Automobile Insurance, Personal Auto Insurance, Personal Insurance, Personal Lines

A Parent’s Guide to Insuring Teen Drivers

2/26/2021 | Stephanie Marsh

It is no secret that car insurance for teenage drivers can increase your insurance premiums.  The reason for that is unfortunately claims data supports new drivers are more likely to be involved in fender benders than any other group related to their inexperience behind the wheel.  The best way to gain experience behind the wheel is to log drive time hours, so we would like to share a few tips to help get your teen on the roads safely without breaking the bank. 

Compare Rates to Find the Best Option for Your Family

As an independent agency, we represent multiple insurance carriers which can be a major advantage for many of our policyholders to review multiple options under one roof – especially when there are significant policy changes to factor into consideration.  What was previously the best option may no longer be the case when adding a new teen driver to your policy.  And that is our time to get to work for you, we will gladly compare options to find the best rate for your family as changes arise and your needs evolve. 

When to Contact Your Agent?

Have we mentioned that we love to hear from you?  Because we do!  Please give your agent a call anytime you have an insurance question or have a few minutes just to say hi.  But regarding when to insure your teenage driver, they do not need to be added to your insurance policy until they are licensed.  However, our recommendation would be to check in with your insurance agent when they first receive their learner’s permit.  The reason we recommend early notification is so your agent can fill you in on all available discounts or factors to consider in the coming months to help prepare your family for that change.   

Policy Discount Information

Adding your teenage driver to your policy as an additional driver will almost always be cheaper than purchasing a separate policy for your teen.  While still very expensive, reasons why this is a more economical route include certain discounts available that your teen might not be able to obtain on their own, such as:

  • Multi-policy discount – many carriers will offer a discount to bundle your policies with one company.
  • Multi-vehicle discount – policyholders with more than one vehicle insured on a policy can be eligible for a multi-vehicle discount.
  • Paid-in-full or EFT payments discount – there can be discounts available based on payment methods selected.
  • Good payor discounts can be offered for policyholders who have consistent records of paying on time. Automatic payment withdraw can help with this!!
  • Many carriers also offer discounts for going paperless if you are willing to sign up for electronic communications with the carrier.

While your first-time drivers often do not have long standing insurance histories, there are a few things they can do to contribute to lowering the price of insurance.

  • Good student discount – many carriers offer discounts for high school through college aged students maintaining a “B” average. Requirements will vary by carrier, always inquire what could be available for your student.
  • Drivers education courses – many carriers will offer discounts for teen drivers who have completed a drivers’ education or training course.
  • Good-driver discount – the longer your teen can stay accident and violation free, the more likely their premium is to gradually decline over time.

It would never be recommended to reduce coverage in an effort to save in premium, especially when adding a higher risk driver to your policy.  However, check with your trusted guide to insurance to see if increasing your deductible amount could save you some premium.

  • Do you have AAA or another roadside assistance program separate from your insurance policy? If so, ask about removing roadside assistance from your auto insurance policy so you are not duplicating that coverage.
  • Do you have an extra vehicle, or would you be willing to temporarily ride share with your family in the event of an accident? If so, ask about removing rental car coverage from your policy so you are not paying for a coverage you could get by without needing. 

What is the Best Vehicle to Purchase from an Insurance Perspective for a Teenage Driver?

Unfortunately, there is no cut and dry answer there, but there is guidance. In looking for a car that is less expensive to insure for a youthful driver, if the value of the auto is low then the cost to insure it is going to be lower than one that is worth more. Therefore, used cars will be cheaper to insure than new cars. One might consider purchasing an older vehicle and carrying liability coverage only. But something to keep in mind is, teens do typically have a lot of fender benders. With liability coverage only you would be paying out of pocket for any damage to your vehicle and only insuring against the damage caused to others. See where that could get costly from a repair standpoint or possibly having to purchase a replacement vehicle?

The auto being safe is the most important factor for any parent. From an insurance perspective, safety features such as airbags and antilock brakes are used in rating and these features are pulled over by the vehicle’s VIN. Also taken into consideration from a rating standpoint and identified by the vehicle’s VIN is the vehicle’s engine type, transmission, and other specifications. Sedans typically have a higher safety rating and there are a great deal of coupes considered sports cars. Autos to avoid would be sports cars, convertibles, Mini Coopers and most definitely motorcycles.

Additional Factors for Consideration as Your Driver Gains Experience 

Now that your teen is on the road, they will likely be looking for some extra cash for gas and spending money.  If your teen plans to drive their personal automobile for food deliveries, always check with your insurance agent first to confirm you and your teen are covered for that exposure.  Many personal automobile policies exclude coverage for delivery so that is something we will need to review to confirm there are no gaps in coverage.

Once a teenage or young adult driver purchases an auto on their own, without their parent’s name on the title, their parent’s insurance coverage no longer is valid for them.  They must get a car insurance policy in their own name.  Without ownership, Mom and Dad no longer have insurable interest in the vehicle and it is now the child’s responsibility since they purchased the auto on their own.  Coverage should be bound before the car is driven off the lot because the parent’s policy will not cover the new auto.  But the good news is that many companies will offer a discount for the child’s policy if the parents have a policy through their company, so that could help them save a little premium getting started.

Another bit of information is that once a child moves out of the household and into their own residence, the auto they drive should be put in their name and they should place the insurance coverage themselves.  This does not apply if the child is a full-time student and living away from the household.  In that situation while they are in school, the garaging address for their location can be added to the parent’s policy.  A gap in coverage can occur if your child has roommates and the roommate drives their vehicle and gets in an accident.  All drivers in the household need to be disclosed to the insurance company, as roommates also have access to the covered vehicle.  Some companies will allow an exclusion of the roommate drivers and in exchange will not pay for a loss if the roommate is in an accident in the insured's car.  The premium is less when the roommates are excluded, but again, coverage is not afforded for them should they drive the vehicle.

We hope this information was helpful and if you have any questions please reach out to your agent!