Can I save on teen driver car insurance with liability only?
Can I save money on car insurance by letting my teen drive with liability coverage only?
When you receive your first car insurance bill after adding your teen driver, you may think you have to get a second job just to afford the insurance premiums. Teen drivers are expensive to insure!
In years past, it was common to buy your teen driver an older vehicle and insure it only with liability coverage. This would eliminate the high cost of comprehensive and collision coverage, and still allow your teen to get to school and their after school activities. Nowadays, insurance companies are using a technique called "driver averaging" that eliminates this car insurance loophole.
Driver averaging is the practice of rating all drivers across all vehicles, which, with a teen driver on your policy, results in higher premiums on all vehicles because the teen is being partially rated on all the vehicles. Even the old liability-only vehicle will be slightly more expensive to insure, but not as high as if the teen was rated exclusively to that vehicle.
If your vehicles include dad's Cadillac Escalade and mom's Lexus RS400, you're going to be paying higher rates on those vehicles thanks to junior being added to the policy. Some companies still use the older style of rating, where each driver is assigned to a vehicle or even a percentage usage of each vehicle, but others have moved to using driver averaging in an attempt to collect more premium on vehicles that teen drivers have access to.
Insurance companies who use driver averaging justify the move by demonstrating claims where junior was driving dad's Escalade and backed into another car in a parking lot, but the insurance company was not collecting an increased premium for junior's use of the more expensive vehicles that carried full coverage. Driver averaging removes this descrepancy and allows the insurance companies to collect a fairer rate for vehicles that are more expensive to insure.
You can contact your car insurance company to see how they rate drivers on vehicles, and find out for yourself if you can save money by insuring your teen on an older vehicle with liability only. Chances are you will be paying more for insurance regardless, and you can always get free comparison quotes from our fast, easy quote form to see if you're getting the best rate on your teen driver's car insurance!
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