Part 2: Parents have questions, we have answers
Last month, we gave parents of teen drivers some tips on how to increase safety and keep insurance premiums in check. This article answers some common questions we get from parents when their children approach driving age.
1. Why does it cost so much to insure teen drivers?
Simply put, teen drivers are the riskiest age group to insure. The risk of motor vehicle accidents is higher among 16- to 19-year-olds than among any other age group—they are nearly three times more likely to crash than older drivers. Most experts agree that immaturity and lack of driving experience are the two main factors that cause teen drivers to have such a high crash rate. Teens often fail to recognize hazardous situations and do not respond appropriately. In addition, teens are more likely to engage in risky activities such as speeding and tailgating.
2. When are teens added to a car insurance policy—when they get a learner’s permit, or when they get a driver’s license?
Requirements for adding teen drivers to your insurance policy vary among states and insurance companies, especially during the time a teen has their learner’s permit. Some insurance companies base their rules strictly on whether or not the teen has a license, while others base their requirements on the age of the teen. Your insurance agent can help you determine when you need to report your teen driver to the insurance company.
3. If my teen has a driver’s license but does not drive, will my insurance rates still increase?
The short answer is yes. Insurance companies have no way of knowing if your teen is or isn’t actually driving. Also, as mentioned in our previous article teens are risky and unpredictable. They could get behind the wheel of a friend’s car without your knowledge, in which case they would need to be insured.
If your teen truly will never be driving, and you want to keep your premiums down, consider having your teen surrender his license to the DMV. Procedures vary by state, but you can ask for written documentation of the surrender which can be given to your insurance company as proof. Some companies may lower your rates in this case, but they are not obligated to do so.
4. Should I put my teen driver on their own car insurance policy to save money?
Adding a teen driver to your car insurance policy can potentially raise your rates significantly (anywhere from 20% to 180% depending on your state), but it is always best to add your teen to your family policy rather than purchase a separate policy. In one example cited by Consumer Reports, adding a 16-year-old driver to a married couple’s family policy resulted in a 250% increase in premiums. If that teen is insured separately, the rates could be even higher.If you purchase a separate policy for your teen driver, you might be tempted to purchase insufficient coverage limits or exclude them from your other policies. This is never a good idea in a family where any driver could operate any of your vehicles at any time.
5. Will we have coverage if my teen has an accident but is not on my insurance?
Maybe, but maybe not. The majority of policies in the U.S. cover all members of the household without you having to report them as drivers. However, some policies may restrict coverage for family members to those that were reported to the company when the policy was put in place. If for some reason your teen was specifically excluded from your auto insurance policy, you will definitely not have coverage for the accident. And if an unreported teen does have an accident, your insurance company could decline to renew your policy.
6. When, if ever, do teen auto insurance rates begin to go down?
Typically, teen driver insurance rates tend to drop after the driver experiences three years with a clean driving record. Depending on your state, rates may drop by 50% after three accident- and ticket-free years, with another drop after six years with a clean driving record. After age 25, car insurance rates should go down again, so long as the driving record remains clean.
7. Is there any way to save money on my teen driver insurance premiums?
Insurance companies vary in both the rates they charge and the discounts they offer. An independent insurance agent, like the advisors at General Southwest, can comparison shop for you. Here are a few discounts that could apply to your teen and family situation:
- Good student discount: if your teen has good grades
- Defensive driving discount: for completing approved courses
- Low-mileage discount: if you drive infrequently or only short distances
- Safety features discount: for vehicle options such as auto-braking or anti-drift warnings
- Multi-policy discount: if you bundle home and auto or other coverages
- Usage-based Insurance (UBI) discount: requires a monitoring device to track driver behavior
8. How much will my car insurance premiums go up if my teen has an accident or gets a speeding ticket?
If your teen driver cannot keep a clean driving record (i.e. is involved in a crash or receives a moving violation) expect your rates to increase significantly—perhaps as much a 20% to 40%. Insurance companies are not simply punishing you; teen drivers represent a significant portion of the costs related to motor vehicle injuries in the U.S.
9. Does the type of car that my teen drives affect premium costs?
Yes, and while teen rates are always going to be high, the car you choose will help you save some money. Your teen may fantasize about a fast sports car or a powerful SUV, but the best cars for teens are mid-sized sedans. From an insurance perspective, small cars are considered less safe, while sports cars encourage speeding. Large trucks or SUVs are more prone to rollover crashes. The best idea might be to provide your teen with a somewhat older vehicle that will cost less if it is involved in an accident, and that doesn’t come with any of the inherent safety concerns of other types of vehicles.
How to Find the Right Insurance for New Drivers
Finding good car insurance for teens and keeping rates under control is far from simple. Get your teen started on the right foot by making sure they take a high-quality drivers education course and have plenty of behind-the-wheel experience before you allow them to head out on the road.
In order to find insurance coverage that addresses your family’s specific needs, you should work closely with a local, independent agent who has experience working with families and teen drivers. Your GSW advisor can obtain quotes from multiple, reputable insurance companies so you can find the best combination of cost and coverage for your needs. We will also help you get all of the auto insurance discounts that your teen is eligible for.
Contact us today at 480-990-1900, or visit our website, for assistance insuring your teen driver, or with any with other insurance-related questions.