Adding a Teen Driver to Your Insurance (Without Breaking the Bank)

Teen driver with car insurance

Shutterstock

Teenagers learning to drive is a rite of passage. It’s one that parents dread, but their teens can’t wait for. I remember how I couldn’t even fall asleep the night before when my parents told me I could get behind the wheel the next day. It was just that exciting for me! I’m sure I wasn’t the only one who lost sleep in our house though. Not only do parents have safety worries plaguing them once Junior gets behind the wheel. Adding a teen driver to your insurance policy can be an expensive proposition too.

In some cases, it might seem cheaper to just hire a chauffeur instead! Luckily, there are ways to reduce the expense of adding a teen driver. Considering that these money-saving methods can also encourage safe driving, utilizing some (or all) of these tips can be a win-win. Here’s how to cut down on this particularly draining expense.

Enroll Your Teen in Driver’s Training

Taking driver’s training is an important step in learning how to drive. It can also be a sanity saver for parents who can’t help but think of their new teen driver as merely a toddler who can suddenly reach the gas pedal. In some cases, completion of a basic driver’s training course is enough to score up to a 10% discount on insurance premiums.

You can go the extra mile, though. Consider also enrolling your teen in a defensive driving course. This is different from basic driver’s ed. It will give you both additional peace of mind and extra insurance discounts. These courses cover crash avoidance, skid recovery, aggressive driving, speeding, tailgating, and passing — all of which teens could use a little extra help with. In many states, taking a defensive driving course results in a 10%-to-20% insurance discount.

The Benefits of Driver’s Training are Twofold

I didn’t take the extra defensive driving course. However, learning to skid and recover sounds quite fun, now that I think about it. I did have an instructor teach me how to drive in one of those special instructor’s car — you know, with an additional brake pedal installed on the passenger side. I’m sure my parents wanted me to have those lessons for my own safety, but it also saved them some money. I still remember many of the things my instructor told me, like putting my hands at the 9 and 3 o’clock positions, tricks to parallel parking, and how one of the worst things you can do while driving is to hesitate.

I’m sure I would have eventually learned to drive with my parents teaching me. However, we were sure to have been arguing quite a bit. I imagine the parent sitting beside me probably would’ve had multiple episodes of nervous breakdowns — not to mention having a sore calf muscle from pressing on the imaginary brake pedal that’s non-existent on the passenger side of our car.

Double Check With Your Insurance

Here’s one important note about scoring an insurance discount thanks to driver’s training. Your specific insurance company may have a list of training programs that is does (or doesn’t) recognize. The last thing you want to do is shell out $500 (or more) for a training course, only to realize your car insurance company won’t offer you a discount for it. A quick online search or phone call will make sure that you use a driver’s training program that will actually save you some money on your premiums.

Have Your Students Keep Up Their Grades

The general consensus is that students with good grades tend to be more cautious drivers. You may or may not agreed with that, but the insurance companies stand by their data. I think maybe a few really bad (i.e. really expensive) accidents were caused by some students with really bad grades. That gave everyone else a bad name. Whatever the reality is though, many companies offer 10%-to-25% discounts for students who maintain a B (or above) grade point average.

You can use this discount as a motivator for your students to do well in school. If Junior’s grades dip too low for the discount, for example, make them pay the difference. Luckily, I was a good enough student that I didn’t need the motivation. However, you can bet that I’m going to tell my kids to keep up their grades high or pay up!

Make Them Pay

Seriously, just make your teenagers pay their own way. Or at least part of it. The reality of driving is that it’s expensive. Sure, the cost of buying a car itself is a big expense. But it doesn’t end there. There’s maintenance costs, gas prices, renewing your driver’s license and/or plates, and of course, those monthly insurance premiums.

The driving age in almost all of North America is around 16-years-old. That’s plenty old enough for your teen to be earning some of their own money with a part-time job. It’s probably a good idea to have them contribute some of that cash to their insurance costs. Learning that driving a car comes with extra expenses is a good lesson for them. You may rather they save most of their money for their own car, house, or college education. Still, even if they are only throwing in $20 a month of their own money towards insurance, that can ease your monthly costs. And help your teen learn how to budget.

Assign Your Teen an Older Car

The newer (or expensive) a vehicle is, the more it will cost to insure. From a purely financial standpoint, it makes sense to let your teen drive your 10-year-old Honda while you keep the newer Acura SUV for yourself.

Some parents are reluctant to do this, however. They are concerned about the outdated safety features of older cars. However, it’s important to remember that safety innovations have been getting diminishing returns over the years. Introducing seat belts and air bags made an enormous difference. On the other hand, the newest advanced safety innovations are only making fractional improvements. As long as your teen driver is behind the wheel of a car built within the last 10 years or so, you can trust that they will be safe.

So if your insurance policy allows you to assign drivers to particular cars, you can save money by giving your teenage the oldest car to drive. Make sure you check with your insurance first though. Many states don’t allow you to assign specific drivers to specific cars. In those states, insurance companies are legally required to insure everyone in the house on every car that’s under the policy. If that’s the case, it might make sense to plan your car purchases ahead of time. You don’t want to be buying a brand-new powerful sports car just as your teen gets their license. You may have to add them as an occasional driver on your new toy, costing you a bundle.

Ditch the Family Policy

Most families are going to save money by adding their teen driver to a pre-existing family policy. However, it’s possible that having the teenager get their own policy will actually end up being cheaper. This is especially true if your family has multiple vehicles, but you only want Junior to drive one of the older ones. Or if one of your cars has an extra high value, like a new luxury SUV or classic muscle car.

It involves some extra paperwork, but it could turn out to be less expensive to put one of the cars exclusively in your teenager’s name and get them solo car insurance to go with it. If the sticker shock of your teen’s insurance costs took you by surprise, this option is at least worth a look.

The Bottom Line

Making sure that your teen driver enjoys their new privileges safely and inexpensively is certainly possible. It’s just a matter of making practical decisions and preparing your child for the responsibility of driving. While you can’t really skip out on the extra insurance costs for your teen, you can follow the advice in this article to ease the burden a little bit.

Teen driver with car insurance

Shutterstock

David Ning

David Ning

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs MoneyNing.com, where he discusses every day money issues to encourage the masses to think about their finances more often. Today, he is living his dream of helping others achieve financial freedom by providing financial education to anyone who wants to seek advice. You can get in contact with him on his website, or on social media through his Twitter or Facebook page.

X