You just added your teenage son or daughter to your auto insurance policy. You get the new bill a month later — and your jaw drops when you see the increase in premium. Sound familiar?
Adding a young driver to your auto insurance policy can cost a whole lot. While many factors are used to determine your rate, your premium will certainly increase substantially. And the premium will be even higher if you insure your child on their own separate policy.
My experience as an insurance agent has taught me that most parents aren’t financially prepared for the increase in premium that comes with adding a young driver. Here’s what you need to know.
Why It Costs So Much
With no driving experience under their belts, young drivers are seen as high risk by insurance companies. This, coupled with the fact that they tend to be less responsible than older drivers, causes insurance companies to charge more.
How to Keep the Cost Down
In general, drivers under the age of 25 are considered young drivers and will cause your premium to spike when added to your auto insurance policy. However, there are discounts offered by various insurance companies that can help you keep the cost manageable.
Here are a few discounts that may apply to young drivers:
Good Student Discount: If your child maintains good grades (usually a GPA of at least 3.0), they’ll be eligible for the this money-saving discount.
Away at School Discount: This discount generally applies to college students who A. are under the age of 25, B. live at a campus more than 100 miles from home, and C. don’t take a vehicle with them.
Driver Training Discount: If offered, drivers under the age of 21 who have taken a driver training course will be eligible for this discount.
The car which your child is assigned on your auto policy will also affect your insurance premium. It’s best to ask your agent’s advice about driver assignments.
*Please note: Each insurance company has its own sets of underwriting guidelines. The above discounts are general regulations, but will vary by company.
If you’re on a tight budget and will soon be adding a young driver to your auto policy, you may want to think ahead and start putting some cash aside. And you should always check with your insurance company on what discounts are available.
Have you taken advantage of any auto insurance discounts for your teenage driver?