Adding teen drivers to your insurance can raise your premium by 82%.
What Determines Cost?
Insurance agents group people by age and risk level. Unfortunately, that causes male teenagers to have higher premiums than girls because boys are riskier and get in more wrecks. Teen premiums are also higher because insurance agents don’t have information to sort them into risk groups through indicators such as marriage and credit score.
Use Real-Time Data
One way to ensure you’re not footing the bill for worse drivers is to monitor your teenager’s driving habits.
A few big carriers let you monitor driving habit data. If you drive the speed limit, limit hard braking and fast acceleration, you’re premium will be lower.
Take Extra Classes
Inexperience is a primary cause of teen wrecks. After you get your license, your teen can take auxiliary safe driving classes to lower your premium.
Good Student Discounts
From high school through college, you can save money by maintaining a 3.0 GPA. I graduated from college at 22, but I can pay lower premiums until 25 because of my college GPA.
Drive Older Cars
You need to protect your teenager, but you don’t have to buy them a brand new car to be safe. Driving older vehicles (not a camero) saves money because the average costs of replacement parts and accidents are lower.
Raise Your Deductible
Many teens will get into minor accidents such as backing into a dumpster or hitting a parked car. If you keep an emergency fund with which to pay for small dings, you can save money by paying higher deductibles— the amount you pay out pocket—but lower premiums.
Go Shopping
It’s easy to compare rates online. Plug in your information and see if you can save by switching, but remember to account for multi-line discounts.
If you own the car, you can drop comprehensive and collision insurance. If your vehicle is worth 10 times less the premium, you may be losing money.
Accurate Information
Only about half of students have cars on campus, so let your insurer know how many miles per year you drive. The fewer miles, the lower your risk of accidents and your premium. You save money because driving a few miles to the store and class is less risky than commuting an hour every day during rush hour.
Build Good Credit
If your teen is old and responsible enough to get a credit card, you can jump start building credit so they’ll save in premiums when they get older. Your credit is a significant factor (along with driving record) in your premium because it indicates how responsible you are. If you care enough to pay bills on time, you’re probably a safer driver.
Adding young drivers will raise your premium, but you can take steps to pay less.