A Complete Guide to Getting the Best Insurance Option for Your Teenager

A Complete Guide to Getting the Best Insurance Option for Your Teenager

One of the utmost joys that a parent can feel is to have happy and fulfilled children.

And for many parents, one of the best ways to treat your child in a special way is to permit them to drive a motorized vehicle. Whether that’s the family car or you have bought them a personal car as a gift, there is a steadily rising percentage of teen drivers in the US.

According to a recent online statistic, young drivers account for nearly 5.3 percent of the total drivers in the United States. That means that there are more than five teenage drivers for every 100 cars plying the US roads.

Though it is a fulfilling experience to finally see your kid hit the road, safety and security should be at the top of your concerns.

Experts and common sense suggest that teen drivers should be well-covered by structured and planned insurance policies before they start driving on their own.

If you have a teenager who is ready to hit the road and take over some responsibility for driving on your fun-filled family trips, then this article is for you as we cover the basics and the necessary steps that you can take to find the best insurance options on the market.

Teen Driver Insurance 101: Getting to Know the Basics

Before we dig right into the heart of teen driver insurance, let us present you with not-so-secret information: adding a teen driver to your insurance policy will certainly spike up your rates.

According to various sources online, your insurance rates can increase by 130 percent after adding a teen to your existing policy.

This means that an average insurance policy’s premiums will cost you an additional $2,000 per year.

That increase is mainly because insurance providers see teen drivers as beginner drivers who do not yet have the advanced knowledge on how to fare well on dangerous roads and in traffic. It also speaks to the fact that they are inexperienced, have more adrenaline that can pump up their speeds, and are less likely to recognize dangerous situations.

That said, providers also classify them as a greater risk because the accident rates for teenagers, especially those within the 16-19 age bracket, are in fact considerably higher than for those with more experience. Insurance providers increase the premium on their policies because they anticipate future claims and payouts for every teenager that is insured.

However, every insurance company treats teen driver insurance differently, factoring in several things such as the age, location, and GPA of the teenager that you want to insure.

More often, they also look at your child’s gender. Research has suggested that male teen drivers cost more to insure than female teen drivers or adult drivers.

Basic Insurance Coverage That You Will Want to Maintain for Your Teen

If you have an existing auto insurance policy and want to add the newest driver in the family, you may want to increase your liability coverage. Doing so can help ensure that your family and your finances are secured. We know that accidents can cause a lot of stress and damage, especially if they involve your child.

Here are some of the basic liability coverages that auto insurers typically provide.

Bodily Injury Liability

In an event of an accident, it is fairly common to suffer an injury. Though we do not hope to encounter such, this is the most fundamental insurance coverage that you will need.

This type of liability coverage ensures that the damages a teen driver may cause to other people are covered. For example, if your teen accidentally hits a pedestrian, this coverage will help compensate that person for their medical bills related to the accident.

By having this coverage, you are securing the welfare of the injured person as well as that of your teen, especially if they are at fault.

Property Damage Liability

The second most important consideration in an accident is the state of the vehicle and any other properties.

Depending on the severity, some cars may only suffer minor scratches and bumps. However, there are times that the car can be severely wrecked. Collisions can also cause damage to properties such as poles, speed bumps, barriers, and other assets.

This type of coverage ensures that the damage to properties owned by the other parties involved will be well compensated.

Hence, you will not be troubled by the financial strain that an accident may bring, especially when other parties are involved.

Aside from this basic coverage, you as a parent can also opt to increase other coverages of your auto insurance policy if you want to include your teen.

Two of the most commonly added insurance coverages are collision and comprehensive coverage.

Collision Damage Coverage

This type of insurance coverage pays for the damages to the car or motorized vehicle driven by your teenager as the result of a collision.

The term “collision” may refer to the act of colliding with an oncoming vehicle, with the vehicle in front of you, or with stationary objects in the road such as speed bumps and traffic poles. It may also cover certain situations such as a “hit-and-run,” where the driver at fault leaves the scene after hitting the car driven by your teenager.

Comprehensive Damage Coverage

This policy addition makes your vehicle well-covered against damages that are sustained from acts other than collision.

