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Have a teenage driver? Here’s how to save on insurance


Side view photo of a teenage girl in a car, her mother sitting next to her and handing her the keys to drive.

Aldomurillo/Getty Images

Back-to-school means a lot of extra expenses for parents, from school supplies for K-12 kids to books and tuition for incoming college freshmen. But one thing parents don’t consider is how expensive it is to have a new driver or teen driver.

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A recent survey showed us that insurance accounts account for a substantial portion of household bills. “Shopping around for insurance — something you should do once a year and often on a weekend afternoon — is an effective way to trim your household expenses,” said Andrew Schrage, CEO of Moneycrashers.com.

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Fortunately, there are ways for parents to save on insurance even when having a teen driver behind the wheel for the first time.

Inculcate safe driving habits

Safe driving habits can have a huge impact on keeping insurance premiums low and earning discounts. “Avoiding accidents and traffic citations can pay off with lower insurance premiums,” Michael Orefis, SVP Operations at SmartFinancial, told GOBankingRates.com in an exclusive interview.

Orefice recommends allowing only one or two friends in the car until your young driver gets some driving experience. “It may be tempting to hang out with friends after your child gets their driver’s license, but cars with teenagers chattering and joking around can be distracting,” she said.

State the dangers of distracted and drunk driving

When you’re a parent dealing with a teen or young adult driver, safe driving means having some tough conversations with your teen about texting and driving, drinking and driving, or driving while high.

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“Teen drivers are more likely to engage in reckless driving behaviors, such as texting and driving and driving under the influence of alcohol or drugs. Research has shown that texting and driving alone increases a teenager’s risk of a crash by 23 times,” Orefis said.

These behaviors can be especially costly for teens, as insurers can add up to 45% surcharges for violations like texting and driving, she told us.

“Parents can encourage safe driving habits by emphasizing the costs of reckless driving. Beyond higher insurance rates, a suspended license and possible jail time, reckless driving puts their lives and every life around them at risk,” Orefis said.

Share resources to help your teen stay safe behind the wheel

It’s one thing to tell your teen about the dangers of driving under the influence of drugs or alcohol. But, it is also important to provide them with solutions if they find themselves in a situation where they are forced to make that choice.

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“Remind your child that calling you for a ride home or using a rideshare service is always a better option,” Orifice said. Some services even send two drivers to your location – one to pick you up and one to drive your car home safely.

Take defensive driving classes

Teens, along with adults, can take defensive driving classes to earn substantial savings on insurance premiums. Some insurance companies offer savings of 15% or more if you take an online class. “These safe driving discounts help offset your higher premiums that come with adding teen drivers to your policy,” said Orifice.

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Let telematics prove their safe practices

If you – and your teen – are really safe drivers, you can prove it to insurance agencies through a technology called telematics. This device measures your speed, sudden stops, mileage and other driving risk factors.

“Safe drivers get more discounts,” Orifice said. “Following the speed limit, braking smoothly and avoiding night driving can lead to substantial savings.”

Ask about discounts for good grades

High school and college students can usually get discounts of 5% to 25% depending on the insurer. Better student discounts are generally available to full-time students with a 3.0 GPA or “B” average, Orefice said.

He used Esurance by Allstate as an example, a company that offers students a 10% discount on the liability, collision and medical payments portion of auto insurance premiums. Best of all, the discount is good for one year after graduation.

Make your college student leave their car at home

If your college student lives in a college dorm on campus more than 100 miles from home, you can save money on insurance premiums by leaving their car at your home address.

“The insurance company recognizes that you put fewer miles on the car when your child is in school and charges a lower premium accordingly,” Orefice said.

After sharing this little-known tip, he noted that depending on the insurer, a student may still be able to drive a car during breaks and holidays without rate hikes.

Don’t be afraid to switch carriers

If your current carrier won’t offer you a deal after adding teen drivers to your policy, it may be time to work with your situation and shop around for a company that lowers your premiums (relatively). “Inertia is a powerful thing,” Schrage said. “Insurers know that the longer you keep your policy, the less likely you are to leave.”

Schrage calls this insurance the “satisfaction premium.”

Whether those increased premiums come with time or lifestyle changes like adding new drivers to your policy, you’re more likely to find a better deal when you shop around.

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Shop online to buy leverage

Reminding us that shopping for insurance shouldn’t take too long, Schrage said shopping online to get quotes from multiple insurance companies is a good use of your time — and can result in big cost savings.

“These online agencies deal with thousands of insurance shoppers each week and therefore have pricing power with insurance companies that individual direct buyers can’t match,” he said. He noted that the savings of shopping for auto insurance can save 20% to 50% in many cases.

If you’re adding a new driver to your policy, those cost savings may offset some of the increases you’ll experience with a driver under 25 in your family.

“If you’re not satisfied with your current carrier, comparison shopping can help you find a policy that meets your budget and coverage needs,” agrees Orifice.

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About the author

Dan Alcott is a full-time freelance writer and content marketing expert who geeks out about finance, e-commerce, technology and real estate. His long list of publishing credits include Bankrate, LendingTree, and Chase Bank. He is the founder and owner of GeekTravelGuide.net, a travel, technology and entertainment website. She lives on Long Island, New York, with 2 cats, a kitten, and three lizards of varying sizes and personalities — along with her two children and husband. Find her on Twitter, @DawnAllcot.

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