For a teenager, there really isn’t a greater day than getting your driver’s license. I remember my excitement- and the thrill when my folks handed over the keys. Then I promptly ran into my folks’ garage door. With my MOM in the car.
Oh yeah, this could have been so much worse. But it illustrates a great point- the combo of inexperience, distraction & nerves on the part of teenage drivers are the perfect storm for an accident. My agency, Alan Galvez Insurance, works extremely hard to educate kids on the dangers of driving- you can read more about it in a prior post.
But I got to thinking recently- why don’t we educate parents more about the factors that determine a teenager’s insurance premium? What to look for when car shopping for your teen? We do great with educating the kids, but since the parents are normally responsible for paying, shouldn’t they be better informed in advance? Wouldn’t that make budgeting a lot easier?
So parents this one’s for you- so you’re better prepared for the financial impact that a teenage driver has on your bank account.
Many insurance companies will allow teenage drivers with only a temporary permit to be listed as drivers, but not charge premium until they have a full-fledged license
Imagine buying a few extra months of not having to pay premium for your kid to drive. Would that help your budget? In Ohio, 15 1/2 is the minimum age to get a learner’s permit. The restrictions are very substantial though (limitation on number of passengers, no driving after a certain time, etc.), so several of our companies have decided to forgo charging premium when drivers are in the permit stage. So if you’ve been having nightmares about the cost of insurance for your teenager, ask your insurance agent if your company has a similar provision.
Kids rated as occasional operators are usually not as expensive as those that are rated as principal operators.
Here’s the trick though- insurance companies have rules for rating teenage drivers on vehicles. An example:
The Jones family has 3 drivers, Dad, Mom & Junior. They also have 3 vehicles. An equal number of vehicles and drivers means each person is rated as a principal operator on the vehicle he or she operates most often.
What if Mr. Jones sells a car? Then the rules usually allow you to take Junior and assign him as an occasional operator to one of the remaining vehicles. The theory is that 3 people can’t all be driving 2 cars at the same time. Someone’s sitting somewhere.
If cost is the overriding factor, then perhaps it may be more economical for Junior to go without his own vehicle.
And piggy backing off this……
Yes, the type of vehicle your kid drives really does make a difference on your premium
Some of you may be saying, “Well duh, Carrie. I knew that.” But you may not know this…..
The cost for the physical damage portion (commonly referred to as comprehensive and collision) of an auto policy can often be greater than the liability. Insurance companies use rating symbols to calculate the cost to insure a particular vehicle (these symbols have generally been standardized within the industry). The higher the symbol, the more expensive the premium.
Some examples of vehicles with relatively low symbols (meaning less expensive to insure):
Keep in mind I’m making this list while I flip through my symbol book, but it should give you a pretty decent idea of the type of vehicle that won’t require you to sell a kidney just for the insurance.
- Buick LaCrosse (non 4wheel or all wheel drive version)
- Chevrolet Cruze or Impala
- Ford Focus, Taurus or Edge (non Sport version)
- Honda Accord EX or SE (4 dr), Civic DX (4 dr)or CR-V
- Hyundai Sonata GLS
- Jeep Compass, Liberty, Patriot, Wrangler
- Subaru Legacy 2.5 AWD and Outback 2.5 AWD
- Non 4wheel drive pick up truck, regular cab, 1/2 ton
The Good Student discount can save you some serious coin
Rule of thumb- if your kid gets a 3.0 or better GPA in school, you could probably save between $75-$100 every six months. If your kid is contributing any portion of the premium, this is added incentive to get good grades.
If your kids are going away to college, seriously consider NOT letting them take a vehicle
With most of our companies, if a kid is at a college over 100 miles from home, with NO vehicle, then there’s a pretty sizeable discount offered. In fact, they’re often rated as married, which gets one of the lowest rates. Again, if cost is a consideration, this is just another way to give your cash flow a boost. Ask your company if this is an option.
Clear as mud? Anything I missed or you want to add to this list? Questions about your situation? Fire away in the comments……
And if you dig what I’m shelling out, please pretend you’re in kindergarten again and SHARE 🙂