Successfully passing the driving test is as an important and exciting milestone in any teen’s life. While most parents share that excitement, many also dread the higher insurance premiums that come with adding a young, inexperienced driver to the family policy. The Insurance Information Institution reveals that adding a teen driver to an auto insurance policy can result in premium increases ranging from 50 to 100 percent.
Fortunately, parents can take steps to keep premium increases under control.
When buying a car for a teen, parents should keep insurance costs in mind. A new, powerful sports car will certainly delight the average teen but will also cause premiums to skyrocket. An older car costs less to insure; however, parents should make sure the car is new enough to offer modern safety features. Insurance agents can be a good source of information about the most affordable models in terms of insurance rates.
Teen drivers need to know that insurance companies provide considerable discounts for a clean driving record. Even traffic tickets and minor fender-benders can substantially increase already-expensive insurance rates. Parents should emphasize the importance of observing driving rules, both in terms of safety and avoiding sky-high premiums. The longer a teen drives without incurring a moving violation or accident, the better the chances for obtaining lower insurance rates.
While not all states require a driver’s education course for licensing, many do, and performing well in one of these classes may pay off in the form of lower insurance premiums. In areas where these driving courses are not mandatory, parents can enroll their teens in classes offered by community colleges and high schools. Taking an insurer-approved course can result in discounts of up to 15 percent. Parents should contact their motor vehicle departments for information on courses offered locally.
Raising the insurance deductible can result in significant savings for families with careful driving habits. Parents should let their teens know that a higher deductible translates into a double financial hit in the event of an accident. Not only will insurance costs rise dramatically, out-of-pocket expenses will be higher.
A number of insurance companies offer discounts for teen drivers with good grades because studies show a correlation between successful students and safe drivers. Parents of teens who maintain a B-average or better stand to benefit from a good-student discount of 5 to 10 percent.