Now that your blood pressure has recovered from giving your teenage driver her first driving lessons, it's time to add him or her to your insurance policy. But teenage drivers and young adults are historically risky clients for insurance companies – and rates generally reflect that. What is the best way to manage the situation?
Here are some things you and your new driver can do to keep premiums affordable.
Tell Junior to Hit the Books
Insurance actuaries – the bean counters who actually figure out the odds and set insurance rates – have long known that there is a correlation between good grades and good driving records. Kids who have the discipline and focus to do well in school statistically also have the judgment and impulse control not to get into a lot of accidents.
Many insurance companies offer a discount to students with good report cards. If your youngster has a GPA of 3.0 or better, you may qualify for a discount on your insurance premiums. One idea: Compare the difference in premiums with and without the discount – and make junior pay the difference himself!
Keep it in the Family
Insurers like it when everyone in the family signs up. So much so, in fact, that many of them will discount premiums on family members. It is generally much more efficient to add a young driver to an existing policy than it is to get a separate policy.
Use Multi-Line Discounts
Many companies will offer a discount if you use them for multiple lines of insurance. For example, if you have your homeowners or renters insurance policy with a company, and your life insurance, consider placing your car insurance with the same carrier as well.
Get an Older Car
Older cars are generally less expensive to replace than a new car. This means that if your young driver totals a 10 year old car, the insurance company has to pay less to replace the car than if she wrecks a brand new one. This translates to much lower insurance premiums if you carry collision coverage. Don't skimp on safety – but don't needlessly pay too much for a car for a young driver, either.
Skip Collision Coverage
You may want to consider skipping collision coverage altogether. For older cars, the bigger risk isn't the cost of the car – it's the covering your teenage or young adult driver against liability. You can recover from the cost of a single clunker. You can't recover from a $100,000 judgment. If your family can afford to replace an old car, consider dropping collision altogether and adding to liability coverage.
Avoid Tickets and Accidents
The last part seems obvious to adults; It may not register yet with the kids. Impress on them the importance of maintaining a good driving record. Moving violations get recorded, and reported to the insurance industry. Even a single accident or moving violation can cause your premiums to skyrocket. And a single DUI conviction? Better invest in a bus pass, because those are the only wheels your kid will be taking for years. Coverage is nearly impossible to find once a young driver gets a DUI.