Is it Wise to Put Your Teen on Your Auto Insurance Policy?

When a teen gets a driver’s license, they are excited to experience freedom on the open road. It’s natural that parents are worried about their driving and the costs of putting their teen on their auto insurance. Let’s face it, teen car insurance is expensive, but it’s a legal requirement in most states and every driver needs it. Most teens cannot afford car insurance, so in this article we will explore how to put a teen on your personal car insurance and how much it’s likely to cost.

Adding a Teen to Your Auto insurance

There really are only two options, you can add the teen to your existing auto insurance policy or help them to get an insurance policy of their own. In virtually every case, the former is the only real choice, but if you have the funds the latter may be an option. When you add a new teen driver to your auto insurance there are certain pros and cons that you need to understand:

Pros:  

•Convenience: It’s much easier to add your new teen driver to your existing auto insurance policy than to try and get them to take one out on their own.

•Discounts: Some car insurers will offer discounts that decrease the costs incurred when a teen driver is added to your auto insurance policy. The discounts can be improved if the student can demonstrate evidence that they can be trusted. This could be the completion of a special driver’s ed program or even a good GPA. Ask your insurer about any discounts that they may offer and what your teen needs to qualify for them.

•The Cost: Adding a teen to your car insurance is cheaper than a standalone policy of their own. This is fair, the new teen driver has no driving history and the insurance company cannot evaluate the risk potential for the policy. Many insurance companies don’t offer standalone cover for new teen drivers at all. So, in many cases adding the teen to your own auto insurance policy could be the only option.

Cons:

•Increased Premiums: Even careful teen drivers will cause you to pay more for your car insurance policy. If there is a premium difference the teen should pay it to learn about the responsibility of car ownership. 

•Increased Liability: If the teen driver is found to be the cause of an accident when they are driving on your car insurance, you could be liable. There could be legal issues and it’s almost certain that your car insurance premiums will rise.

What Insurance Coverage Does Your Teen Need?

A teen driver must have the minimum auto insurance coverage required by the state where they reside. This should include: liability, collision and comprehensive cover. Let’s take a look at these three types of insurance cover in more detail:

•Liability Coverage: Many states require this to pay for any injuries or damages to third parties that occur due to the teen driving. The minimum cover may not be enough to pay for severe damage and injuries. So, it’s prudent to go with extra liability protection for extra peace of mind.

•Collision Coverage: Named drivers must have collision coverage if there is an outstanding loan on a vehicle. This is a lender requirement, it’s needed to pay for damage if the vehicle collides with another vehicle. If there is no collision coverage you will need to pay for repairs to the other vehicle yourself. As you can imagine this could be extremely expensive and in the event of a vehicle write off you may be replacing it entirely!

•Comprehensive Coverage: This covers most of the typical risks, including theft, fire, animal collisions, weather damage and other hazards. This is a requirement if the vehicle is financed, it may cover a repair or replacement if your vehicle sustains damage from the aforementioned hazards.

How Can a New Driver Pay Less for Auto Insurance?

To mitigate the higher car insurance premiums due to a lack of driving history new drivers can follow some simple tips to save money:

Selecting the Right Car

Most teen drivers imagine themselves driving their dream car out of the gate and it’s probably something fast and loud. The reality is that this type of vehicle would be an extremely poor choice for a new driver. Sporty models are always in the highest insurance groups and they will always cost more to insure. They are also harder to control and they are more likely to be stolen. A new driver should choose something modest in a lower insurance group. This will give them some time to build up their insurance history to lower their premiums when they buy something better later.

Voluntary Driving Courses

Passing a voluntary driving course demonstrates a commitment to developing good driving habits and maturity. The focus should be firmly on safety and defensive driving to lower the insurance premiums. If you don’t know which course is best, contact your car insurer and they will be happy to offer some advice.

Ask About Insurance Bundling

Some insurance companies will offer discounted rates if multiple products are purchased together. Although a new teen driver is unlikely to have personal or home insurance others in the household will. Even if the teen can’t be added to the auto insurance of the parent, there may still be ways to benefit with insurance policy bundling. 

Compare Insurance Quotes

It’s never been easier to compare insurance quotes to ensure that you’re getting the best deal. An insurance quote can vary a great deal depending on the specific insurance company and they use varying criteria to assess risk potential. Bear in mind that the lowest quote may not always be the best option. It’s important to work with a reputable company that offers the level of coverage that you need.

Consider a Monitoring Scheme

Certain insurers have driver monitoring schemes which offer discounts for newer drivers. There’s usually an app that runs during driving that detects speeding, sharp cornering, harsh braking and other bad driving behavior. This is a little dystopian, but on the plus side it will encourage the teen to drive safely.