If your teen just became a licensed driver, you’re probably suffering from sticker shock—not from their new car, but from the car insurance bill. Once you pick yourself up off the floor, you need to be smart and see what you can do to bring the astronomical cost down. It all starts with a little knowledge and some comparison pricing of other auto insurance agencies.
First though, a little background.
Once you choose your coverage and deductible options, insurance companies use statistics and demographics to come up with a final price for you. These variables can vary from state to state. They include your age, gender, driving experience, car type, annual mileage, place of residence, credit history, and more.
Unfortunately, if you have a teenage son, you’re going to pay for it. The National Highway Transportation Safety Board holds the majority of car accidents against males in the 16 to 25 age group. That’s because this demographic has been pegged as the greatest risk takers when it comes to driving fast, erratically, and in a way that causes accidents that otherwise would have been avoidable.
Don’t despair. There are ways to getting a lower rate, and comparing quotes from different agencies is the first step.
Many insurers believe that teens with higher grades make better choices—and this in turn makes them better drivers. If your teen maintains a 3.0 GPA or higher, they may be eligible for a discount on their auto premiums. Make sure this is factored into any quotes you receive.
Next, if your teen is driving a safe, yet inexpensive car, you’ve made a smart choice. Pricey cars that accelerate quickly to high speeds are among the most expensive to insure because they cost the most to fix after an accident. A young male driver behind the steering wheel of a sports car (who will in theory want to have some fun) will send your premiums skyrocketing. Having your teen drive the family car with both parents on the policy is ideal. But, if your teen needs his or her own car, a reliable and safe compact car is your best bet.
Finally, make sure auto agencies are aware your teen is a competent driver and not a liability. Some will deduct the cost of your annual premium if your teen takes additional driver safety courses, avoids tickets, and only drives short distances.
Always remember to compare quotes annually against other auto insurance companies. This is because circumstances change year and year, and companies that may have overcharged you previously are now offering you a much lower quote. You could be paying hundreds more than needed, when another company can offer you the same terms at a better price.
And, fear not. As your teenager grows into young adulthood with a blemish-free insurance record, the premium costs of your bill will drop dramatically.