Today’s Jake’s birthday.
And it’s not just any ordinary birthday - it’s his 16th birthday.
Which means it’s time to take his driver’s license exam.
After 6-months driving with Mom in the passenger seat, he’s incredibly excited to take over the keys.
But Mom, on the other hand, is worried - to say the least.
Not only is she worried about him on the roads alone, but she’s also worried what her insurance premium is going to look like with a new teen driver on the record.
Auto insurance rates (also referred to as insurance premiums) are based on statistics such as driving record, age, sex, age/type of vehicle and location. And the teen demographic has a much higher accident rate than other drivers.
In fact, the Department of Motor Vehicle reports that the crash rate for those between the ages of 16-19 is 2.7 times higher than that of the average driver.
In other words, insuring a teen driver is not cheap.
But here’s the good news.
There are ways to offset the cost of insuring your teen.
Here’s FOUR helpful tips we recommend to help keep insurance premiums low and keep your teen safe and accident free.
1. CONSIDER INCREASING YOUR DEDUCTIBLES
Auto deductibles, which is the amount of money you pay for an insurance claim before your insurance kicks in, typically range from $250 to $1,000. By increasing your deductible and using your insurance for big repairs, you can significantly reduce your auto insurance premium.
On average, you can save on average 8-10 percent in insurance premium by raising your deductibles from $250 or $500 to $1,000. This varies depending on the area you live in, demographics, etc.
The average auto insurance policy is made up of three components:
- Liability, which pays for another party in the event of an accident or injury and the insured is considered “at fault”
- Collision, which is optional coverage that pays for the cost of repairing or replacing your vehicle, minus the amount of your deductible.
- Comprehensive, is an optional auto insurance coverage that protects your car against damage not resulting from a collision, as well as from theft.
If you decide to increase deductibles, you may want to keep an emergency fund in a savings account so that you can afford your deductible in the event of a claim.
2. Ask for the good student driver discount.
If your teen maintains at least a 3.0 grade point average (GPA), he or she will typically qualify for an auto insurance rate discount. The good student discount is an auto insurance discount provided by the carriers that benefits students financially for their academic achievement.
The Journal of Accident Analysis and Prevention found in a recent study that students with a C or D average in school are 49 percent more likely to get into a car accident than those with an A or B average. As a result, students with an A or B average are considered low-risk drivers by car insurance companies and rewarded with lower rates.
To prove good student status, your insurance agent will ask for evidence of good grades, such as a report card or letter signed by your teen’s school administrator.
Depending on the insurance carrier, the discount can range anywhere from 10-15% on your car insurance premium.
3. WEIGH OUT YOUR BUYING DECISIONS
Insuring new cars are more expensive than insuring used cars. When shopping for your teen, consider purchasing a safe, used car to help save on premium.
You can find a safe, used and affordable car that has high safety ratings which usually contribute to lower insurance premiums than a new, expensive car.
4. Ensure your teen keeps a clean driving record.
Teens get distracted easily. To help your teen keep a clean driving record:
- Restrict your teen’s nighttime driving. About 90% of all driver decisions are made based on what you can see. Even with less traffic on the roads, more than 40% of fatal car accidents occur at night.
- Do not allow teens to have more than one passenger. The AAA Foundation for Traffic Safety released a report in 2012 that showed the risk of a 16- to 17- year old drivers involved in a fatal accident increases with each additional teenage passenger in the vehicle. The risk increased by 44 percent with one passenger; it doubles with two passengers and quadruples with 3 or more passengers.
- Ban cellphone use while driving. 94% of teens acknowledge the dangers of texting and driving, but 35% admit to doing it anyway. 21% of teens involved in fatal accidents were distracted by their cell phones.
- Ride with your teen occasionally to make sure they’re practicing the safety habits they learned in their drivers ed course. You have an important role as a parent/guardian of a new teen driver to help them learn and develop safe driving habits. Your teen faces the greatest crash risk the first 6-12 months after they receive their license. To minimize this risk, monitor your teen’s driving habits and follow through with consequences if violations occur.
Look… we know it’s not easy putting your teen on the roads alone.
But hopefully these four tips help give you some direction on how to get started in not only insuring your teen, but also in giving them necessary “rules” that will help keep them safe.
Let us help you insure your home, your auto, and your new teen driver.
Call us at (330) 334-1561 or email email@example.com to get started.
This article was adapted from Zywave. This is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.