5 Tips on Saving Money with Your Teen’s Car Insurance Policy

by Emily Guy Birken · 6 comments

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.

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  • Sarah Hill says:

    Thank you, thank you, thank you! We have AllState and these tips helped with our daughter’s policy!

  • Money and Matrimony says:

    Great tips! Parents should be savvy shoppers when it comes to their child’s car insurance. It is important to not only know what different coverages costs, but also what they cover. It’s all about risk management.

    If you can take the extra risk, raise the deductible for comp and coll coverages. When it comes to Bodily Injury, Property Damage, and Uninsured Motorists coverages the amount saved is often not worth the amount of risk you are taking on in order to lower the coverage. Don’t put your teenager at risk in order to save literally a few dollars a month in insurance premiums.

    The type of car your teen drives can greatly increase how much it will cost to insure them. Get a teen a nice used American made vehicle. Why you may ask? Because the costs to repair your vehicle plays a factor in some of the vehicle and driver rating of many companies. If the parts are easier to find, the rating factors for certain coverages are lower causing lower premiums for you!

  • Emily Guy Birken says:

    @Directbanc, thanks so much for the kind words! I hope my suggestions work for you.

  • Directbanc says:

    Great timing on this article- we just received a notice from our insurance company asking for information about our teen drivers! We know they are looking for a way to raise our rates, even though we only let the boys drive the old beat up car. I am going to look into your suggestion that we assign them the cheaper car, and hopefully our rates will stay the same. Thanks for the great article.

  • thefrugallery says:

    I think it makes sense to have the child contribute to the insurance costs. This teaches them responsibility and also reminds them that how good they drive is directly related to how much money they have to spend to insure the car. If they’re responsible enough to drive they are responsible enough to help pay for the added costs.

  • Marbella says:

    Our car insurance is much lower if we live outside the big cities, so sometimes it can lend itself to write the children in their summer home address and get a much lower fee.

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