The day that most parents dread is approaching…
You have to add your 16-year-old to your auto policy. Apart from the stress and uncertainty that parents feel knowing their children are going to be hitting the open roads, the nagging question is... how much will it cost you? This is certainly one of the most common questions posed to your insurance agent. As you’d expect, the answer must be prefaced with “it depends”.
In order to relieve the suspense...
I can tell you that it generally ranges from as little as $800 to as much as $2,500 (or more) per year. But this will depend on a variety of factors. Let’s examine a few and talk about what you can do to minimize the damage.
First, hopefully everyone understands the “why” of the extra cost. Please understand that an inexperienced and distracted driver is being added to the policy. The insurance industry knows what this means better than anyone. Teens are more likely to speed, drive recklessly, and exceed the limits of their ability more than any other demographic. It’s only natural that the price will directly correlate to these realities.
So, here are 7 things that can make the premium increase a little less (or a little more)...
1. New vs. Existing Vehicle
Will the the child have his/her own vehicle? If so, even the type of vehicle can affect pricing. If we are just adding the driver and no dedicated car along with him/her to the policy, this will help with pricing in most cases. The policy will factor that, without an extra car, exposure will be limited. Add a vehicle and that goes right out the window. If a 3rd car is a must, your best bet is to choose an older vehicle that will not require full coverage. Add a brand-new car or - heaven forbid - a sporty convertible, and yes, you will see a hefty increase in your policy.
2. Good Grades
If you can prove that your child has at least an overall G.P.A. of 3.0 or better, this will certainly help mitigate the increase. How much? It’s not huge – usually a few hundred dollars at the most. But, either way, this is a great opportunity to incentivize your child and awaken them to the financial results of their actions.
3. Clean Driving Record
This is big. Remember what your premium did the last time you had a speeding ticket or an accident? For a teen driver, you can double or triple that! It’s best to get ahead of this one. Get on a conference call with your agent and have them quote the policy with a clean record versus one with a speeding ticket or accident.
4. Defensive Driving Course
This is an extra course your child can take that will teach him/her to drive safely. It will teach your child habits that will help to prevent accidents and citations. Not only will it help to shape your new driver’s thinking, it will get you another discount!
5. Away at School Discount
If your child is heading off to a college that is at least 100 miles away and will not be taking a vehicle with him/her, be sure to let your agent know. The agent can apply a discount that will reflect this reduced exposure and result in a nice discount. DO NOT delete the teen from your policy. This has many pitfalls that I will discuss in a future article.
6. Tracking Devices
Many insurance companies now offer tracking systems that can relay driving data back to your insurance company. This can be done by installing a device on the car or is often as simple as adding a phone app. While I am philosophically opposed to these devises for adults, I think they are a great idea for teen drivers. Teens can earn additional discounts for good driving habits and the progress can be checked online. It also helps to shape the driving habits of your child, as they understand that they are being monitored.
7. Driving Habits
What are your habits? Remember the range of cost I gave in the beginning of this article? Well, part of the determination of cost will be what the current driving habits are of the household, as well as the credit score of the parents. I talked about how both things affect pricing in a previous article but, just remember, if you are paying a lot for insurance due to poor credit or a bad driving record, the cost for adding a teen will be on the high side.
Your agent shares your pain.
As a very minor consolation, know that the insurance industry knows that youthful drivers are expensive. For that reason, the additional premium generated by adding a teen driver does result in a lower commission for your agent. Most agents won’t mention it, but, I think it’s good to know that the industry does try to make it as painless as they can for the consumer.
Time heals all wounds.
One thing to keep in mind is that the initial shock of adding a 16-year-old to the policy will not last forever. Generally, the older your child gets, the less expensive he/she will be to insure, and you should see a gradual decrease in your policy as the child gets older. Every company handles this a little differently. But, by age 25 or 26, your child will no longer be considered a “youthful” driver.
Interested in talking with an agent about adding a teen driver to your policy?
About the Author:
Robert Heed is a licensed insurance agent located in Medina, Ohio. Robert has been in the insurance business since 1994. He shares his practice, Agency One Insurance, with his wife and fellow insurance agent, Christine Heed. Robert focuses on Personal lines, while Christine’s focus is with Commercial Insurance. They have two children, Patrick and Grace, and have been married since 1995.