New Drivers: The Cost of Auto Insurance

So, your teenager just turned 16, passed driver’s ed and has just come out of the driver’s license office with a huge smile on her face because she just passed her driving test but you don’t have a smile. You aren’t nearly as thrilled as she is because now you have to add a sixteen year old to your auto insurance policy and you just know those rates are going to skyrocket!

This is definitely an area of concern and each insurance company goes about new drivers a different way. One question that many parents with new drivers have is whether or not the teenager should just be added as a driver on the parent’s policy of if the child should have his or her own policy, which is a very fair question. Below we’ll explore the answers to that, rate increases and how you can reduce the costs that your teenager will bring to an auto insurance policy.

Rate Increases

The amount that it costs to add your teenager to an auto insurance policy can vary depending on a number of factors; however, you can expect the rate to increase at least a few hundred dollars and more than $1,000 yearly. You can also expect the rate to stay the same until he or she reaches a certain age for rates to drop, which is usually 21-22 for women and 25 for men since women are considered less of a risk on the road than men. With that being said, if you have a 16-year-old son then you should expect higher insurance rates than you would have if you were insuring a16-year-old daughter. Depending on which way you want to look at it, you can blame it on speeding and racing or just simply testosterone.

The type of vehicle that you are insuring for your teenager will significantly affect your auto insurance rates. For example, if your daughter will be driving a Chevrolet Cavalier then you can expect more affordable insurance rates than when you compare rates on a Ford Mustang. Sometimes the difference between the two types of vehicles mentioned (a safer, accommodating car vs. a sports car) could be several hundred dollars not necessarily per premium but per month.

Add to My Policy or Start Their Own?

Usually, the cost of insurance is going to be higher if your teenager starts his or her own policy; however, they do have the advantage of building a solid reputation with an insurance company early on. If you have your teenager pay his or her own insurance bill then this could also help teach them about budgeting, handling money, etc.

On the other end of the spectrum, you can add several discounts to your auto insurance policy by adding your teenager and their vehicle to your policy such as the multi-vehicle discount and the multi-driver discount in certain circumstances, etc.

Reducing Policy Costs

Aside from the multi-vehicle and multi-driver discounts, you can take advantage of good student discounts if your student can maintain at least a B average consistently. In addition, after several months have passed, if your child has maintained a clean driving record, the good driver discount may come into play. Raising your deductible can also benefit in lower insurance premiums but make sure you can afford to pay the deductible in the event an accident occurs.