Have a Teen Driver? Here’s How To Save on Insurance
Back-to-school means lots of added costs for parents, from school supplies for K-12 children to books and tuition for incoming college freshmen. But one thing parents may not consider is how expensive having a new driver or a teen driver can be.
A recent survey showed us that insurance accounts for a substantial portion of household bills. “Shopping around for insurance — which you should do once a year and can mostly get done on a weekend afternoon — is an effective way to trim your household spending,” said Moneycrashers.com CEO Andrew Schrage.
Impart Safe Driving Habits
Safe driving habits can have a huge impact on keeping insurance premiums low and even earning discounts. “Avoiding accidents and traffic citations can pay off with lower insurance premiums,” Michael Orefice, SVP of Operations at SmartFinancial, told GOBankingRates.com in an exclusive interview.
Orefice also recommended restricting your young driver to allowing just one or two friends in the car until they gain driving experience. “Driving around with friends can be tempting after your child gets their driver’s license but a car packed with chatting and joking teenagers can be distracting,” he said.
Impart the Dangers of Distracted and Drunk Driving
When you’re a parent dealing with teen or young adult drivers, safe driving also means having some tough conversations with your teen about texting and driving, drinking and driving, or driving while high.
“Teenage drivers may be more likely to engage in reckless driving behaviors, like texting and driving, and driving under the influence of alcohol or drugs. Research on texting and driving alone has shown that it can increase a teenager’s risk of crashing by 23 times,” Orefice said.
These behaviors can be especially costly for teens, as insurers may add surcharges as high as 45% for infractions like texting and driving, he told us.
“Parents can encourage safer driving habits by stressing the costs of reckless driving. Beyond higher insurance rates, a suspended license and possible jail time, reckless driving puts their life and every life around them at risk,” Orefice said.
Share Resources To Help Your Teen Stay Safe Behind the Wheel
It’s one thing to tell your teen about the dangers of driving while under the influence of drugs or alcohol. But, it’s also important to provide them with solutions should they find themselves in a situation where they are forced to make that choice.
“Remind your child that calling you or a rideshare service for a ride home is always the better option,” Orefice said. Some services will even send two drivers to your location – one to pick you up and one to drive your car home safely.
Take Defensive Driving Classes
Teens, along with adults, can take defensive driving classes to earn substantial savings off insurance premiums. Some insurance companies offer savings of 15% or more if you take an online class. “These safe driving discounts can help offset your higher premiums that come with adding a teen driver to your policy,” Orefice said.
Let Telematics Prove Their Safe Habits
If you – and your teen – are truly safe drivers, you can prove it to insurance agencies through technology called telematics. This device measures your speed, sudden stops, mileage and other driving risk factors.
“Higher discounts are rewarded to safer drivers,” Orefice said. “Following the speed limit, braking smoothly and avoiding nighttime driving can lead to considerable savings.”
Ask About Discounts for Good Grades
High school and college students can often secure discounts of 5% to 25%, depending on the insurer. Good student discounts are typically available to full-time students with a 3.0 GPA or a “B” average, Orefice said.
He used Esurance by Allstate as an example, noting that the company offers a 10% discount for students on the liability, collision, and medical payments portion of auto insurance premiums. Best of all, the discount is good for up to a year after graduation.
Have Your College Student Leave Their Car at Home
If your college student is staying in a college dorm on campus more than 100 miles from home, you may be able to save money on insurance premiums by leaving their car at your home address.
“The insurance company recognizes that you’ll be putting fewer miles on the car while your child is at school and charges a lower premium accordingly,” Orefice said.
After sharing this little-known tip, he noted that the student may still be able to drive the car on breaks and holidays without a rate increase, depending on the insurer.
Don’t Be Afraid To Switch Carriers
If your current carrier won’t give you a deal after you’ve added a teen driver to your policy, it may be time to shop around for a company that will work with your situation and still keeps your premiums (relatively) low. “Inertia is a powerful thing,” Schrage said. “Insurers know that the longer you keep your policy, the less likely you are to leave.”
Schrage calls these insurance increases a “complacency premium.”
Whether those increased premiums come with time or due to lifestyle changes like adding new drivers to your policy, it’s highly likely you’ll find a better deal when you shop around.
Shop Online for Buying Leverage
Reminding us that shopping for insurance shouldn’t take long, Schrage said that shopping online to get quotes from multiple insurance companies is the best use of your time – and may generate the greatest cost savings.
“These online agencies deal with thousands of insurance shoppers every week and therefore have pricing power with insurance companies that individual direct buyers can’t match,” he said. He noted that the savings for shopping around for auto insurance could save 20% to 50% in many cases.
If you’re adding a new driver to your policy, that cost savings could offset some of the increases you’ll experience with a driver under the age of 25 in your family.
“If you aren’t satisfied with your current carrier, comparison shopping can help you find a policy that meets your budget and coverage needs,” Orefice agreed.
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