Insurance for Teen Drivers

Part 1: What every parent should know


teenage driverAsk any parent of a 16-year-old, and they’ll likely tell you that having a teen driver is a mixed blessing. It’s great that your kid can finally drive herself to soccer practice, and pick up a loaf of bread on the way home. But it’s also a bit frightening to think of your baby out on the streets alone. And then there’s your car insurance bill…


Why does it cost so much to insure a teen driver?

We get asked this question all the time. The short answer is this: Insurance rates are calculated based on the statistical likelihood of a claim payout, and teens, as a group, have the highest risk of being in an accident.

By the numbers:
963,000 young drivers were involved in crashes in 2013
Of these – 383,000 were injured while driving and 2,865 were killed

There are many reasons why young, inexperienced drivers are more prone to being in accidents. Here are five of the many factors that contribute to teen driving risk:

  1. Low risk perception:How many times have you said, “My teenager thinks she is invincible”? Unfortunately, this statement is often true, even when teens are behind the wheel of a car. Young drivers underestimate the risks they face and overestimate their ability to respond.
  2. Risk taking:Invincibility, again. Teen drivers are more likely to engage in risky driving behaviors like speeding, tailgating, running red lights, violating traffic rules, making illegal turns, passing dangerously, and failing to yield.
  3. Skill deficiencies:Young drivers are new drivers. They haven’t yet mastered the skills they need to stay safe.
  4. Alcohol and drug use:Unfortunately, substance abuse is a leading cause of serious crashes among teen drivers. And teens with alcohol or drugs in their system are even more prone to crashes than older drivers who may have consumed similar substances.
  5. Distraction:Teens are easily distracted by many things, including having their friends in the car while they drive. In fact, the fatality risk of 16- and 17-year-old drivers is three times higher when they are driving with passengers than when they are driving alone.


What can you do to reduce driving risks for your teen?

As a parent, it’s important to set limits for your child and to have realistic expectations. Teens should understand that driving is a privilege, not a right, and they should only be allowed to drive if you feel they will adhere to your safety rules. Here are some guidelines to reduce driving risks:

  • Enroll your child in a private driver education course taught by a professional.
  • Have your child obtain his learner’s permit as soon as possible and get as much experience as he can before getting his license. Consider having him practice a full year, even if your state only requires this for six months.
  • Have your child practice driving under various conditions such as at night, during bad weather and in heavy traffic.
  • Restrict the number of passengers allowed in the car with your teen driver. Multiple passengers increase distractions and risk.
  • Do not allow your child to ride with other teen drivers unless you are comfortable with their level of driving experience and family support.
  • Do not give your child her “own” car. If you are purchasing an extra vehicle, consider it a “family car” that everyone may use. Teens should only drive cars that meet current safety standards.
  • Make sure your teen gets enough sleep before driving; this will lessen the chance of an accident.
  • Set a good example in your own driving by abiding traffic laws, not talking on a cell phone while driving and not carrying on in-depth conversations while on the road with your teen in the car.
  • Create a driving contract between you and your child. Outline responsibilities, set clear rules, and provide consequences for breaking them.


How can you get the best rate on car insurance for your teen?

As soon as your teen is ready to get his learner’s permit, contact your insurance agent. If your child gets into an accident prior to being on your policy, your insurance company may not cover the damages, and could revoke your policy. Adding a teen will raise your premium, but do not lower your liability coverage drastically to combat rate increases. It simply does not make sense to carry less liability for a high-risk driver. Plus, you will be forced to cover damages out-of-pocket if your child gets into an accident and is not adequately insured.

Ask your agent about Usage-Based Insurance (UBI) which uses telematics to monitor driving behavior. This technology works though either a self-installed plug-in device, or though a mobile app on your smartphone. Telematics measure driver safety, and your insurance company can use the data (good or bad) to adjust your premium rates. Many companies offer a small discount for signing up, with additional discounts available if your driving meets their safety criteria. In addition to reducing your insurance bill, telematics can also alert you if your teen is engaging in risky behaviors, like speeding or braking too hard.

Parents of teen drivers should also consider a Personal Liability Umbrella Policy. If your teen accidentally injures someone or damages property, you could be the target of litigation. It’s common for juries to award damages that far exceed the limits of most auto insurance policies. An umbrella policy can protect you from these risks. (Read more about personal umbrella policies.)


Keep calm and call General Southwest

A driver’s license represents a rite-of-passage for teens and their parents. Your General Southwest advisor can help you through this transition, answer your questions, and make sure you have the insurance coverage in place to handle any bumps in the road ahead.


(Don’t miss our next installment: Teen Drivers Q&A – Your questions answered.)

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