How much will my car insurance rates increase with a teen driver?
How much will my car insurance rates increase with a teen driver? My son is turning 16 in a couple months and I want to brace myself for sticker shock when my car insurance renewal comes.
As parents, we would like to keep our kids from growing up, either because we want to keep them under our protective wings forever or more likely we don't want them to turn 16 and be added to our car insurance policy!
Teen drivers increase car insurance rates, there is no way to avoid it. Teens are more likely to cause car accidents due to inexperience and distractions such as cell phone texting, changing songs on their MP3 player or having other friends in the vehicle. Thankfully states are enacting legislation to address some of these hazards, but there is no way to eliminate all the risk facing our teen drivers.
How much your car insurance rates will increase when you add your teen driver to your policy is dependent on several factors. The primary factor is simply your car insurance company rating factors used to determine the rates of your policy premium. Some companies rate specific drivers on specific vehicles, and other companies may use "driver averaging", which averages driver risk across all rated vehicles.
How does your car insurance company rate drivers?
If your car insurance company rates drivers specifically to a particular vehicle (usually the one primarily driven), then you could save yourself some money by buying your teen driver an older vehicle and insure it for liability coverage only. So instead of driving the 2010 Accura Integra with full coverage, your teen will have to settle for the 1998 Honda Accord with mismatched fenders and liability only.
But if your insurance company uses driver averaging, it won't help your car insurance rates to rate your teen driver on the vehicle with liability coverage only. All drivers are rated on all vehicles, so even if Junior doesn't drive dad's 2009 Cadillac Escalade, the premium will increase regardless.
Is driver averaging fair? Not necessarily, but many times when teen drivers were rated on older vehicles to reduce the premium, they were causing accidents in the higher value vehicles which caused car insurers to lose money on claims since proper premium was not being charged on the policy. Driver averaging is an attempt to more fairly spread the risk across vehicles.
If your current car insurance company uses driver averaging, you might consider shopping your coverage around to find a company that will rate your teen driver on a lower value vehicle. This may save you thousands of dollars while your teen driver is on your policy. Enter your zip code in the box below to start a price quote!
Reduce teen driver car insurance rates
You can't control how your teen driver is rated on your vehicles (unless you switch companies), but you can take advantage of discounts available.
Enroll in a Driver's Education course
This is a great way to save as much as 15% off your teen driver car insurance rates. Some high schools still have driver's ed courses available for students, and there are also third-party companies who teach driver's education outside of the school setting so they could take the course in the summer if they prefer.
Get good grades
Good students tend to be better drivers, so car insurance companies reward teen drivers with good grades with a discount. Generally students with B-average grades or better will qualify for the discount, which can be considerable, even up to 25%!
Increase your physical damage deductibles
One sure-fire way to lower your car insurance rates after adding a teen driver is to increase your deductibles. Deductibles are the amount you pay out-of-pocket when filing a physical damage claim, and by assuming more of this expense, you will lower your car insurance rates. If you have enough cash reserves to absorb a higher deductible, you can save considerably on your rates by taking a higher deductible.
Do you really need to file a claim?
High school parking lots are notorious for minor fender benders and teen drivers rush to exit the premises after the bell rings. If your teen driver in involved in a minor accident that does not cause serious damage, you may consider either not fixing the damage or paying for the repairs out-of-pocket in order to keep the claim off your car insurance history. Teen drivers with accidents are a major expense that could cost you more in increased rates than the amount of the claim.
How much your car insurance rates will increase with a teen driver are partially up to your insurance company, and partially up to you. You can do a lot to lessen the sticker shock of that first car insurance renewal with a teen driver, so prepare now and save yourself some money!
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