Should My Teenager Have His Own Auto Policy?
Learning to drive is one of the greatest milestones in a young person’s life. With the freedom of driving, however, comes the responsibility of car insurance. Since most teenagers live at home when they begin driving, their parents are usually expected to foot the bill for coverage. This can cause insurance rates to skyrocket as insurance companies find teenagers to be extremely high-risk drivers. Parents with driving-age children must decide on the best way to insure their children’s vehicles without sacrificing their pocket books.
Why Teens Are Considered High Risk
Auto accidents are the leading cause of death for young adults. Inexperience in driving coupled with underage drinking are responsible for most car accidents among teenagers. Additionally, teens often rice together in groups, which can lead to the driver becoming distracted and making poor choices.
Teenagers are also somewhat more likely than adults to engage in risky behaviors, text while driving or drive without a seat belt. Finally, a teenager’s lack of driving history makes insurance companies rely solely on statistical information to calculate rates. This means that your teenager’s rates will be high regardless of whether they partake in any risky driving behaviors.
In most cases, teens have the highest rates before age 18. Rates will drop off slightly at that point but remain high until the driver turns 25. Drivers over age 25 with a good driving record can usually receive a substantial discount at that time.
Should Teenagers Have Their Own Policies?
You cannot legally be a sole policy holder until you are 18 years old. This is because insurance policies are legal contracts that require an adult to sign. If a teenager is legally emancipated, an insurance company may be able to offer a policy. Otherwise, a teenager’s parent or legal guardian must co-sign for the teen’s policy.
When debating whether teens should have their own insurance policies, the real question is whether their vehicles should be listed on the family policy or have a policy of their own. Depending on your situation, either option may make sense.
If your teenage driver is a listed driver on your policy, the insurance company will assume that the teen has access to every car on the policy. This means that the high-risk designation placed on that teenager will apply to every vehicle you insure, which in turn will cause your rates to increase across the board. On the other hand, if your teenager’s vehicle has a separate policy, you can opt to exclude your teen from your primary policy.
Exclusions don’t always lead to cheaper insurance. In some cases, your own good driving record can have the effect of helping to cancel out the teen’s risk assessment. Additionally, insurance companies often offer discounts for insureds with multiple vehicles on one policy. It’s a good idea to get a quote for both options and see which method makes more sense for your needs.
If you do choose to exclude your teen from your auto insurance policy, be aware that the teen is restricted from driving any vehicle listed on that excluded policy. Failure to uphold this will put you in danger of claim denials and policy cancellations if you’re discovered.
Ways to Save Money on Car Insurance for Teens
Whether your teenager’s vehicle is insured under the family policy or separate insurance, there are a few ways to save money on auto insurance for teens:
- Ensure that the teen’s vehicle is equipped with safety features – Not only will these safety features give you peace of mind about your child’s safety, they will also help earn some discounts from an insurance company.
- Have the teen take an advanced driver’s education course – Most insurance companies will offer discounts for completion of these courses, and courses are offered at low cost or free from the DMV or local library. Ask around to see what is available in your area
- Encourage your child to get good grades – Good student discounts last through college and are a great way to keep insurance premiums down. Discuss this option with your insurance company and be sure to send in your child’s report card each semester
- Reduce the coverage on the vehicle – If the teen’s car is used and has little value, there’s no point in carrying full coverage insurance. Opt for a basic liability policy instead
- See if there are any other discounts you might qualify for – Every insurance company offers special discounts and options for reducing the cost of insurance. Speak with your insurer to see if there are any programs that your teen may be able to take advantage of.
One of the best ways to save money on auto insurance is to comparison shop among multiple companies. Before your teen starts to drive, consider shopping around to find the best possible deal on insurance. Whether you move all of your policies to that insurer or opt only to insure your child through them, you can be assured that you’re getting the best possible rates for your teen.