Among a parent’s most anxious thoughts surrounds their teenage child actually obtaining a driver’s license. Of course, parents are primarily concerned about their child’s safety on the road, but closely followed by that can be sticker shock at the cost of insurance for an inexperienced driver.
At the same time, teenagers cannot wait to get behind the wheel and start impressing their friends. One can understand their urge, after all parents were teenagers once, and they too wanted to drive as soon they got their license. Driving represents freedom, and is a rite of passage that we all want to be safe as well as affordable.
Five simple actions parents can take to lower their insurance costs:
No Optional Coverage for Physical Damage
Why buy collision coverage on an old, beat-up car? I have a simple rule, If I can afford to fix the car then I don’t need collision. Let’s face it, collision coverage for a teen driver can range from $500 to well above $2000. If a vehicle is worth less than $2000, then buying coverage for collision is throwing money away.
Higher deductible limit
Yes, it’s okay to have a higher deductible limit as long as you are saving on your insurance. By raising the deductible from $500 to a $1000, a teenage driver could save hundreds of dollars, making it the smartest decision parents can make to save on their insurance.
Get a monitor
Several insurance carriers such as Safeco and Progressive offer a device that monitors teen driving habits, and offers a subsequent discount for installing the device. Now, that’s an amazing offer. First, it helps parents save on teen insurance and second, it helps parents monitor teenage drivers’ road behavior (offered by a few insurance carriers such as Safety Insurance). If a child drives an average speed of 90 MPH, parents know it’s time to take those keys away or they could have a disastrous accident in the making.
Encourage your teenage driver to obtain their drivers license as soon as they are legally capable
Some parents make the mistake of encouraging their teens to delay obtaining a driver’s license. That is not a smart financial tactic, because the less time an operator has with a license the more expensive their insurance becomes. In Massachusetts for example, an inexperienced driver typically saves money on auto insurance after three years of being licensed, and then after six years an operator becomes eligible for the full experience driver discount. That means a child who obtained his license at the age of 16 will see some savings at the age of 19, and then at 22 will be eligible for the full discount. That is a huge savings at an age when most kids are in college and money is tight.
List them on your policy
Yes, once your child obtains her driver’s license, she needs to be listed on your policy. In fact, your insurance policy requires you to list all household members who have an active driver’s license. Therefore, your teen driver should be listed on your policy as soon they become licensed. If they drive your car occasionally then list them as occasional driver.