15 Feb Safety and Cutting Costs for Teen Drivers
When it comes to insurance rates, teen drivers usually pay the most. They are inexperienced and statistically have more claims. Therefore – their rates reflect it. The good news is – there are things you can do to lower the cost of insurance.
First and foremost – shop several companies! At Harbor/Brenn Insurance we have 8 companies we check for rates and I can tell you that the costs vary quite a bit – by several hundred – sometimes thousands of dollars.
Second, encourage your kids to get good grades! Many companies offer a 10% or better “good student discount” for kids with a B average or better and a clear driving record – no tickets/no accidents.
Thirdly, check rates for having the kids as an “occasional” driver on the policy or having them as a primary driver – perhaps on an older but safe car that you don’t need to insure for damage. Collision coverage is often one of the more expensive costs in the premium for young drivers.
Lastly, check out some of the new discounts companies are offering for monitoring devices. One of our companies, Auto-Owners, offers a discount for having a “teen driver monitoring device” on the vehicle. If the operator is between 16 and 20 years of age and has a global positioning system (GPS) unit attached to the vehicle they usually drive and it’s able to locate the vehicle and have the ability to know when the teen driver has exceeded a given speed limit – they will allow the discount. Verification of the GPS unit will be necessary.
Another great help you can give your kids is to work on establishing credit for them when they are young. Many people don’t know that insurance rates include an “insurance score” that can lower the cost in some cases by up to 54%. That insurance score is partially determined by factors based on your credit – and kids typically don’t have any when they are young – so they’ll pay more for their insurance.
A mom I insure was very wise and got her kid a checking account and started establishing his credit when he was still in high school. When he got his first car in his name and had to get his own first auto policy, he was in the best rate category for his insurance score and saved himself over $900 a year on his auto insurance compared to a “no score” factor that most kids at his age receive. When your kids are driving your cars – titled to you – not them – they are under your insurance score rate. It’s your policy – your score. (and yes – we do check both mom and dad to make sure whoever has the best score is the one that’s used)
It’s when they get their own cars – titled to them – and must be on their own new policy that the unpleasant surprise of a low insurance score and higher rate can hit them in the pocket book! (also remember the first rule of insurance everyone – insurance 101 – you can’t insure something you don’t own! Don’t put someone else’s car on your policy – you got no coverage and neither do they – it invalidates the contract.)
Insurance scores have been used by companies for about 15 years or more now – but I’m amazed at how many people still don’t know about it or how it affects their premiums for insurance. Check your credit – make sure it’s accurate – and work on improving it if you can as it will make a difference. Get your kids credit started early – it will save them HUGE money when they go out on their own. Every company rates it differently too – so check your options with several companies. Give me a call – I’ve got 8 I can check for you!
My last piece of advice – click this link to get a copy of the Parent-Teen Driving-Agreement and sign it with your kids. Let them know that no matter what – you will come get them to keep them safe – than have them at risk for any reason. For a parents piece of mind as well as the kid knowing that they matter most – it’s a very easy piece of paper that should be part of every kid getting their driver’s license. Just my humble opinion of course!
Jenny Brower, CPIA
P.S. My co-worker Amy has taught insurance skills at the schools – we do a good job communicating to kids about insurance here. If you would like us to “counsel” your kids about how insurance works and how best to stay safe on the roads – we would be happy to meet with you here at our office!