Teenagers are expensive! But adding one to your auto insurance policy doesn't need to break the bank.

Written by Ryan Hurlbert on October 25, 2010 & Posted in Auto Insurance

Can you afford to let your teenager get their driver's license?


The number-one cause of death for Americans ages 15-20 is motor vehicle crashes. In 2008, according to the National Highway Traffic Safety Administration (NHTSA), 12.9 percent of all drivers involved in fatal crashes were teens between 16 and 20 years of age, but they only account for 6.3 percent of all licensed drivers.

Teens crash at a higher rate than other drivers because they combine immaturity and inexperience. A 10-year study by the National Institute for Mental Health suggests that the part of the brain that controls risk recognition and problem solving is among the last parts to develop, which explains why 18-year-old first-time drivers have a lower accident rate than their 16-year-old equivalents.

Which is a long way of explaining that your insurance premiums for your teenager are going to be very high, because the odds of them filing a claim are very high. How can you reduce your cost to an acceptable level?

What car will they be rated on?

If you have more drivers than cars, your teen will be rated on the most expensive car in your household. If you have an equal number of drivers and cars, your teen will be rated on the car they drive the most. The money you save by not having Junior rated on your Porsche could actually pay for an inexpensive car for Junior to drive. Save even more by only carrying liability insurance on that car.

Choose a car that carries a low loss rate, as these will be cheaper to insure. You can compare multiple years, makes, and models online at the Insurance Loss Data Institute.

Is your teen ready?

Should they really be driving? While you can get a license at 16, there is no law that says you have to. If you don't feel your child is ready, then don't let them get a license. Once they are licensed, if you feel their behavior behind the wheel is unsafe, have them surrender their license to the DMV and perhaps get some more training.

Get them professionally trained.

Just about every auto insurance company in America will give your teen a discount for completing an approved driver's training course. Go a step beyond basic driver's training, and look into professional defensive driving courses available in your area. You may not see an insurance discount for completing the advanced course, but the lessons learned could help your teen avoid an accident and be a safer driver. Remember, absence of claims equals lower premiums.

Make the grade.

Want an even bigger discount? Get good grades. Discounts vary, as do grade point requirements, but in most cases a 3.0 GPA will save you 20 to 30 percent. Some parents split the savings with their child as an incentive to work harder in school, but others simply make earning a good student discount a requirement to keep driving. Do what works best for your teen.

Limit distractions to limit claims.

Nothing will add to your insurance cost faster than a claim or two. Distracted driving is a big problem for teens: according to the Insurance Information Institute, almost half of all teens admit to texting or using a cell phone while driving. Do not allow texting or using the phone in the car, period. Limit the number of passengers they can carry.

If your teen gets a moving violation (such as a speeding ticket), take the keys for an extended period of time so they will learn to be more careful. GPS tracking systems can tattle on speeding or driving beyond prescribed boundaries, and in-car cameras can be useful training tools. Many insurance companies offer these devices for free or at minimal cost for their customers.

You may be able to implement one or all of these strategies to reduce your insurance premiums for teen drivers. It can pay to shop around for the best rates, too. Some auto insurance companies are more "teen friendly" than others.

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