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5 Ways to Prune Premiums for Teen Drivers
My son just started driving and our auto insurance premiums went up by almost $2,000 per year. What can I do to make that a little less painful?
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
December 22, 2005
My son just started driving and our auto insurance premiums went up by almost $2,000 per year. What can I do to make that a little less painful?
It is always scary to get that first auto insurance bill after your teenager starts driving. Adding a teenage daughter to your policy typically boosts your premium by 50 percent; adding a teenage son can more than double the price, according to the Insurance Information Institute. And that's even before they get their first ticket or accident.
But taking a few key steps can often cut those premiums in half:
1. Ask about discounts for your teen. Most insurers offer a good-student discount, which can shave up to 30% off their premium. Your child must have a B average or better.
Some insurers offer a discount for teenagers who have completed drivers' education, others offer their own educational programs for young drivers, which can reduce your rate by about 10%. One example is State Farm's Steer Clear Driver Discount gives a discount for all male and unmarried female drivers under age 25 who have had no at-fault accidents or moving violations in the past three years and have completed a special program administered by a State Farm agent that includes a video presentation, reading a safe-driving magazine and completing a driver's log to document driving experiences. Details and discount size will vary by company, state and person.
2. Make the most of other discounts. Insuring your home and auto with the same company, and maintaining a spotless driving record yourself. Since your premiums are so high right now, it's a particularly important time for everyone in the family to avoid accidents and tickets, which can earn you a good driver discount of about 20%.
3. Choose the right car for your teen. The car your child drives can also make a big difference in the price. It's generally cheapest to add your child to your policy as an occasional driver, rather than getting a separate policy. And pairing him with your safest car will help a lot, too. Not just an old car, which might not have up-to-date safety features; but a safe car. You can get a list of the safest cars from Insurance Institute for Highway Safety. The 2006 Top Safety Pick awards include the Ford Five Hundred and Mercury Montego for large cars, the Subaru Legacy and Saab 0-3 for mid-size cars, and the Honda Civic for small cars. To see the effect these types of cars can have on your insurance rates, check out the vehicle ratings at State Farm or the Make and Model Comparison Tool at Allstate.
4. Boost your deductibles. Raising your deductibles to at least $1,000 can help, too. And if the car is worth less than a few hundred dollars, you can drop your comprehensive and collision coverage entirely. To check out your car's value, visit the Kelley Blue Book Web site.
5. Shop around. And it doesn't hurt to compare prices from other companies -- some insurers don't really want to insure teenage drivers and jack up the cost a lot more than others. You can check out prices at quote sites, such as InsWeb.com, Insure.com or at StateFarm.com, Allstate.com and Progressive's Web sites. You could also contact an independent agent. If a family member is in the military, also check out USAA.