If your teenager is getting ready to take off on four wheels, prepare yourself. Adding a teenage driver to your insurance policy may appear to be rather straightforward, but it can be more complicated than you might think. Since many parents have more questions than answers, we have created this quick guide to car insurance for teens and how it affects a parent’s policy.
Is It Better to Purchase Individual Car Insurance for Teens?
There are very limited scenarios in which a teen might benefit from a stand-alone policy. Unless you have a sports car on your coverage, it is almost always better to add your teen to an existing policy rather than purchase a new one. Teens on your policy can piggyback on your safe driving discounts to get a better rate on coverage. Even with the added cost of higher premiums, it is usually much more affordable to add a teenager to your policy than to purchasing individual coverage.
When Do You Have to Add Your Teen to Your Policy?
It is always a good idea to let your insurance company know if you have a new driver in the household – even if that driver only has a learner’s permit. In many cases, a parent’s policy will extend to cover a student driver, but with some limitations. However, this is not always necessarily the case. Some insurance companies require you to add your teen to your policy right away, while others do not require it until your teen is licensed to drive alone.
Does Your Teen Need the Same Coverage You Have?
IN almost all cases, the liability coverage on your policy must have the same limits on all vehicles. With regards to physical damage coverage, It can vary from car to car. If your new driver has a car of their own that is older and is owned free and clear, you might consider not carrying physical damage coverage. However, you should consult with your independent insurance agent before making a decision. Teenagers – particularly those ages 16 to 19 – are three times more likely to be in a collision than drivers age 20 and older. If you drop or cut back on certain coverage types, it could result in a significant financial loss.
Since parents can ultimately be held liable for the financial repercussions of an at-fault accident, we recommend maintaining liability insurance levels on all vehicles in the household that are high enough to protect your assets in a lawsuit.
Will a Teen Crash Cause Your Rates to Go Up?
On average, car insurance rates will increase by 79 percent when adding a teenage driver to their policy. Gradually, those rates will come down with each passing year assuming there are no accidents or serious moving violations. However, a single accident can cause a significant rate hike with long-term consequences. Though every insurance company is different, many will determine the extent of a rate hike based on the seriousness of the accident, the cost of the claim, and the cause of the collision.
How Can You Save on Car Insurance for Teens?
You don’t necessarily have to settle for high car insurance rates. Although premiums for teens are typically higher than those for older adults, there are discounts to be had. For example, your teen might qualify for a 15 percent reduction in premiums just for having good grades. In addition, taking a voluntary driver skills course could yield an additional 10 percent off. Your individual options for savings will vary, so talk to your agent about the different ways you can save.
Peter Cole, an insurance agent and partner at Pentagon Insurance Agency in Elk River, MN, began his career in the industry more than 30 years ago. He prides himself on backing up every sale by personally providing service to his clients and by providing the coverage they need at the best possible price.
Contact Peter to discuss your situation today!