is certainly warranted. 

I do not think that every child turning 16 should be driving.  It is also my opinion that if a teenager can not earn the money on their own to cover their driving costs, they should not be driving.  As a financial planner for 20 years, I have heard countless horror stories about the financial havoc that a teenage driver can have on a family.  There seemed to always be one constant in these stories, the teen was not paying for the insurance and as a result did not seem to take their driving responsibilities seriously.

Here are some interesting statistics on teen drivers:

Statistics on teen driving and crashes

— Car crashes are the leading cause of death for American teens — more than drugs, guns, or any disease.

— A teenager’s first 500 miles of driving are the most dangerous. During that time, they’re 10 times more likely 
to crash than an adult.

— In 2003 alone, teens were involved in an estimated million and a half accidents.

— Two-thirds of the teenagers who died in car accidents last year were not buckled up.

— During the most recent five year period for which records are available, nearly 35,000 people died when a teenager was driving.

— Teen drivers killed in motor vehicle collisions had a youth passenger in the automobile 45 percent of the time.

— For every 10 "close calls" in a car, there’s one crash.

— 16-year-olds crash at a rate that’s nearly one and a half times as high as 17-year-olds.

— 15 to 20-year-olds make up 7 percent of licensed drivers, but suffer 14 percent of fatalities and 20 percent of all reported collisions.

— 53 percent of teen driver deaths occur on weekends.

— On the basis of current population trends, there will be 23 percent more 16 to 20-year-old drivers on the road in 2010 than there are today — 26.1 million

 

Agree or disagree, click on comments below.

 

My main website is www.ChristianMoney.com

 

James L. Paris

Comments

[Steve Dowdy]

Jim,

Great advice. As an insurance agent, I strongly recommend the older car option. Customers should clarify how often the teenage driver will operate their parents' automobiles - a primary driver classification is much more expensive than an occasional driver classification.

Also, ask about driving training discounts. The company I represent offers a Steer Clear Discount that can save up to 15%.

[dolores charbonier]

I was so glad I read this .I have had a issue with my adopted son over this since he was 15 he is now 17 years of age, he is a very smart young man but not when it came to this issue.He has no job to even pay insurance.I told him to get a job to pay insurance and later we could see about a car.He said, at 18 he will get a lis..He also hated that he needed my signature to get a Lis..This is a very big problem with teens he realy seemed to attack me over this he couldn't understand.It realy hurt to have him do that to me .