Adding a teen driver to your car insurance policy means a big premium increase for many households. Here are three proven ways to keep your auto insurance costs under control.
1. Call Your Insurance Company to Get an Exact Quote
Tell your insurance agent you are interested in minimizing premium costs. Ask how your rate changes if you switch to a higher deductible.
If you have a loan against the car your teen will drive, you may be required to keep a full coverage insurance policy on the vehicle. Talk with your lienholder to learn about their requirements. If you own the car, you have the option of placing liability-only insurance on it, which could significantly decrease your premiums. Keep in mind that if your teen is in an accident, your liability-only insurance coverage won't pay for repairs to the car.
How often and the number of miles your teen drives may affect your family's auto insurance rates. Find out how classifying a teen driver as an occasional driver may help reduce premiums. Having a teen classified as a principal driver may raise rates significantly, depending on the insurance company.
Don't be surprised if you find that rates vary widely depending on the company you choose. For example, Erie Insurance is only available in 12 states, but their average yearly insurance rate for teen drivers is $2,411. Nationwide's average rate for teens is $4,059. State Farm's is $4,611. Of course, these are only averages; your insurance premium costs depend on where you live, the type of car your teen drives, and their driving record.
2. Call a Few Other Places to Compare Rates
Ask about available discounts for households with teen drivers. If your insurance agent works with many companies, they may be able to help you get a policy with an insurance company that offers lower rates for teens. They'll also understand which discounts may work for your family. For example, Erie Insurance offers up to 20% off in Youthful Driver Discounts for drivers who are under 21 and still live at home. American Family Insurance offers discounts up to 10% after a teen driver uses their tracking app as part of the Teen Safe Driver program. State Farm has a 25% Good Student Discount for young drivers with a high GPA that your teen can keep until they turn 25.
There are several online insurance rate comparison websites that help make finding the best rates easy. According to Jackie Cohen of Insurify, parents could end up paying an unnecessarily high rate if they don't do enough research.
"Be sure to ask further questions to your insurance provider before settling on a quote," said Cohen. "If your child doesn’t drive much, they may also be eligible for low-mileage discounts. Plus, once your teen has enrolled in a university, inform your insurance company — they may grant even further discounts for kids continuing their education."
3. Find out Which Models Are Cheapest to Insure
Here are the five least-expensive vehicles to insure among the 25 best-selling models:
Ford Escape: $1,503 per year.
Jeep Compass: $1,497 per year.
Honda CR-V: $1,474 per year.
Jeep Wrangler: $1,455 per year.
Subaru Outback: $1,429 per year.
Unfortunately, purchasing an inexpensive car for your teen doesn't necessarily mean your insurance rates will be lower than they would be with another vehicle.
The Subaru Outback has an average annual insurance premium of $1,429, with a starting manufacturer suggested retail price of $26,345. Compare that to the Hyundai Elantra's average annual insurance premium of $1,743 and MSRP of $19,450, and you can see the savings discrepancy.
Nathan Barber, of QuoteWizard, says, "Own a safe car. The car one owns plays a big part in the rates one will pay. A car with a good crash-test rating and safety features will go a long way in the annual rate a teen will have to pay."
Barber also notes that it's important to have teens take a driving class. "Put your teen through a defensive driving course — Continued driver education sends signals that you have been proactive in becoming a better driver. Some companies offer a 10 to 15% discount for those who can prove completion."
Maximize Your Teen's Car Insurance Discounts
Shopping around for the best price and enrolling your teen in either online driver's ed classes or defensive driving lessons are two of the best ways to get discounts on your insurance. Get the specifics and find out before you enroll your teen if the class meets your insurance company's requirements for the discount. Having a teen driver at home doesn't necessarily mean you'll pay sky-high insurance rates if you are willing to ask questions and compare rates.