One minute, they’re drooling adorably on a rattle, and the next thing you know they want to borrow your car keys. It might not happen quite that quickly, but it still can be pretty tough for parents to get used to the idea that their teenage children are ready to get behind the wheel. It doesn’t get any easier when you research how much it will cost to insure your brand new driver, since the addition of a teen driver can make car insurance premiums go through the roof. But you can keep costs in control if you follow these guidelines:
1. Re-evaluate your comprehensive and collision deductibles. Even with newer cars, you may not need the best comprehensive and collision insurance. If you raise your deductible to $1000 for these, you can save a great deal on your premiums, but still feel comfortable knowing your car is covered in case of a claim. Just make sure you have an extra $1000 in your emergency fund in case you do need to file a claim.
If your car is an older one, you might consider dropping comprehensive and collision coverage altogether. Know what your car is worth, because depreciation in value could mean that your car’s value is only slightly higher than your deductible.
2. Add your child to your policy. In general, it will be cheaper to keep your child on the same policy as the rest of the family, particularly if you bundle your car insurance with homeowner’s insurance. If your child is not buying his or her own set of wheels, make sure you “assign” either your or your spouse’s car to the new driver. This will allow you to keep insurance rates the same on the adult-only car, and will give you the option of assigning the cheaper car.
In some cases, it will be cheaper to move to a different insurance company. Some insurers have great rates for teenagers, while others have prohibitively high premiums for teen drivers. So it’s a good idea to shop around.
3. Remember that grades matter. The insurance industry understands that there is often a correlation between good grades and better driving. Many companies will offer discounts to teen drivers who maintain at least a B average (a 3.0 GPA).
If your speed racer hasn’t necessarily been hitting the books, this might be a great way to motivate her to both study harder and learn financial responsibility. Ask your teen to pay for her own insurance until her grades come up and she qualifies for the good grades discount.
4. Explore other teen driver discounts. Many companies will offer discounts for teens who have taken an approved driver’s education course, defensive driver training, and other driver safety programs. These discounts will also give you peace of mind knowing that your child has learned many different strategies for handling difficult driving situations.
5. Choose your child’s ride wisely. If your teen is buying his own car, it makes the most sense for him to buy a used car, one which has already taken the hit in depreciation as long it it is well rated for safety. Both those factors will lower the premiums for his wheels.
If your child will be driving Mom or Dad’s car when he gets behind the wheel, you may be able to classify him as an occasional driver, which will keep your premiums lower.
While seeing the tangible evidence that your child is growing up may be tough to swallow, you can make sure that the hit is just emotional and not a financial one, too.