So your little bundle of joy is now a teenager who passed their drivers test, and they are itching to get behind the wheel...alone! Before you let them hit the nation’s highways, you have to add them to your auto insurance policy. Here's some help that will hopefully make the addition of your new driver less of a financial burden on you, and more of a time to celebrate this milestone in your child’s life.
Good grades count all around--even in car insurance. A large number of companies offer discounts for youthful drivers with a B or better grade point average. However, just because your high school student is on the honor roll, doesn’t mean he or she will be a good driver. Good grades is a possible indicator to insurance companies that the student might be more responsible on the road compared to those who don’t take school seriously, but good grades in no way a guarantees a good driver.
If you have been with same company since you were a young adult, this is the time to explore. Don’t do it alone! Independent insurance agents work with multiple companies and can give you objective advice about which company would be best for your situation. Some companies don’t want inexperienced drivers, while others welcome the potential to gain multiple lifetime clients with one policy. An independent agent can help you make the right decision for your family.
Usually there is a credit for taking an accredited driver education class. Sometimes the discount is over 10%. That depends on the company used. In addition to AAA, there are a number of excellent local driving schools offering classroom and road instruction. Some of them even will get the students tested. Saving you and your kid a trip to the local motor vehicle office. A note-make sure you get the passing certificate. A good number of insurance companies want proof that your child actually passed the class.
If you are going to shop companies, remember, your credit score will most likely be taken into account when determining the premium you will pay. Credit score cannot be more than a certain percentage of the premium decision in an insurance company’s rate calculation, but a bad credit score will hurt you. Also, when your credit score is pulled for insurance purposes, it does not affect your credit.
If you have a college degree (doesn’t count with all companies), then chances are your premium will be less. While a 4-year degree will help you more than a 2-year, a 2-year degree still counts as graduating from college.
The best way to keep your insurance premium down is to make sure that your child does not own her own car. I have seen premiums double when a teenager is made the principle driver of a car. In some cases, your child is getting licensed because you need that 3rd driver to help with the chauffeuring, and you have a dedicated car for them to drive. If that is the case, see if you can arrange for the highest rated (priced) driver--your child--to be assigned to the lowest rated vehicle. The more preferred insurance companies will allow the agent to assign the drivers to the cars they actually drive. There are other companies that automatically assign the highest rated driver to the highest rated vehicle, which causes the rate on that policy to dramatically increase.
When your newly licensed driver is looking for a job, please note that a personal auto policy will not cover you for commercial ventures such as newspaper or pizza delivery. While this is rare, it’s worth noting: you also can’t use the car as a for-profit taxi service. However, a friend chipping in for expenses is not considered “for profit.”
A DUI conviction will get your child 5 years of surcharges. Additionally, even if they are simply in a car and drinking (and not the one driving), due to zero tolerance on underage drinking, they may be at risk for still getting a DUI charge. Of course the laws vary by state. Drinking and driving--no matter one’s age--is a bad situation for everyone nearby, and always against the law.
Receive too many moving violations and you may find that your company will not renew your policy because your family is too great a risk. As an independent agency, people come to us when their insurance company thinks they have too many violations. We can find them insurance, but it’s not cheap! Please tell your teen: keep the speed down and watch the road.
If your kids are like mine, their phone has now permanently been attached to their hand. You must make sure they understand that their phone has to be removed the moment they turn the key. Even experienced drivers can’t multi-task with a smartphone and keep the car heading straight. Almost every state has “distracted driving” laws. That text message can wait until they have come to a safe and complete stop out of traffic.
When your child does become licensed, your premium will increase no matter who insured you. It does pay to shop around. The best way to do that is to contact an independent insurance agent. They have access to multiple companies and make sure you are getting the best coverage for your budget.
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Photo Credits: Teen Driver © State Farm - Flickr.com; Check Man, Cross Man and Jump Man © ioannis kounadeas - Fotolia.com