It’s
part of becoming independent: Most teens reaching driving age want their own
vehicle to drive. Of course you will have to pay for gas and other costs, and
probably for the car itself; but have you thought about insurance costs?
Teenagers
just learning to drive have the highest insurance rates, much higher than
experienced drivers pay. And insurance rates for teenage boys are significantly
higher than for teenage girls. These rates are based on accident risks; and
younger, less experienced drivers are much more likely to cause an accident
than experienced adult drivers.
So how
can you minimize your car insurance costs and drive more safely?
Work
with your parent(s) or guardian(s) to reduce costs. Adding you to their auto
insurance policy will likely be less expensive for you than buying your own
policy. Adding a teenage driver to their insurance policy will, of course,
raise their own rates, and might nearly double their own costs. You and your
family will need to compare rates from various insurance companies and do the
math to find your most economical option. Having all of your insurance from the
same company would be best, especially if your parents have been with the same
insurer for years.
Despite
the stiff rates, about 43 percent of parents give their teens a car as soon as
they are licensed to drive. Teen drivers can be costly to insure, especially
when they are not earning additional income for the household. So your parents
might well ask: How important is it that you begin driving now? In fact, recent
news stories show that many of today’s teens wait longer to begin driving than
previous generations did. Could there be a reason for this?
If you do
not need transportation to work, you may want to reconsider whether you need to
drive yet. Driving a car may best be put off until later when the insurance will
be less expensive. Just waiting until Age 25 will reduce the insurance bill
significantly. However, if you really need to begin driving now, there are
other ways to soften the blow.
Newer
cars tend to be involved in fewer accidents than older models because they have
more standard safety features, such as assisted
steering, sensors, or backup cameras. Buying a
newer, safer car may lower your insurance rate as insurance companies look
favorably upon these features. If your car is already a recent model, make sure
that your insurance company is aware of any safety features.
If you
decide against getting a newer car, you can raise the comprehensive or
collision deductible. Raising the deducible to at least $1,000 will lower the
monthly premiums. However, it will also make it more expensive to file a claim.
This may not affect you if you are a very careful driver, but try to save more
money in an emergency savings account in case of an accident. Paying for
damages yourself when you are able will help you gain a claims-free discount
and keep you from becoming a problem case for your insurer.
Getting
good grades can also reduce the cost of car insurance. Many auto insurance
companies provide discounts to students who maintain at least a B average.
Inquire whether your insurer offers such a discount. If they do, be sure to
keep them updated with your latest GPA so you can continue to receive the lower
rate.
Ask
your insurer about all discounts for teenage drivers, as you might be able to
save money by taking a driver-safety program.
READERS, what do you think?
What factors
make teen drivers expensive to insure?
Would
you delay driving until college if it meant a significant savings for your
family?
References:
Hill,
C. (2014, July 17). Car Insurance Rates Rise 79% When You Add a 16-year-old Driver.
MarketWatch. Retrieved from http://www.marketwatch.com/story/car-insurance-rates-rise-79-when-you-add-a-16-year-old-driver-2014-07-17.
Lankford,
K. (2010, February 1). 8 Ways to Cut Insurance Costs for Teen Drivers. Kiplinger. Retrieved from http://www.kiplinger.com/article/insurance/T004-C001-S001-8-ways-to-cut-insurance-costs-for-teen-drivers.html.
