Teen drivers are new drivers. Lacking experience in recognizing and responding to hazards, new drivers are more likely to be involved in auto accidents. Teen drivers are also statistically more likely to engage in risky behavior, like speeding, driving distracted or impaired, or not wearing seatbelts.
The statistics, in fact, are fairly harrowing. As the Centers for Disease Control and Prevention (CDC) reported, motor vehicle crashes are the second leading cause of death for US teens. The motor vehicle death rate for male drivers aged 16-19 is double that for females the same age.
All this to say, you can’t blame auto insurance companies for charging higher rates to insure teen drivers. You can only take comfort in knowing that, as the years pass and they gain experience, those rates will slowly creep back down. And in the meantime, there are things you can do to help that process.
If you’ll have a new teen driver in your household anytime soon, it’s important to understand the insurance considerations of teen drivers sooner rather than later. That way, you can avoid surprises while doing what you can to educate your teen about driving safety and how insurance works.
So what’s involved in understanding auto insurance for teen drivers? What do you need to know — and what do THEY need to know? Covered breaks it down.
Be Proactive in Talking to Your Insurance Agent
Yes, your rates will go up when you add a teen driver to your policy. (They’ll increase more for a teenage son than for a daughter.) But trust us: Transparency is best. If you don’t tell your auto insurance company that your teen may be driving your car, they could view it as misrepresentation. That means they could deny coverage in the event of an accident.
Experts recommend ensuring that your teen is covered under your policy by the time they get their learner’s permit. So when that time comes, talk to your insurance advisor or agent in advance about your options. They can help you understand the likely impact to your current policy and identify potential discounts.
Typically, it’s a better idea to simply add your teen to your policy. Teen-only policies tend to be both risky and expensive. NerdWallet found that teens and their families can save an average of more than $3,000 annually by getting single-policy coverage.
Shop Around for the Best Rate
While there are many good reasons to periodically reshop your car insurance, it’s absolutely crucial to do so when you’re adding a teen driver to your car insurance policy. Different insurers simply offer different deals and discounts. (Remember: Covered’s fast and accurate quoting tool makes shopping around genuinely simple, providing customized quotes in minutes.)
Make Sure Coverage Levels Make Sense
How much car insurance is enough? Start by understanding the coverage basics for your state, which is probably what your existing policy is set up to mirror. Then, talk to your insurance advisor or agent about strategically increasing that coverage. According to the Insurance Information Institute (III), that may mean increasing your liability coverage. A personal umbrella liability policy could also be worth considering.
You could also consider raising your deductible, which may help you lower your premiums. That said, III recommends using any savings to increase that liability coverage.
Consider Assigning Your Teen to a Specific Car
Some auto insurers let you assign your teenager to a specific car. Ideally, that car will be the least valuable, least flashy, most statistically “safe” car you own, which is typically the least expensive car to insure. Sports cars should be avoided. Go with something proven to offer good crash protection.
Bear in mind, however, that if you assign your teen a car for insurance purposes, they must always and only drive that car. If they drive an unassigned car, they may not have coverage.
Remember: In order to insure any car, your name must be on its title. If your teen’s name ends up on a car’s title, your teen is going to end up paying for his/her own very expensive car insurance policy.
Talk to Your Teen About How Insurance Works
When teens first start driving, they’re understandably excited to get behind the wheel. They’re focused on freedom… not on insurance. That’s why it’s important to start talking to your teen about how car insurance works well before it’s time to get behind the wheel. Specifically, help them understand that:
No insurance means no driving. Make sure they know that it’s illegal to drive a car without insurance. Show them where you keep the insurance card in your vehicle, making it clear that any car should never be without its insurance card and proof of registration. (Yes, officially, car insurance isn’t required in Virginia or New Hampshire. But yet it is necessary… for anyone who wishes to avoid the risk of financial ruin.)
How they drive impacts how much they’ll pay for car insurance. Sure, this seems obvious. But why would your teen know this unless you explain it to them? Make sure they understand that at-fault accidents and traffic violations will cause auto insurers to raise their rates.
Their car insurance can be taken away from them. Be clear that serious infractions — think repeated incidents or drunk driving — can cause auto insurers to cancel or non-renew policies.
Car insurance doesn’t mean paying NOTHING in the event of an accident. Deductibles are utterly foreign concepts to teens. Help them understand how deductibles work, as well as if/when the different types of auto insurance coverage come into play.
There are other ways they can help reduce car insurance costs. Several insurers offer discounts for good grades (i.e., maintaining at least a B average), taking recognized driver training courses, and remaining accident-free. Some offer safe driver programs in which teens sign and abide by parent-teen driving contracts, making them eligible for discounts. Once they’re in college, other insurance discounts may apply (e.g., if they don’t bring their car to a college campus 100+ miles from home).
Education Is Still the Best Insurance
As a parent, what’s the best insurance you can have for a new teen driver? A whole lot of education — and we’re not just talking about insurance education. It’s important to actively reinforce safe driving practices: by being a good example, by enrolling your teen in driver safety training, by giving them plenty of supervised time behind the wheel, and by talking to them about the dangers of distracted driving.
Understanding auto insurance for teen drivers isn’t the most fun thing you’ll do today. But it won’t be at all helpful if both you and your teen are blindsided by the insurance considerations and costs once they’re ready to get behind the wheel. So take another look at those crazy-frightening statistics, and know that these are conversations worth having.
Ready to start understanding how adding a teen driver may impact your auto insurance? Give us a call at (833) 487-2683 or send us a message. One of Covered’s amazing licensed insurance advisors will be happy to do a free policy review.