Gaining a driver’s license is an exciting rite of passage for teenagers, but it also can cause concern over accidents and insurance rate hikes. New drivers are twice as likely to be involved in fatal accidents. Insuring teen drivers can be pricey, so it is important for families to discuss expectations and budgeting before putting their teenager behind the wheel.
The first step is setting up a financial plan. Who will pay for insurance, gas, repairs, tickets or accidents? Make your child’s financial responsibilities very clear. Many parents opt to purchase their child’s first car if the driver is responsible for gas and repairs. Every family will have a different system that works for them.
When shopping for insurance, do your homework. Oftentimes it is less expensive for families to add their teen driver onto their own plan rather than purchasing a separate insurance policy. There are also a variety of discounts than can be offered for teen drivers, including safe driving discounts and discounts for a high GPA or honor roll status.
Some insurance companies also offer monitoring devices that transmit a signal to parents when the car is speeding, seatbelts are not used or when hard braking is used. Although these systems may be costly, some insurance companies offer up to 15% discounts when there is a teen monitoring system in place.
Make sure you are familiar with the terms of your insurance policy. Some companies will charge a penalty fee if a young driver damages a car that they are not assigned. It can be most cost efficient to assign your teen driver the least valuable car. Insurance companies will reduce rates if new drivers are driving less expensive and less fast.
Increasing your deductible can also save you a considerable amount of money on premiums. Of course, be sure to have an emergency fund in place in the event that someone in your family has an accident.
It is important to revisit these decisions when your child transitions to college. Many insurance companies will reduce rates if your child goes to school over 100 miles away and does not bring a car on campus.
Stephanie Wilmsmeyer is a State Farm insurance agent in Columbia, Mo, specializing in auto insurance. For more info on how Stephanie Wilmsmeyer’s auto insurance expertise can help you find the right policy for you, follow her on Google+.