Auto insurance for teenagers has always been expensive, and that will probably never change. It’s common for most parents to add their teen as a named driver to the family auto policy because it is usually the most affordable alternative.
However, less expensive doesn’t mean cheap. That’s because insurers calculate their rates based on the likelihood of a driver getting into an accident. The National Safety Council says that drivers between the ages of 16 and 17 are three times more likely to be killed in a traffic crash than drivers between the ages of 25 and 64. Statistics like these make drivers under the age of 25 bigger risks in the eyes of auto insurance companies, so expect your premium to increase anywhere from 50 to 75 percent.
There are some other important factors that affect how much you will pay when adding your teen to your insurance:
- Gender – Teenage boys are considered to be more reckless and bigger risk takers than teenage girls. All of that bravado comes with a price, higher rates than for teenage girls.
- Experience – Lack of driving experience translates into higher premiums because insurers assume that inexperience makes the driver more prone to accidents.
- Geography – Driving in a high-traffic geographic area is another rate booster because it increases the probability of getting into an accident.
While the deck seems to be stacked against you, there are ways you can lower premiums:
- Buy them an older model car – Older cars cost less to insure than newer models.
- Avoid the extras – All of those add ons that teenagers love, like chrome rims and big stereo systems, will increase the rate you’ll pay.
- Lower/drop collision coverage on older cars – If the value of the car is less than the product of your annual premium times 10, think about dropping the collision and/or comprehensive coverage portion of your policy.
- Raise your deductible – A higher deductible can lower your auto insurance rate by 15 to 30 percent.
- Enroll the teen in a defensive-driving class – This could result in a premium decrease.
- Obtain car insurance from the same company that provides your homeowner’s or renter’s insurance – Many insurers will offer a 10 to 20 percent discount for multiple lines of coverage.
- Maintain your credit score – Insurers base your premium in part on your credit score; the higher it is, the lower your rate will be.
- Ask about low mileage discounts – As gas prices increase, many people aren’t driving their car as much. If you drive less than the annual average miles allotted by your insurer, see if you can qualify for a low mileage discount.
