The cost of insuring your young or teen driver can be an eye-opening experience, with rates running as high as twice the amount paid for an older driver and sometimes higher.
Auto insurance rates are determined by the probability of a loss based on rating factors.
As many as 2,500 different factors may be used in determining an auto insurance rate quote, but they all lead to two primary loss statistics that drive the cost: the average frequency of loss and the average severity of the loss.
A loss is a claim.
Less experienced drivers, on average, have more accidents. There is a greater risk of a loss for the insurer. That’s the simple answer. Less experienced drivers also, on average, have more expensive accidents than more experienced drivers.
Some major auto insurers won’t write a new auto insurance policy for a driver, regardless of age, if that driver has less than 3 years of driving experience. While age is a rating factor, the amount of driving experience weighs on the insurance rate as well.
Fortunately, there are ways to lower the insurance cost for your teen driver.
Good Student Discounts
Many auto insurers offer discounts for good students. Typically, your teen driver will need to have A’s and B’s to qualify for this discount. Insurers may also want to see a copy of the report card and may need to see future report cards to verify that your high school or college student is still eligible for the good student discount. This discount can be sizeable. Inquire with your insurance agent if you think your student may be eligible.
Safe Driver Discounts
Some auto insurers offer safe driving courses for young drivers. Usually, these courses are available at no charge. Your teen will have to complete some training modules which create awareness of risks on the roadway and promote driving safety. If your young driver has a ticket or an accident, they may not qualify for this discount.
Discounts for Defensive Driving courses
Most Auto insurers offer a discount for drivers who have completed an approved defensive driving course. This discount isn’t Limited two young drivers so the entire family may want to take advantage of the savings that are available.
A Defensive Driving course costs about $20 to $30 and can even be completed online. The initial cost of the course is often offset by your discount within the first six months of your policy. The discount for a defensive driving course is usually good for 3 years, so you’ll continue to save money until you need to renew your Defensive Driving certificate. While you may need to pay a small amount for the Defensive Driving course initially and to renew, overall, you will save money with this discount.
Remember, with a young or a teen driver, the insurance rate is higher. Any percentage-based discounts, like those detailed above, will create larger dollar savings for a younger driver than for a more experienced driver.
If your insurer offers a Defensive Driving discount, others in the household may be eligible for the discount as well, multiplying your savings opportunity.
Check The Vehicle Assignments on Your Policy
Is your teen driver assigned to the proper vehicle? Some households have an older car or truck that young drivers can use. The cost of adding a young driver to an older vehicle is often lower than if you assign that same driver to a newer, more expensive vehicle.
Review your policy to see who is assigned to which vehicle, and determine if that vehicle assignment is accurate. Drivers can be inadvertently switched from one vehicle to another when making policy changes such as adding a car or removing a car. Inaccurate driver assignments can cost you money in the form of higher rates.
Low Mileage Use Discounts
If the vehicle your teen drives isn’t driven many miles annually, that vehicle may be eligible for a low mileage use discount. Insurance rates are a reflection of risk, and the less vehicle is driven, the less risk exists for a loss. You will have to provide your odometer reading to your insurer at regular intervals. Your insurer will use the numbers provided to calculate the annual mileage driven and determine if you qualify for the discount.
Discounts Through Driving Apps
Many insurers now provide another way to save money based on your driving habits. Most of the insurers who offer this type of discount utilize a smartphone app to monitor your driving.
The data they collect through the smartphone app will vary, but relevant data will include rate of speed, hard braking events, sudden swerves, and time of day that the vehicle is driven.
Some insurers will also monitor your mileage usage through these apps.
If this sounds like big brother is watching — that’s because big brother is watching. While insurance companies that utilize this technology to offer a discount are collecting data about your driving habits, they know less about you than online advertisers, your favorite search engine, your cell phone provider, or your internet service provider.
Not everyone is comfortable providing their personal data to yet another corporation, but it is an additional discount you can utilize if you choose and if the discount is offered by your insurer.
This discount isn’t exclusive to teen or young drivers and can be utilized by other members of the household.
By taking advantage of one of these discounts, or several of them used together, insuring your teen or young driver can be a much less expensive venture.
Check with your insurance agent or your insurer to find out which discounts you may be eligible to receive, and also review your policy for accuracy. There may be some coverages you’d like to discuss further or other opportunities to save on your auto insurance policy.