Home > Personal Finance > 6 Tips to Lower the Cost of Your Teen’s Car Insurance

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In the vast majority of American households, there are two words that – when combined – can send a chill down parents’ spines. Those two words are: teenager and license.

The reasons why are obvious. According to the CDC, 16- to 19-year-old drivers are at greater risk for being involved in car accidents than any other age group. Teenagers also represent the most expensive demographic to insure, primarily because of their impetuous nature and their inexperience behind the wheel.

A recent Forbes article noted that adding a 16-year-old female to your family policy will increase your bill by 67%, and adding a male of the same age would mean a 92% jump. But before you decide it’s simply too expensive to let your teen get a driver’s license, consider these ways that you can save money on your teenager’s car insurance.

1. Get your teen enrolled in a driver’s ed course.

Depending on where you live, your state may require this for anyone under 18 to get a license. But even if it’s not, consider the fact that most insurance providers offer discounts to teenage drivers who have completed a driving safety course.

2. Make sure your kids do their homework.

Insurance companies tend to see a correlation between teens who get good grades and teens who are less of a risk behind the wheel, and that correlation can show up as a discount to your family policy. Kids who maintain a GPA of 3.0 or better usually qualify for what’s called a “good student discount.”

3. Speaking of family policies…

Be sure to add your teen to your existing auto insurance policy. The cost of getting insurance for a teenage driver can border on outrageous, but there’s little to compare to a teen driver who secures a policy on his or her own. Plus, by adding another vehicle to your existing policy you could score a further discount, which might serve to offset the added cost.

4. Adjust your policy to select a higher deductible.

This is a good tip for anyone looking to lower the monthly car insurance bill, but it can be especially handy if you’re adding an inexperienced teenage driver to the mix. Naturally, you’ll want to make sure the deductible is something you can afford if the time comes to exercise your insurance policy. Hopefully, it’ll never come to that!

5. Pick the right kind of car for your teen to drive.

Sports cars are, by their very nature, more expensive to insure. For this reason, if your teen is also shopping for a car at the same time they’re getting a license it’s a smart move to opt for a more modest car that won’t be a red flag to your insurer’s sensibilities. At the same time, you’ll want to make sure the car is properly equipped with safety features like ABS and air bags that can serve to drive the cost of insurance down even lower.

6. Shop around for the lowest price possible.

Teenage drivers will always have to pay a significantly higher rate than adults. But it’s not a given that every single provider is going to charge you the same amount of money. If the price of the insurance policy you’re being quoted seems inordinately high – or even if it sounds reasonable! – get a second and a third opinion. It really does pay to comparison-shop.

Also, keeping your costs on your own insurance low, of course, helps with your overall premium. In some states, your credit scores can influence your car insurance rates, so it’s a good idea to work on building or maintaining good credit. You can see your credit scores for free every month on Credit.com.

In the end, there’s no duty more important to both your wallet and the safety of your young drivers than to teach them the importance of driving safely. Even if you score a super deal with an insurance company on your teenager’s insurance policy, those rates will skyrocket if the kid’s actions behind the wheel cause an accident. Exercise a strong guiding hand and practice what you preach! Remember, kids learn behavior from their parents. If you want your kids to drive responsibly, the first step is to set a good example for them to follow.

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  • Rene Toman Insurance

    Teen’s car insurance can sure put on hefty toll on your pocket book. Number five is was an interesting point. Overall this is a great read thanks for sharing!

  • Shiny

    Well written article!!

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