Young DriverIt’s no surprise that teenagers are expensive to insure. Every parent of a young driver knows how much insurance premiums can go up once the teenager gets a driver’s license. Fortunately, there are many ways to reduce the cost of auto insurance for teens. Some of these, like discounts for good grades, may come naturally for some students. Others, like discounts for advanced driver’s education courses, take additional work.One discount that’s beginning to grow in popularity is the teen monitoring device discount, which offers reduced insurance prices in exchange for using technology designed to monitor a driver’s habits. This technology isn’t cheap, however, and it may not be the best choice for all families. By understanding how it works, you can make a smart decision for your own household.

Why Teens Are Expensive to Insure

Insurance companies calculate the cost of premiums by determining how likely a person is to be involved in an accident. This process is called risk assessment, and it draws data from a number of sources including statistics and a driver’s actual history. In the case of teens, driving history is unavailable, so insurance companies must rely on statistics. In general, this is bad for teens as teenagers, as a population, tend to be involved in many accidents.

Teenagers are more prone to drinking and driving than older drivers as they don’t want to be caught drinking. They’re also more likely to be involved in risky behaviors like speeding or driving without a seat belt, and they often ride together in large groups that can distract the driver.

Even if your teenager doesn’t partake in any of these activities, insurance companies will still charge high rates until there is proof of your teen’s good driving habits. Fortunately, there is a work-around for this: Teen monitoring devices.

How Monitoring Devices Work

Monitoring devices are plugged directly into the vehicle’s on-board computer or wired through its stereo system. They collect information and feed it back to the parent or subscriber. This allows parents to know the whereabouts of their children at all times in addition to monitoring their driving habits. This is similar in some ways to the monitoring systems offered by insurance companies themselves, such as the Snapshot program from Progressive. It differs, however, in that the information is fed to the driver’s parent instead of directly to the insurance company.

In general, these devices track the geographic location of a vehicle and its speed. Parents can program the devices to alert them whenever a vehicle leaves certain areas or goes over specific speed limits. These alerts can be transmitted via email or text message, and the parent can set the parameters for how often the alerts arrive and under what conditions.

Although the device does nothing directly to prevent the teen from driving poorly, the knowledge that they are being monitored does help keep them in line. Parents who take an active role in their children’s driving habits can help curtail bad habits and encourage safe driving behaviors.

Many insurance companies offer discounts for insuring vehicles equipped with these devices. In some cases, they offer the discount specifically because of the positive effect on teen driving habits. In other cases, the monitoring devices are viewed as anti-theft mechanisms, which most insurance companies offer discounts for. Depending on the company, you may qualify for a discount of up to 30 percent.

Should You Get a Monitoring Device for Your Teen?

Of course, the benefits of a monitoring device do not come cheaply. These devices can cost upward of $100 to install, and many have a monthly subscription fee. If you do choose to purchase a monitoring device, you need to ensure that the discount you receive is high enough to counteract the cost of the device itself.

Also bear in mind that not every vehicle can handle this type of device. If a vehicle was made before 1996 or does not have an on-board computer system, the monitoring device will not work properly. Since many teens drive used cars, this is a concern that may limit your ability to use this type of device.

You must also consider the effect that installing the device may have on your relationship with your teen. Some teenagers respond well to this type of monitoring. Others may view it as a show of distrust and actually worsen their behaviors in response to it. It’s your job as a parent to decide whether a monitoring device is a wise choice for your family’s needs.