Thursday, December 27, 2012

Tips for Saving Money with Teenage Drivers

By Matt Fleming

Your kid has finally reached the age where they can start driving and you are excited because you won’t have to drive them to soccer practice, take them to a friend’s house, or pick them up from school anymore. What you are probably dreading is that you have to add them to your auto insurance policy and your rates are going up.. a lot (double). Have no fear, there are several things you can do to keep your premiums low and still afford insurance for the kids to drive.

Good Grades

Make sure Junior has at least a 3.0 GPA or “B” average in school. Most insurance companies offer a “Good Student Discount” which is a huge discount on your premium. This can also be a motivation for your kids to keep their grades up in order for them to have driving privileges, “if you don’t have a 3.0 GPA or better you don’t drive”. 

Driver’s Training

If they take driver’s education in school or any other training where they received a certificate of completion then this can also result in a discount. If they were not offered driver’s ED in school then send them to a driving school or have them complete an online course, it’s fast, easy, and cheap. Any school (online or classroom) will work as long as you get a Certificate of Completion as proof for the insurance company. There's also an interesting study published by the Arizona DOT that discusses the effects of driver education on traffic crashes and violations (.pdf download).

Should I Buy Them Their Own Vehicle?

I don’t want to stop you from buying your teenager a vehicle if you need an extra one or you don’t want them to use yours. Unfortunately, if you have the same ratio of vehicles to drivers and one of those drivers is a youthful driver then that vehicle will probably be the most expensive vehicle on the policy. Even if it’s liability only on a 1986 Volvo 740SLE (baby blue) which is what I drove in high school and the parents have nicer cars with full coverage. If there are 3 drivers and two cars then the insurance company will have the kid listed as an occasional driver or a non principal driver which will keep costs down. I’ve seen companies rate policies that have the same ratio of cars to drivers rate the youngest driver on the highest rated vehicle. Example, you have a 2007 BMW 528i, 2007 Toyota Camry, and a 91 Honda Civic. They will rate Junior on the BMW which is the highest rated car. So if you are contemplating buying them a car because you don’t want them driving your car and it will save you money because they will be on the “junker” think again.

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