No question about it, auto insurance for your teenage driver can cost a bundle, depending on the circumstances. Unlike many other types of insurance, you have no choice but to have auto insurance on your vehicles. It’s a legal requirement. There is a common misconception among parents of new teenage drivers that the teens should be put on a separate auto insurance policy with lower bodily injury limits. The purpose is to save money on the policy and to keep the teen’s driving mishaps off the parents’ auto insurance record. But the fact is, if a minor teenage driver has an accident, an injured party whose damage is not covered by the low limits of the teenage driver’s auto insurance will most likely go after the assets of the parents anyway. If that happens and you don’t have a big stash of cash to cover the damages, your house might be in jeopardy. Inexperienced teenage drivers have a much higher rate of accidents than experienced drivers. In fact, insurance agents can tell you, a very high percentage of teenage drivers wreck their first car. So don’t risk your personal assets by skimping on bodily injury limits.
What Does a Basic Auto Insurance Policy Cover for Your Teenage Driver?
Bodily Injury Liability- covers injuries that your teenage driver causes to others. If your teenage drivers are listed on your auto insurance policy, they are also covered if they cause accidents while driving someone else’s car (assuming the owner of the car has granted permission). Without adequate bodily injury liability, if your teenage driver gets into a serious accident, you can be sued for a great deal of money. That’s why it’s not smart to limit this coverage to the state minimum.
Medical Payments or Personal Injury Protection (PIP) – pays for treatment of injuries to your teenage driver and passengers in the car.
Property Damage Liability – pays for damage your teenage driver causes to someone else’s property. That usually refers to another car, but could be damage caused to fences, light posts, and other structures.
Collision – pays for damage to your car (or your teen’s car) caused by hitting another car or object, flipping over, or hitting a pothole. Usually this feature of auto insurance has a deductible ranging between $250 to $1,000. If your teenage driver has a collision, the auto insurance should pay for the fix, once the deductible is met. If you have money set aside to pay the deductible, you can save significantly on your teenage driver’s auto insurance policy by having a higher deductible.
Comprehensive – covers your teen’s car for theft or damage caused by something other than another car or object, such as fire, falling objects, explosions, earthquakes, hail, vandalism, riots, windstorms, contact with animals. Comprehensive auto insurance will also cover a cracked or shattered windshield, possibly without charging the deductible. The deductible on this coverage is usually between $100 and $300, but again, the higher deductible will save you money on premiums. Unless you have a car loan, comprehensive auto insurance is not usually required.
Uninsured or underinsured motorist – this auto insurance covers your teenage driver if he or she is hit by a hit-and-run driver, or a motorist without auto insurance or without adequate insurance, or if your teen is hit while a pedestrian.
Plan Ahead If You Want to Save on the Cost of Auto Insurance for Your Teenage Driver
There are ways to keep the cost of insuring your teenage driver down, especially if you plan well in advance.
Remind your teens that doing well in school will make their auto insurance more affordable since there are often discounts available for good students. Most teens are very motivated to gain the freedom that driving allows. If they know you will only permit them to drive if the insurance is affordable, your teen may put more effort into studies, which leads to a double benefit: better grades, lower auto insurance costs.
Get quotes from several different insurers. Rates can vary considerably. Often the companies you see advertising on TV as ultra-cheap are actually a great deal higher than the competition.
Have your teenager driver share in the cost of driving, maintaining and insuring the car. If part of his or her allowance or paycheck goes to cover the cost of auto insurance, the teen will more likely appreciate the privilege of driving and make an effort to hold spending down.
Don’t assume that after your teenager has had commercial driver’s training, he or she is prepared. Commercial training programs usually require only a few hours behind the wheel before declaring your teen ready for the open road. The fact that automobile accidents are the number one cause of death among teenagers should tell you, they need more training than they are getting. Spend enough time driving with your teens and talking to them about the potential dangers that you feel comfortable with their skills and knowledge.
Price should not be the deciding factor in auto insurance, especially for a teenage driver. But with some planning and by insisting on your teen participating in cost control you should be able to swing it without getting a second mortgage.