The time has come. Your teenager is reaching the getting-his-license milestone that all parents dread. Not only are you concerned for their safety on the road, but your attention is also now drawn to your insurance rate. You fear your new driver will increase your rates to a level that will be difficult to afford. There are, however, several things you can do to help alleviate the burden of having a teen driver on your policy and get the best car insurance coverage.
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Ask for Discounts
Some individuals visit an insurance website, get a quote, and think that’s it. They’re unaware of the number of discounts insurers have that can assist with high premiums. You see some of them advertised, but you will never know the extent of what your insurance company offers until you ask. A few things you need to know: Money can be saved.
Many factors can be attributed to how much you will pay for auto insurance. Customer loyalty, your demographics, driving history, and safety equipment on your vehicle all play a part in how insurance companies will rate you. Meeting specific requirements can give you an advantage and sometimes dramatically reduce your monthly premium. Some of these discounts can include:
- Safe Driver: Remaining accident/violation free.
- Equipment devices: Anti-theft systems, -lock brakes and hybrid vehicles also fall under this category.
- Bundling: Pairing your auto insurance with your homeowners or renter’s insurance.
- Account status: Signing up for auto pay, paying your policy in full, and going to paperless statements.
Good students can receive discounts. Young drivers who also receive good grades can be eligible for a dramatic discount on their insurance. Studies have shown that a student who receives As and Bs is more likely to be a better driver than a student who receives Cs and Ds. This discount does vary by company, and in fact, may not even be offered by some. Those insurance companies who extend this discount have certain qualifications that must be met:
- The student must be younger than 25 years of age.
- Be enrolled full-time in high school or university.
- Maintain at least a B average (3.0 GPA), or on the honor roll.
- Provide continued proof of good performance.
Terms of discounts. As life goes on, situations change. You may relocate to a different state, switch jobs, purchase a different car, or change to your family dynamic. Each of these can warrant a change in your insurance rates.
- Moving can affect your premium because insurance often changes, depending on zip code.
- Switching jobs and the distance you must drive can also increase or reduce your rates.
- A newer car or additional car will have an impact on your insurance cost.
- Getting married, divorced, and having children can all change how much you pay.
Just as these changes can affect your premium, having a poor performing semester could jeopardize your good student discount. Therefore, most insurance companies regularly verify that the student is maintaining the benchmark GPA to continue their discount status. This can come in the form of a report card or a certified letter from school administration.
If a child does not qualify now, or his/her grades drop, he/she can work on them. When they do reach the minimum requirements, you can revisit the issue with the insurance company.
Keep in mind that not all insurance companies offer the same discounts, or they offer differing decreases based on that discount class. These rates can also vary by state, age, and gender.
Insurance Rates: Boys vs. Girls
Studies have shown that teenage boys are more likely to be involved in an automobile accident than female teenage drivers. According to the Insurance Institute for Highway Safety, in 2016, 66% of motor vehicle crash deaths in the age group of 13-19 were caused by males. Only 34% were attributed to female drivers. This combined total accounted for 8% of traffic fatalities for that year.
Speeding, reckless driving and night driving are all significant causes for males. T-bone accidents rate among the top issues for females. Text messaging while driving is generally equal between the two genders (49% vs. 46%). No matter the type or cause of an accident, insurance rates will be dramatically affected.
Whether male or female, an accident will affect the insurance policy in different ways. Your insurance company could do one or more of the following:
- Increase the rate of the teen’s vehicle on the policy.
- Increase the rate on a parent’s vehicle on the policy.
- Cancel the teen’s portion of the policy.
- Cancel your entire policy.
Because of these risk factors, it is imperative that you find the best rates from the get-go. This involves shopping around because not all insurance companies charge the same rates for every driver.
States with the Cheapest Rates for Teens
Where you live in the country will determine your insurance premiums. Location is one of the most significant factors when it comes to rating an individual. Those in Connecticut, New Jersey, and Oregon pay the highest rates, up near $5,000 per annual policy.
The three states that have the cheapest rates in the U.S. are:
- Ohio: Erie Insurance Company offers teens an annual policy for $812.
- Iowa: Pekin Insurance Company offers teens an annual policy for $927.
- West Virginia: Pekin Insurance Company offers teens an annual policy for $1,076.
If a teen has any accidents or moving violations, then those rates will be considerably different. Other factors to consider are the type of vehicle they drive. If they make any aftermarket additions, like rims, sound systems, or lighting enhancements, this will trigger an increased premium to cover these additions.
3 Insurance Companies with the Most Discounts
All insurance carriers offer their customers discounts, some more than others. The following three companies extend the most auto insurance discounts of the Big Five insurance companies.
Farmers offer 17 different discounts. Among those are multi-vehicle, Safe Driver, and Good Student. You can expect around a 10% discount if you apply Good Student to your policy.
2. State Farm
State Farm offers 14 discounts of its own. The company also gives good students a discount on their premiums. In addition, they provide discounts, anti-theft devices and bundling your auto policy with other policies.
GEICO is tied with Allstate, both offering 13 discounts. Among these are daytime running lights, occupational discounts, and discounts for members of the armed forces.
This list may be extensive, but not all-inclusive. Different companies can offer different discounts to their customers. This is why it is important to shop around, ask questions, and get informed about what is out there. Your unique situation could save you money in the long run.
Having your teen behind the wheel does not have to break you completely. When you have to face the daunting task of adding your child to your insurance policy, talk with your insurance agent. Have them do a policy review with you considering your current situation and thoroughly go through all aspects of your circumstances. Ask if there are any new discounts available to you and your teen driver. You may be able to find cheap car insurance, after all.