Theft and vandalism are some of the leading causes of damage claims that are not the result of an accident or collision. Other leading factors include acts of nature such as floods, fire, tornado, hail, and extreme weather.

It can also cover causes such as animal strikes, or when your teenager hits an animal crossing the road that causes damage to your vehicle.

Typically, parents tend to settle for minimum state requirements when getting auto insurance. However, experts suggest that you at least increase your liability coverage if you are planning to include your teenage child in your insurance policy.

True, you can save some money by not including comprehensive and collision coverage. But in doing so, you can be removing valuable protection that can make all the difference when your teen driver encounters an unfortunate incident.

On average, comprehensive insurance will only cost you $192 a year while collision coverage will set you back $526. Yes, that may be a little high for some families. But if you take a closer look at how much financial strain and damage an accident can cause you, this issue is a no-brainer.

In an event of an accident involving your teen driver, always remember that it is your assets that are put in jeopardy.

If medical bills weren’t high enough, what happens when property damages kick in?

It may risk your hard-earned savings, retirement accounts, future income, investments, and many other financial sources that you never intended to use for such misfortunes.

Simply stated, the benefits of well-rounded and prepared insurance coverage will outweigh the increase in premiums that you need to pay.

How Much Coverage Do I Need for Teen Driver Insurance?

Just as experts say for most drivers, it is recommended that your teen get a full coverage insurance policy.

On a more technical aspect, experts recommend getting 100/300/100 insurance coverage for the welfare of your teen and the rest of your family.

Those figures mean that you set a liability limit of $100,000 for bodily injury, $300,000 for total injury, and $100,000 for property damage.

This way, you are protecting the future of your teen and your family from unforeseen and unwanted incidents that may happen.

As an adult, you may well know that accidents do happen even to the most cautious and exemplary drivers on the road.

Taking a risk is a big no-no, particularly if it involves your teen.

How Much Would It Take to Insure My Teenager?

There is no single answer to this query. In reality, the actual rates that you need to pay will largely depend on the state you live in.

For instance, regular auto insurance for a family that lives in Florida will cost $2,250 per year. If they opt to add their sixteen-year-old to the insurance policy, it will spike up to around $5,500—a 144 percent increase in insurance premium.

Aside from geography, several other factors such as age and gender will affect the actual rate for your insurance policy.

This price increase is generally brought about by certain risk factors that insurance providers take into consideration when accepting teens to the insurance policy.

Risk Factors that Tend to Increase the Rates for a Teen Driver Insurance

According to a recent study conducted in the United States, almost 2,500 teenagers lost their lives in 2018 due to traffic accidents. This figure means that every day, about seven teens aged 13-19 die due to motor vehicle crashes.

In this part, we highlight some of the leading factors that result in higher insurance premiums from providers:

Teen drivers’ lack of experience

News reports and documentaries often tell us that teen drivers are more likely to underestimate the danger of a situation. Their inexperience can also lead to errors in critical decisions that result in severe accidents and crashes. Moreover, the overall hype of being “fast” attracts many teen drivers, who tend to hit the ground running rather than just maintaining average speeds.

Not wearing seatbelts

According to a 2018 report, almost half of traffic fatalities involving teen drivers and passengers 16-19 years of age were not wearing seatbelts during the time of the accident. This means that teenagers are much more likely to ignore wearing such restraints.

Distracted driving

The upsurge of technology has had its fair share of effect on ballooning serious accident rates in the US. Released data from the 2019 Youth Risk Behavior Survey revealed that 39 percent of high school students who drove used their phones to text or email while driving. We know how negative the impact of cell phones can be, especially to young and inexperienced drivers like your teenage child.

Driving at high speeds

Reports have shown that 30 percent of male teenagers involved in fatal crashes were speeding at the time of the accident. In comparison, 18 percent of female teenagers were discovered to be at high speeds when the crash happened. In both demographics, the percentage was alarmingly high compared to other age groups.

Driving while intoxicated with alcohol or drugs

It is a common truism that you should not drive and drink.

This fair warning is especially true for teenagers, as consuming any amount of alcohol before they drive significantly increases their crash risk. Compared to older drivers, there is a higher risk of being involved in a crash at the same blood alcohol concentration (BAC) levels.

