Real Talk About Insuring Your Kid’s First Car
Knowing What You Need
Your teen just passed their driving test, and you couldn't be prouder. All of their studying, practice, and nerve-wracking effort has paid off. And speaking of paid, you already have a car picked out for them and ready to go.
But the insurance? That's another matter. It might be tempting to put this off as long as possible, but in reality, knowing how a teen with a new (to them) car will affect your policy is crucial for being prepared for both their time on the road and how it may affect your wallet.
Let's look over what you may need to think about when it comes to your new driver being behind the wheel.
Who Owns the Car? And Pays for Coverage?
If the car is titled in your name, the easiest and most practical way to insure it is to add it to your existing auto policy. In this scenario, your teen is a driver on your policy. Having your child and the new vehicle on your policy increases the chances of you receiving discounts such as multi-car, good driver, and long-term customer.
If the car is titled in your teen's name, however, you may need to put them on their own auto policy. While this option is usually more expensive, it might be chosen to teach responsibility, to keep family finances separate, or if the teen has a poor driving record and is negatively impacting the family policy.
Why Are Teens So Expensive to Insure?
It's not personal, it's statistical. Teen drivers are more likely to be involved in accidents, and that means insurance companies see them as higher risk. According to the CDC, teens 16-19 are three times more likely to be in a deadly accident than drivers 20 years old and over. That sobering statistic shows that nothing helps someone drive safely on the road more than experience.
Given that teens are more likely to be in an accident, insurers know they are more likely to pay claims. Not only that, but with the higher risk of accidents, especially serious ones, the claims they may pay out could be very high, especially if someone were unfortunately injured.
We may not like it, but until those statistics change, teens will remain more expensive to insure.
Strategies to Save
There are ways that you can try to offset the costs of a new teen, whether they're on your policy or have one of their own. One method that we have hinted at before is to use discounts. Some companies offer a Good Student discount for high grades. If the rest of the family has a clean driving record, that can help lower the costs. And, of course, as they age and gain experience, the price will drop as long as they stay accident-free.
Another idea is to pick the right car. A bright red, brand-new sports car or luxury SUV may not be the best way to save. Instead, think mid-sized sedans, high-safety-rated vehicles, and older cars and trucks. While this probably won't win you any Favorite Parent awards, it may help ease the burden on your wallet.
But the best way is simple: talk to your agent. Every person has a unique situation and a unique teen in their family. The only way to truly give you the help you need is to know you and your teen so that a knowledgeable agent can guide you toward the best policy, vehicle, and discounts. It is also a good idea to have your teen meet with the agent to learn firsthand how their responsibility can help everyone around them.
This content is from sources believed to be accurate and is for general information only, not tax or legal advice. Consult appropriate professionals for your individual situation. Copyright FMG Suite.
