You can control the cost of your teen-driver’s insurance, but you cannot afford to compromise your coverage.
“As soon as your teen starts driving, alert your insurance company,” the big carriers say. Consistent with their vehicle codes, most states will not allow your teen to take the license test without proof of insurance. As a practical matter, however, begin the process of insuring your teen as soon as she gets her learner’s permit, because securing exactly the right coverage for the new driver and the rest of the family will take some time. Insuring a teen driver is not a “one call does it all” deal.
Cold-hearted and realistic :
Shopping for car insurance, remain exceptionally cold-hearted and realistic. First, accept the fact that your teen-age driver will bump into things. The numbers do not lie: sixteen-year-old drivers have by far the highest accident rates among all drivers. Not a surprise: they need time and practice to develop their judgment and perfect their feel for the car. Second, accept the fact your insurance premiums will increase sharply: A daughter will add approximately 50% to your rates, and a son will double them. In order to strike the right balance between cost and coverage, independent insurance experts strongly recommend you follow these five steps…
1. Become The Example and The Enforcer :
Help your teen-ager understand what “compliance” means. Show her how it works. Fasten your seat belt, obey the speed limits, turn-off and put away your cell phone, use your signals, come to full and complete stops, and follow all the little regulations you have let slide over the years. Then, make sure your new teen driver understands she, too, must follow all the rules—no exceptions, no excuses, no explanations. Especially make sure your teen driver understands the risks associated with texting while driving: A person texting behind the wheel is 17 times more likely to crash than a drunk driver. Also emphasize the risks of driving tired, which can be more dangerous than DUI.
2. Adjust your deductibles and add optional coverage :
Given that your new teen driver will bump into things, adjust your collision coverage accordingly. You can reduce premiums by raising deductibles, but do not raise them so high you cannot afford to fix your car. Especially if all the family drivers share one car, you cannot afford to have it damaged or broken for more than a few days. Be realistic. A recent study indicated more than 80% of American families cannot find $1000 cash within thirty days. If you fall into that 80%, do not set your collision deductibles that high. Just as importantly, if your insurance carrier offers “accident forgiveness,” sign up. The “forgiveness” coverage costs less than you would pay in extra premiums after an accident. Perhaps most importantly, upgrade your coverage to include “full replacement value.” Standard coverage usually guarantees you receive the vehicle’s low “blue book” value if it is “totaled”; full replacement value assures you actually receive enough money to go out and buy another vehicle just like the one you lost. You pay a few dollars for “FRV,” but it can make a difference of thousands in pay-out for a serious accident.
3. Increase your liability coverage :
Your standard car insurance satisfies the minimum legal liability requirements and therefore are reasonable for mature, experienced drivers. The experts very strongly recommend you increase your liability limits and then add “umbrella liability coverage” until your teen-ager establishes a history of safe driving. Especially if you are self-employed or own your own business, you should secure “umbrella” coverage to protect all of your assets in a personal injury lawsuit.
4. Cash-in on rewards and discount programs :
If your company offers “vanishing deductible” programs, enroll. Generally, for every year your family remains accident-free, your carrier takes $100 from your deductible. By the time your teen comes-of-age, you may have zero deductible. Some companies give you a choice between vanishing deductibles and cash-back safe-driving bonuses. You decide which works best for you, but make sure you include your teen driver in the discussion. Most of all, use your teen’s driving privileges to drive up his grades. Almost all companies offer lower rates for students with “B” averages and even lower rates for students with “A’s.” In many cases, the difference between a 2.9 gpa and a 3.0 translates to 20% lower premiums.
5. Share responsibility with your teen driver :
Many families agree to pay for insurance for the first six months their teen driver has her license; after that, they demand she must pay the extra cost of her coverage. Here, too, the numbers do not lie: Surveys show that teens who work and pay their own insurance premiums are approximately 50% less likely to get tickets or get into accidents than teens who have all expenses paid. The surveys suggest a littler serendipity, too. Students who work approximately 20 hours per week actually have higher grade averages than those who do not work at all.
In the last decade, traffic laws have changed to protect teens against themselves. Tougher laws and stricter enforcement measurably have reduced the teen accident and injury rates. Still, extra airbags, tougher laws, and smarter parents cannot perfectly protect inexperienced drivers. Therefore, in order to prepare for the very worst cases, work with your insurance agent to secure exactly the coverage you and your teen require.