New Teen Driver? 5 Money-Saving Tips

I have a new teen driver - what does that mean for my insurance?

October 7, 2020
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Written byCharlie WendlandHead of Claims

As parents, your teen’s Sweet 16 is a huge milestone! However, it brings a host of new responsibilities for your child and worries for you. While you trust your child is prepared to hit the road, whether it be driving to their first job or to school each morning, being unprepared for the unknown could cost more than you’re ready to spend. You should expect auto insurance premiums to increase with a teen driver, but waiting to explore your options until the day your teen obtains their driver’s permit, receives their license, or buys their first car can cost you in unnecessary ways. 

Here's what you can do now to make sure you don’t pay more than necessary for auto insurance:

Know Your Timeline

How soon will your teen need to be added to your policy? Will they be added when they receive their learner’s permit or after they receive their license? Generally speaking, children do not need to be added until their license is obtained. While they are driving with a permit they are covered under their parents policy. Since state insurance laws vary, speak with a knowledgeable agent who can explain your state's requirements. You should also check your current auto insurance carrier’s rules.

Reflect on Your Last Vehicle Purchase

Prior auto insurance research likely taught you that vehicle age and model affect insurance rates. For example, the same make and model car will cost more to insure if it is 5 years old vs. 10-years old. But the original cost of the car factors into the equation as well. A 6 year old Mercedes may actually cost more to insure than a 4 year old Honda. For example, a late-model sports car will have premiums higher than a 10-year-old SUV. You may also remember that lower premiums are available when you increase the collision and/or comprehensive deductible.

Select a Vehicle to Insure 

Consider whether your teen will drive one vehicle in the household or have the freedom to drive them all. Generally, adding your teen to your car insurance policy as a primary or secondary driver will increase the rates for all vehicles on the policy. As many factors play into the overall pricing of your insurance, you may want to quote out examples of different vehicles for your teen if you are buying a new car. If they will be sharing the cars already in the household, choose the car they will drive most often to have them added as a secondary driver.

Task Your Teen with Responsibility

Your new driver doesn’t need to pay the monthly insurance premium to bear responsibility for the cost. While you take the lead in locating potential insurance carriers, they can search online for benefits and discounts companies offer to policyholders. Your teen will learn that they can help keep costs down with good driving habits, good grades, and by completing a driver education program. 

Besides making smart decisions on the road and in the classroom, your teen might also help lower premiums by watching driving safety webisodes or signing parent-teen safe driver agreements. When teens take an active role, they’ll be able to see first-hand how their behaviors can influence household finances. Check your state guidelines or current carrier’s optional discounts if classes like this are taken.

Request an Insurance Quote

If you’ve shopped for auto insurance before, you already know that insurance prices vary among companies. Adding a new driver to your policy will likely increase your premiums regardless of their age. However, teenagers often cost more since they are at greater risk for accidents due to their inexperience and tendency to engage in distracted driving. As you shop rates, pay special attention to available discounts your teen found online. They can help offset some of the increased costs of adding a teen driver to your policy.

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