Young drivers are two to three times more likely to get into an auto accident than experienced drivers. According to the Centers for Disease Control and Prevention, teen drivers are especially prone to accidents during their first month with a license and when they're driving other teens. The risk increases for each additional teen passenger, and young men are more likely than young women to be involved in a fatal crash. Insurance companies take this added risk into account when selling auto insurance policies for teenagers; the rates can be fairly steep. Here are some ways teens and their parents can save some money when insuring a young driver.
Don't Buy Separate Policies.
It's likely cheaper to add a new teen driver to an existing policy than to buy a policy solely for the teen. The premiums may rise, but not necessarily as much as the cost of a brand new policy. Moreover, there are many ways to get discounts on auto insurance that don't apply to new drivers. For example, buying multiple policies from a single provider often yields a multi-line discount, but few teens need other types of insurance (e.g., homeowners or life insurance).
Use One Provider.
Many insurance providers offer a discount to customers who insure multiple vehicles. If the teen has his or her own vehicle, buying insurance from the provider that a parent uses can decrease costs for both parties.
Depending on the insurance provider, discounts for good grades may be available to students with a B average or better. Home-schooled students may qualify as well (hopefully parents won't be prompted to give their children better grades just for the sake of saving a little money). The discount typically is worth between 10 and 20 percent but may be even higher. It isn't applied automatically, so be sure to ask if and when the report card is sufficiently impressive.
Take the Hand-Me-Down.
New cars, even the not-so-glamorous models, are costly to replace. It may not be cool, but the best way to keep a lid on insurance rates is to have teens drive an older car. Still, there are pros and cons to weigh. With an older vehicle, premiums may be lower, and it's more likely that collision and comprehensive coverage aren't necessary. The safety features available in many newer cars, such as airbags, daytime running lights, and anti-lock brakes, decrease insurance rates, but the overall cost still may be higher. At the same time, an eye toward safety can be more important than lower premiums. Airbags, for example, save thousands of lives each year and may not be present in cars built before 1998.
Get Additional Training.
Taking an additional driver's education course after getting a license can save teens, and generally anyone younger than 25, even more on insurance rates. Several insurance providers offer teens discounts for completing the TeenSmart program, which costs $99.95 (coupon codes from insurance agents can drop the price to about $50). The program comprises downloadable video and workbook lessons, as well as a few in-car exercises that teens and parents do together. Some insurance companies mount their own programs, such as State Farm's Steer Clear program, which is free to download and requires teens to log five to 20 trips supervised by a parent.
Young adults moving away for college may be eligible for a rate cut if they're not bringing a car to school. Many insurers extend a discount if the school is at least 100 miles from the home address, because the student won't be driving the vehicle often.
Other Discounts Still Apply.
The discounts mentioned above are available exclusively to, or well-suited for, young drivers. Most discounts, however, don't impose age restrictions. Buying an anti-theft device such as a steering wheel club, paying for a year's worth of coverage up front, and raising the policy's deductible all help lower premiums. Check the insurance provider's website, or contact an agent, for a full list of discounts.