Teens & Car Insurance: How to Cut Costs

For a parent, it’s a bittersweet moment when a teenaged son or daughter gets behind the wheel for the first time. It’s exciting to see a child grow up, but frightening to think about the dangers of the road.

And insuring a teenage driver can be brutal for the wallet, sometimes doubling the family’s premium. There are, however, a few ways to trim the premium at the start, as well as precautions to prevent it from skyrocketing later.

Typically, you won’t pay any more when your teen is driving with a learner’s permit, as there will have to be an adult in the car. But the child will have to get a policy or be added to the parents’ policy as soon as the driver’s license is issued.

Generally, it’s cheaper to add the child to the parents’ policy than to take out a separate policy, though this would be a question to explore when you shop around.

Insurance premiums are based on a long list of factors. It’s more expensive to insure any driver who lives in a congested urban area where accidents, theft and vandalism are more likely. But since most families are not likely to move to the suburbs or country just to reduce auto insurance costs, other strategies may make more sense.

First, avoid getting an expensive new car. Since the insurer will assume the teen will drive the car even if there are others, it will boost the premium.

Second, avoid getting an additional car for the teenager’s sole use. If a one-child family with two parents has three cars, for example, the insurer will assume one of those cars is for teenager’s full-time use. The insurer considers a full-time driver riskier than a part-time one.

It will be cheaper to have the teenager listed as a secondary driver for the least expensive vehicle the family owns, though that will not prevent the teen from driving other vehicles, or restrict the amount of driving.