Here’s the bad news: your car insurance premium can rise 50% to 200% when you add a teen driver to your plan. Before you take the keys away form your teen and ban them from driving until they are twenty-five, consider how to make the new addition to your car insurance plan more affordable.
You can pay up to 50% less for your teen’s car insurance depending on what they drive. Safety ratings are important in lowering costs. Horsepower and high performance do nothing but increase your costs considerably. The most cost effective car would ideally be older, heavier, and paid off. You may drop collision coverage on very old or paid off cars, saving you more money.
Does your auto insurance company allow you to designate which driver uses each car? Some companies will try to designate your teen to the new or luxury car in the family, which causes your rate to skyrocket. If you can, designate your teen to the oldest car you own.
If possible, raise your deductible to save money. The ideal deductible is from $1,000 to $1,500. The deductible is what you pay only when your insurance company pays out a claim. Keeping your deductible up will pay off in a few years. You will see your savings reflected in the cost of your premium.
Let’s not leave the teens out of the fun! They can contribute to savings as well. A 3.0 GPA will be rewarded with discounts by some auto insurance companies. Teens who have good grades and are involved in community service groups, like scouts, are seen as less risky. Insurance companies love to insure the ‘less risky.’
Use these steps to better afford teen car insurance!