Tag Archives: Teenage Car Insurance Policy

Car Insurance for Teens and Young Drivers

Two phrases that typically do not go well together are “car insurance” and “teens and young drivers.” So what’s the problem? Prices. Teens and young drivers pay the highest prices in the car insurance industry. In fact, they can be high enough to cause a real financial burden on young people.

As the parent of a teen or young driver, you may be asked to shoulder some of the financial responsibility for the time being. There are things you can do to help keep a young driver’s premiums as reasonable as possible. Let’s discuss some of those things.


Your Policy, Your Car

The reason young drivers pay so much for car insurance is that they are more dangerous behind the wheel. Statistics from the CDC show that young people between the ages of 15 and 24 are responsible for 30% of all traffic accidents in America, despite making up only 14% of the total number of drivers on the road.

By keeping your teens and young drivers on your policy, and driving your vehicles, you reduce the risk enough to see a difference in insurance rates. Insurance companies assume a couple of things here:

  • Less Frequent Driving – Since everyone in a household must share common vehicles, having your teen drive your car means he’ll have less access to it than he would his own vehicle. In theory, this reduces both the amount of driving he does and the likelihood he’ll have an accident.
  • More Responsible Driving – The other thing car insurance companies assume is that teens and young drivers are more responsible with their parent’s cars than they would be with their own. This increased sense of responsibility hopefully leads to safer driving.

Vehicle Assignment

When you add a teen or young driver to your policy, your insurance company will automatically assign that driver to the most expensive vehicle. They do so as a matter of protecting themselves. But be aware you do not have to settle for those default assignments.

Instead, you can insist your young driver be assigned to the least expensive vehicle. In so doing you will reduce your annual premiums. Assigning a driver to a specific vehicle does not mean he can only drive that car. It simply means that’s the car he will drive most often.

Ask About Discounts

Discounts are great way to save money on your car insurance. Where teens and young drivers are concerned, one of the more popular discounts is one given for good grades. Assuming your young driver is still in high school or going to college, he could qualify for the good grades discount by furnishing a copy of the appropriate paperwork from his school.

You may also qualify for additional discounts including those for multiple drivers, multiple vehicles, safe driving, and bundling your policies together. As long as discounts are available, you might as well use them to offset the cost of insuring a young driver.

Educating Young Drivers

The most important thing you can do where young drivers and car insurance is concerned is to educate those drivers. Most young people do not understand how the insurance system works and, as a result, it never occurs to them that the way they drive will affect how much they pay.

Educate your teens and young drivers about the importance of being safe and legal at all times. Even the slightest blemish on their driving histories could increase their premiums. Eventually your teens will grow up, move out, and get their own vehicles and car insurance. Until then, make sure they know how things work.


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Adding Drivers to Your Policy

Sometimes circumstances require a driver to include additional drivers on his car insurance policy. Additional drivers can include teenage children, parents, and even friends and acquaintances. It goes without saying that adding drivers to your policy will increase your insurance rates. But relax; it’s not all bad.

Depending on the reasons for adding a driver, you may actually get away with a cheaper rate in the long run. That’s provided the additional drivers have a clean record and have been driving for a significant amount of time. However, these are all things to know ahead of time. That way, you are not caught off guard with higher than expected rates.


Adding Teenage Drivers

The most common scenario is when parents add their teenage drivers to their policies. When this becomes necessary depends on how your car insurance company operates in relation to state laws. There are two possibilities most fall under:

At the Time of Permit – Some insurance companies require you to report your teenage children as soon as they earn a learner’s permit. Your insurance rates may not go up right away, but your insurance company still needs to know your teenager will be driving your vehicle.

At the Time of Licensing – If your insurance company does not require reporting a child with a learner’s permit, you’ll definitely have to report that child once he earns his license. It’s understood that a fully licensed driver has access to your vehicles and will be driving them.

Unfortunately, when it comes to teens there really is no such thing as cheap car insurance. Teens pay the highest rates of anyone because they are, as a group, responsible for the largest number of serious accidents. For male drivers between the ages of 18 and 25, rates are the absolute worst.

Adding Parents

Another common scenario is when drivers add their parents to their policies. This may happen if your parents move in with you on a permanent basis. Whether they own their own vehicles or plan to drive yours, they should be reported to insurance company unless they plan to maintain their own car insurance.

This is one case where adding the extra drivers may save you money in the long run. For example, let’s assume your parents no longer own a vehicle. Your insurance company will assume they will have access to your vehicles if they are licensed. Also assuming your parents have been driving for decades and have a clean record, they actually help you by reducing your overall rate.

Your parents’ safe driving record, combined with discounts offered to older drivers, could mean that each of you pays less. Thanks to parents, cheap car insurance can be possible with a combined policy covering everyone living in the same household.

Failing to Add Drivers

Failing to add drivers when necessary is where this gets sticky. As a rule, you are required to add any drivers who live in your house and have a license. The only exception would be the driver who has his own insurance policy. All others would have to be added to your policy.

If you fail to add these drivers, you may get into trouble in the event of an accident. Why? Because state laws allow insurance companies to refuse claims on accidents involving drivers that have not been reported. This doesn’t apply to temporary guests who do not live in your house.

In the end, it’s always best to report drivers living with you. Doing so may prevent you from getting the cheapest car insurance, but it’s better than the alternative of being denied a claim because you failed to add them.