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Money saving tips for parents of teen drivers

When the excitement of your teen driver getting their license wears off, reality hits and you ask the important question – “How much will it cost to insure my newly licensed teen driver?”

And there’s no easy way to say this, so I’ll just say it – it’s expensive. Teenage drivers can easily cost 2-3 times as much as an adult driver. The reasons are many, including the severity and frequency of accidents, but this is a cold, hard fact. So while parents can’t do anything about the data that drives rates, there are several things they can do to reduce the financial consequences of adding the teen driver to their car insurance.

Many insurance companies will not require a teenage driver to be added to the policy until he has his license

In Ohio, 1

5 1/2 is the minimum age to obtain a learner’s permit. However, the restrictions are very significant (limitation of the number of passengers, no driving after a certain time, etc.), so several of our companies have decided to waive the toll premium when drivers are in the permit stage. Imagine buying a few extra months without having to pay a premium for your child to drive. Would it help your budget? If you’ve had nightmares about the cost of your teen driver’s insurance, ask your insurance agent if your insurance company has a similar provision.

Children classified as casual operators are usually not as expensive as those classified as main operators.

HOWEVER, there are rules for grading as a principal versus an individual. Here are some examples:

The Jones family has 3 drivers, father, mother and junior. They also have 3 vehicles. An equal number of vehicles and drivers means that each person is classified as a main operator of a vehicle.

The Smith family has 3 drivers, but only 2 vehicles. The adult operators are assigned first, one to each vehicle and then Jr may be classified as a temporary operator on a vehicle. The theory is that 3 people cannot all drive 2 cars at the same time.

So the number of drivers and the number of vehicles determine how the teenage driver is assessed.

If cost is the overriding factor, it may be more economical for Junior to go without his own vehicle for a while.

Good student discount can save you some serious $$

Ask your insurance company if they offer this discount (not all do). Rule of thumb – if your child gets a 3.0 or better GPA in school, you can probably save between $75-$100 every six months. If your child contributes any part of the prize, this is an extra incentive to get good grades.

If your kids are going off to college, seriously consider NOT letting them take a vehicle

With several of our companies, if a child is in college more than 100 miles from home, without a vehicle, then there is a pretty big discount. In fact, they are often rated as married, which fetches one of the lowest prices. Again, if cost is a consideration, this is just another way to give your cash flow a boost. Ask your company if this is an option.

The BEST type of vehicle you can buy for your teen driver is one that only requires liability

Along with safety ratings, whether you need liability only or liability PLUS comprehensive and collision will determine the best type of vehicle for your teenage driver. First, a quick review of three terms crucial to this discussion—liability, comprehensive (sometimes called “other than collision”), and collision.

  • Liability – covers the other guy for bodily injury and property damage. Example – you hit another car. Liability pays to fix the car and pays medical bills for the other driver.
  • Comprehensive – covers damage to YOUR car. Examples are: broken glass, animal encounters, vandalism, theft, fire, falling objects.
  • Collision – covers damage to your car for other “stuff” that may happen to your car that is not covered by comprehensive. Examples are hitting a tree or another vehicle.

Most importantly: the premium for comprehensive coverage and collision coverage is specific to a vehicle (meaning what you buy has a huge impact on your premium) and can sometimes be greater than the liability portion. Insurance companies use rating symbols to calculate the cost of insuring a particular vehicle (these symbols have generally been standardized within the industry). The higher the symbol, the more expensive the premium.

We have seen situations where including comprehensive and collision on a vehicle a teenage driver is driving DOUBLE or TRIPLE the premium. So it’s best to have your agent quote your teen driver on a specific vehicle so you can see the cost for yourself. You can then decide whether the payment of the premium justifies the opportunity to have the car fixed by the insurance company if there is a claim or the value of the vehicle if it is totaled in a claim.

Adding a teenage driver to your car insurance is often a shock to your wallet. These tips are designed to remove some of the sting. Need to discuss your policy? Call us at (937) 592-4871 or fill out the form below to see what we can do for you.

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