Adding a new teen driver to your insurance plan is expensive. If a teen wants to drive though, most states require proof of insurance before getting a permit or license. This rule guarantees that both parties will be able to cover the costs of the car, property damaged, and health costs associated with crashes. To understand how to save money, there are some basics to understand about how insurance works.
The Basics of Insurance Coverage
Insurance companies weigh probabilities of costs per driver versus how much money customers put into the coverage. Newer drivers of any age have less experience driving and therefore present the most risk for the insurance company paying out in a crash. Not all new drivers are the same though. New drivers between the ages of 16 and 19 have the highest risk, being three times more likely to get into a fatal crash than drivers 20 years of age or older. Teenage males are twice as likely as females to crash and all teens have their risk go up with each additional passenger in the car. The older a teen gets and the more experience they gain operating a car, rates will begin to drop because they are not as likely to crash.
There are various coverage plans that insurance companies offer. The lowest is liability coverage and is what is mandatory in most states. It covers bodily injury to another person in an accident and property damage coverage if the driver causes property damage. This way, drivers can assume the risk of paying for their own bodily injury and property damages in a crash. There are more optional coverage options that help cover medical bills, loss of income, childcare, and rental cars for a higher cost.
Tips to Save on Insurance
With an understanding on how insurance works, there are some simple ways to save on insurance for new drivers.
- Research coverage options. Look into what level of insurance coverage is required for your state and then compare it to the coverage you are paying for already. Choosing a plan that provides less coverage will cost less, but be warned that it may cost you more if there is a crash.
- Shop around. Get quotes from many insurance companies and see if there is one that will offer you the same coverage for less. Switching could save you a lot of money.
- Ask about discounts. Many insurance companies will offer discounts for teens who get good grades, take a defensive driving course, use speed monitoring devices (like an app), family policies, multipolicy discounts, and a less expensive rate for military service.
- Consider the car. Insurance companies charge money for insurance based on the safety, reliability, and cost of the car. Since more expensive cars are stolen more often and cost more to fix, the coverage will be higher.
- Look into less conventional insurance. Some companies offer a pay-per-mile insurance option. If your teen does not drive very much, this can be a more affordable option.
Even with finding the right coverage option for your family, insurance costs will be higher for a new teen driver. The best thing to do is keep encouraging them to be good drivers with your words and actions. Set a good example of staying focused on the road and using safe driving practices. As your teen gets more experience, they will develop good driving habits that will benefit them their entire life.