Add a teen driver to your insurance, without going broke

Adding a teenage driver to your car insurance policy can hike your annual premium by as much as $3,500.It’s a fact that young teen drivers are involved in far more accidents than even those in their early 20s. But if you talk with your insurer, you’ll find several ways to minimize the inevitable premium hike.

Parents with teenage children have more than enough to worry about, but here’s yet another coming-of-age problem they have to cope with: the high cost of auto insurance for teen drivers. Adding your high school student to your auto insurance policy can increase your annual premium by as much as $3,500.

It’s so costly because teen drivers are involved in significantly more accidents per mile driven. For example, according to data from the Insurance Institute for Highway Safety, drivers age 16 are involved in about 26 accidents per million miles driven versus 10 accidents for drivers 20-24.

While there’s no avoiding the statistics insurers cite to charge commensurate premiums to cover teen drivers, parents do have some ways to save money. You can start with adding your teen to your current policy as an additional driver. This is almost always cheaper than buying the teenager an individual policy because you can take advantage of all the discounts you probably already get, such as covering multiple cars, using automatic payments, going paperless and so on.

Also ask about a good-student discount. Teens who carry at least a B average can qualify for discounts of around 10% or more. Your teen driver should attend a state-certified driver’s safety education course. Many states offer them online, and when you send the certificate of completion to your insurance company, you can usually save at least another 10%.
When college is away from home

Is your teen going away to college this fall? Make sure to tell your insurer. Most will reduce your teen driver surcharge if the child goes to a school more than 100 miles away and doesn’t take a car.

But even if you live in a city and your teen takes a car to a school in a rural area, you might be surprised to learn it can save you hundreds of dollars. That’s because the car will be primarily driven and parked in a lower-risk location. The point is you should be sure to talk with your auto insurer when your teen driver goes off to school. Safety should trump expense

Some parents consider purchasing a “clunker” and naming the teen as the owner, primary driver and obtaining a separate policy with liability insurance only and no collision coverage. This could save a few bucks, but your priority should probably be on providing a safe vehicle for your teen rather than saving some money on insurance.

Instead, you can reduce your premium by increasing your deductible and making sure you’ve signed up for all available discounts. Check with your insurer about the savings in raising your deductible from, say, $200 to $500 or even $1,000. Don’t exclude your teen

It’s best to avoid tricks to get around the cost of insuring a teen driver. One is to tell your insurer to list your teen as an “excluded driver” on your covered vehicles. If the company goes along, your teen driver won’t be covered if involved in an accident when driving your car. (Many states have laws requiring insurers to add all licensed children living in their parents’ home to their auto policy.)

Finally, keep in mind that most personal auto insurance policies exclude coverage for drivers and vehicles transporting goods or people for pay. So if you’re teen plans to use your car as a driver for Uber, Lyft or food deliveries, call your insurer first. They likely can offer an additional coverage rider for such activity, which costs more but ensures you and your teen are covered.

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