As a parent, one of the most costly questions you’re likely to hear from a teenager is, “Can I get my learner’s permit?” Granted, it’s an important rite of passage in the life of nearly every American teen. However, it also holds the potential to expose you to all sorts of new expenses.
Chief among these will be adding a teenager to your car insurance.
That one might not be as costly as you think.
Here’s Some Good News
Accepting a learner’s permit request will not trigger an automatic rate increase in most states. Many companies will list a teen with a learner’s permit on previously existing policies at no additional charge. This is due to the fact that most states require student drivers to be accompanied by a licensed adult, typically over the age of 21. The thinking is a teen is less prone to engaging in risky antics with a responsible adult seated next to them.
What’s more, there are a number of ways to reduce the cost of insuring a young driver once they are licensed.
These include:
1. Register their car in your name
A teen whose car is registered in their name is required to have their own insurance policy. Meanwhile, adding them as a listed operator of a car registered to you spreads the insurance company’s risk over your entire family. This will result in a lower premium.
2. Good grades get lower rates
If ever there were a carrot parents could dangle to get their kids to buckle down in school, this is a good one. Insurers look more favorably upon teen drivers who earn good grades. Generally, those that maintain a B average or better qualify for discounts. Be ready to share a copy of that report card though—the insurance agent will ask to see it.
3. Wait until they’re older
Encouraging a teen to wait a few years to get their license will save you money as well. Many insurance companies’ rates are up to 8% lower for a 19-year-old than a 16-year-old. You’ll pay lower premiums if you can get them to hold off for a few years. But good luck with getting them to agree.
4. Enroll them in an accredited driver’s training course
You’ve taught your child everything you know about being a safe driver. However, you may have inadvertently passed along some of your—shall we say—less than desirable habits. “Do as I say, not as I do,” will only carry them so far. Insurance companies know this and offer discounts to parents who enroll their children at a recognized driving school.
5. Have them drive an inexpensive safe car
Okay, let’s say you’re running an insurance company. A parent comes to you to insure their teen—who just got a driver’s license. By the way, they will be driving a brand new, 453-horsepower BMW M2.
How likely are you to offer them a low rate?
Exactly.
Now, imagine that same parent coming to you with their kid driving a 168-horsepower, 2005 Volvo S40. Safety features galore, it’s also economical to repair and — slow.
See where we’re going here?
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In Summary
Adding a teenager to your car insurance can be done without breaking the bank. The key is taking a common-sense approach to availing yourself of every possible discount. Another smart move is to shop around for the best rates. Just make sure you’re comparing apples to apples in terms of coverages and deductibles so that you can make an accurate assessment.
One more thing, always be up front with your insurance company. Leaving the child off of your insurance policy and expecting the company to pick up the tab should the unthinkable occur is setting yourself up for a financial disaster.
