Insuring a Teen Driver? Get Ready to Pay

by Miranda Marquit · 0 comments

My son turns 13 this year. As I consider what it means to have a teenager, I’ve also been thinking about what comes next. And, even though the event is still three years away, I’ve been considering the reality that my son will be driving soon.

As children grow, it’s clear that they become more expensive. Extracurricular activities cost more, and they never seem to stop eating, putting strain on your grocery bill. But it’s the car insurance that you might really need to plan for when it comes to budgeting for your growing teen.

According to research from InsuranceQuotes.com, adding a 16-year-old to your policy can result in a 96% spike to premiums. While the impact decreases over time, it’s still only a decrease to 60% by the time your teen reaches age 19. That’s pretty substantial.

Another consideration is the gender of your teen. Because I have a son instead of a daughter, I can expect to see higher rates than otherwise. While there are some states that don’t allow insurers to consider gender, the state I’ll be living in — Idaho — allows insurers to charge more for males than females. As a result, I’m likely to see a higher average increase in my premiums when my son starts driving.

Blunting the High Cost of Insuring Your Teenager

There are ways to reduce the cost of a teen driver when it comes to insurance. First of all, encourage your teen to drive responsibly. Accidents and traffic tickets only mean higher rates down the road. Over time, experience can lead to lower premiums when it doesn’t involve unsafe situations.

Another way to reduce the cost of insurance for a teen driver is to ask for a good student discount. Many insurers offer discounts to students that maintain good grades that average a B or higher. If your student manages to get even better grades, you might be able to see a bigger discount. A good student discount won’t completely offset the higher cost of insuring your teenager, but it can blunt some of the financial pain.

You can also encourage your teenager to take ownership of the situation. Make it clear that any increase to insurance premiums that come as a result of your teen’s behavior when driving has to come out of his or her pocket. So, if your child gets a speeding ticket and the insurance premium goes up by $50, that’s something your teen is responsible for. Many teenagers are more likely to behave responsibly if they know that they will have consequences to their actions — especially if money is involved.

It’s also possible to provide a reward. If your policy offers a good student discount, make it a point to provide your teen with some sort of compensation for helping keep the insurance rates lower. You can split some of the premium savings with him or her. This provides an incentive for your child to maintain good grades as well as make efforts to drive responsibly.

While there is likely no getting around the higher insurance costs of a teen driver, there are some things you can do to reduce the pain and ensure that your budget isn’t completely overwhelmed.

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