Question: My teen crashed his car and now our car insurance has tripled. What can we do to cut our insurance bill?
Answer: Unfortunately, there's no quick fix to undo the financial damage of a teen driver getting into an accident. Whether your car was totaled or it was a minor fender bender, a teen driver getting into an accident is likely to result in a steep premium increase.
Some tips and tricks can help counteract the rate hike, but nothing (aside from time and eventually removing them from your policy) is likely to completely erase it.
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With that said, you have some options for how you navigate this situation with your teen. Even if these tips and tricks can't completely cancel out a post-crash rate hike, they can help soften the blow.
Here are some of your best options after your teen's car accident.
Ask your insurer about accident forgiveness programs
Some insurance companies offer accident forgiveness, which lets you avoid the rate increase that typically follows your first at-fault accident.
These programs often have restrictions, such as a clean driving record or a certain number of years with the insurer. It’s still worth calling your provider to see if they offer it and whether your situation would qualify.
Switch your car insurance
If your insurer doesn't offer accident forgiveness or you're not eligible, now might be a good time to switch your car insurance. Don't expect to find drastically lower rates from another company, as they'll still be able to see your teen's accident history. But every little bit helps when your premiums are soaring.
As you shop around, ask about accident forgiveness programs before you switch. Some companies might offer retroactive forgiveness after you meet certain criteria.
Have your teen pay the overage
You might not be able to substantially lower your premium, but you could at least avoid paying for your teen driver's mistake yourself. If they were at fault, use this accident as a teachable moment, and have your teen cover the added costs to insurance.
If they don't currently earn any money from odd jobs or part time work, this could be the time to have them find something. If that's not an option, you might come up with a system in which they do extra chores around the house to "pay back" the premium hike.
Have your teen take a defensive driving course
A defensive driving course is a good idea for any driver, as many insurers will offer a discount to policyholders who've taken one. It's a good way to demonstrate your commitment to safe driving.
While the discount is going to be small in comparison with the post-accident rate hike, every little bit helps. It's also a good way to teach your teen better defensive driving skills so that they can avoid accidents in the future.
Consider alternative ways to lower your premium
The accident, especially if your teen was at fault, is going to jack up your premium. There's no way around that. But, you can counteract the rate hike by taking advantage of other cost-cutting strategies.
For example, some car models cost more to insure than others. If the car your teen is driving is one of the more expensive models, you might consider trading it in for something more modest.
If your teen wasn't at fault, you might want to consider either raising your deductibles or temporarily dropping collision and comprehensive coverage on the car your teen drives. Both of these increase your risk exposure, but if you need to cut your monthly budget and you trust your teen, this is an option to consider.
Eat the cost, and wait for your teen to turn 18
Accidents remain on the Comprehensive Loss Underwriting Exchange (C.L.U.E) database that most major companies check before offering coverage for up to seven years. But, luckily for you, your teen can get their own car insurance once they turn 18. And, after they move out, you'll be able to remove them from the list of drivers on your policy.
If you worry a part time job in high school would take too much time away from their schoolwork, you can eat the cost for now, then let them know that when they turn 18, they're either getting their own policy or they're paying the excess premium on your current policy. This gives them time to make plans for the expense.
Do not remove your teen from your policy
In most states, a car insurance policy must list every licensed driver living in your household, even if they're never going to drive your car. You won't be able to remove your teen from your policy, even if you've taken away their driving privileges.
Even if you live in a state where that isn't required, it's still not a good idea. If your teen sneaks out for a joy ride and gets in another crash, your claim could be denied if they weren't listed on your policy. You'll be stuck paying for the other driver's damages and any potential lawsuit out of pocket.
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