Getting a Personal Policy for Your Teen vs. Adding to Parents’ Policy

In some cases, parents may think about getting a separate auto insurance policy for their teen. However, not only is this more expensive, but some local laws and guidelines may prohibit it.

In the majority of the states, the law requires the parent to take responsibility when they sign for their teen’s license. This means that you will be jointly liable if your teen is involved in a collision if they are younger than eighteen years of age.

Also, some states mandate that 18-21-year-olds are not yet legally capable of signing binding contracts. This means that you still need to accompany your teen when signing for their car purchase papers and insurance policy.

However, there are times when a separate insurance policy is the best way to go.

Sometimes, your teen may rack up so many driving violations and accidents that the insurance rates for your family’s policy will go sky-high.

In this case, it may be a wise move to get a separate insurance policy for your child so that it can also serve as a way of saying that they must be responsible for their actions.

Ways to Save on your Teen Driver Insurance

Though higher rates almost always accompany your teen driver insurance, there are ways that you can limit the impact—primarily by ensuring that your teenager is a good driver.

Maximize the usage-based driving system

This program essentially says “you must prove that you are worthy.”

Many insurance providers use such a program that monitors the driving habits of their clients. Safer driving habits and fewer miles will typically equate to reduced insurance rates.

These habits are monitored by tracking technology. The provider may use the data from this technology to decide if your teen qualifies for a lower insurance rate.

Take advantage of a good student discount

There are insurance providers that offer young driver discounts. They might offer decreased insurance rates for under-eighteen drivers who maintain a certain grade point average. On many occasions, insurance providers set the standard at a “B” average, meaning that if your teen can maintain their grades at that level, your insurance policy can qualify for a 20 percent discount.

Apply for a “student away at college” discount

College students who live on campus may qualify for a certain discount on their insurance rate. This typically applies when your teen will be living 100 miles away from home and will not be taking a car with them. You can apply for this discount if your teen satisfies the condition, and you may be eligible for a price adjustment.

Let your teen finish a driver training or safety course

A well-trained and educated driver may be less likely to figure into an accident.

This is the thinking of some insurance companies that are willing to reward you with a discount if your teen finishes a driving training course. Though the actual rates may vary, the discount for this type, of course, is typically set at 10 percent.

Reevaluate the type of car that your teen will drive

Most parents tend to hand over the keys of an “old but gold” car to be their teen’s first.

However, if you look closely at this tradition, you may find that it will cost you more because an older car usually lacks a plethora of modern safety devices. Some insurance companies may give you a discount if the car that your teen will drive is loaded with safety features.

Some of these are adaptive cruise control, automatic braking systems, lane departure warnings, anti-theft devices, collision mitigation systems, and many more. You may want to talk to your insurance provider to see what features may qualify for a discount.

Answering the Frequently Asked Questions on Teen Driver Insurance

When should I inform my insurance provider that my teen is driving?

Most insurance providers require that all drivers in the household be listed on a policy. So the moment your son or daughter gets their license, it is wise to inform your provider right away. This will help you prevent any stress and disaster later on because of failure to inform the provider that you were adding your teen to your insurance policy.

My child only has a learners’ permit. Should I add them to the policy?

The answer to this generally depends on the state you live in and the insurance company. Some providers may cover your teen at no additional cost until they get their driver’s license, while others have stricter guidelines. It will be best to check whether your local laws require teens with learners’ permits to be included on an insurance policy.

What type of car is best for teen drivers to decrease insurance rates?

Reliable economic car brands such as Toyota, Ford, and Honda are always be a good starting car for your teen driver. But more modern versions of Subarus, Fords, or Minis may come equipped with more safety features, which often results in more favorable insurance rates.

If you have a higher-end car such as a BMW or a Mercedes, it will typically require higher rates because high-quality insurance doesn’t come cheap. And if you have a power-churning machine like a Lambo or Ferrari, you may want to tame that beast yourself and never let your teen driver operate it.

If this article has served its job to inform you about the fundamentals of teen drivers’ insurance, feel free to reach us by our online contact form or call us at 941-361-1532. We will be more than happy to help insure your teenager and help to keep them safe as they travel the roads.

Contact a DLR Group Insurance agent today to best safeguard your family’s interest!