Earning a driverâ€™s license is a major milestone for a teen. It can also be a scary time for parents. Not only are their kids taking a major step toward adulthood, but the increase in auto insurance rates that come with adding a teen driver can cripple a household budget.
Insuring a teen driver can add hundreds of dollars â€” or more â€” to your annual insurance premiums. Thankfully, there are a few ways that you can keep the expenses manageable, if you do your research and work with your teen.
1. Choose the Right Vehicle
Your teen probably has his or her heart set on a â€œcoolâ€ car that will be the envy of their friends. While you might not want to crush their dreams of tooling around town in a zippy set of wheels, the reality is that the more expensive the vehicle and the more powerful the engine, the more it costs to insure. And when the primary driver is young and inexperienced? Those costs go up even more.
If your teen will have his or her own car, check out the IIHSâ€™ list of vehicles rated by insurance losses. Those vehicles with the highest insurance losses will be the most expensive to cover. If you are adding your teen as a driver to your policy, assign him or her to the least expensive vehicle to insure. It might be the â€œboringâ€ car, but the insurance bill wonâ€™t break the bank.
2. Compare Costs
You might be tempted to consider getting your teen his or her own insurance policy, instead of adding a new driver to your existing coverage. This is almost always going to be the more expensive option. Even if your teen has his or her own car, adding overage to your existing policy is most likely going to cost less, since most insurers offer hefty discounts when customers insure several vehicles at once.
If you purchase an â€œumbrellaâ€ policy that covers your home, business, boat, or other valuable property, the discounts become even more pronounced. It doesnâ€™t hurt to compare auto insurance options, but youâ€™ll probably find that adding your new driver is the least expensive option.
3. Require Driver Education and Training
While Alberta law doesnâ€™t require that teens complete a driver education program in order to earn their licenses, taking a driving class can actually help lower insurance rates in addition to building the skills necessary to be a safe driver. Ask if your insurance company offers driver training or skills development classes. These classes often include both in-class time and simulations designed to teach teens defensive driving skills, and can result in an insurance discount of up to 25 percent.
4. Encourage Good Grades
You probably already want your kids to do well in school. Well, hereâ€™s another reason to encourage them to hit the books: Earning high marks can help lower car insurance costs. Several insurers offer programs in which drivers are rewarded for their grades with a discount on coverage; for example, one company offers up to a 25 percent discount for maintaining at least a â€œBâ€ average.
5. Enforce Driving Rules
Albertaâ€™s graduated driverâ€™s licensing regulations are designed to help new drivers learn the rules of the road and the basics of driving without many of the distractions that cause accidents and violations. Violations and suspensions not only lengthen the amount of time required to become a fully licensed driver, but also drive up the cost of auto insurance. Much like with adults, the cleaner your teenâ€™s driving record, the less expensive the coverage will be.
Therefore, parents who want to save money on their policies need to be strict when it comes to driving rules, and enforce the restrictions that the government places on drivers. This means not allowing your child to drive on a learnerâ€™s license without another licensed driver in the car, and reminding him or her of the rules of a probationary license, including curfews and limits on the number of people in the car.
Remind your teen about the dangers of cellphones and driving, as well as the effects of alcohol. Consider drawing up a written agreement with your child in which they agree to follow the rules, or face consequences, including the removal of all driving privileges.
Above all, remember that it is important to insure your teen driver. Even if he or she will only drive occasionally, itâ€™s less expensive to invest in an insurance policy than to cover damage or liability in the event of an accident. Just explore your options, and you can find an affordable rate that will give you peace of mind.