When should you insure your teenaged driver?

Having a new 16-year-old is a big deal for parents. It’s also a big deal for your car insurance company.

Leading up to the time that your son or daughter turns sixteen it’s a good idea to begin laying the groundwork for some important changes to your insurance. Insurance rates for teen drivers are considerably more expensive than the rates you’ve been accustomed to as the parent. Forecasting what the changes might look like will help you become better prepared for their successful road-test.

Things to consider

Does my teen want to get licensed?
Once a license is issued for a resident of the household, your carrier will require that they now be listed on your car insurance policy. Even if your teen is not the primary driver of any of the vehicles you have insured, he/she will still have to be listed. This change will increase your car insurance premium. Therefore, if your son/daughter is not eager to get licensed, you could avoid all of this…for a bit.

Will my licensed teen have a dedicated car to drive?
If you currently have more vehicles in the household than you have licensed drivers, then prepare for that odd vehicle to be assigned to your new driver. If there is an available car your teen will become the primary driver of it in the eyes of your carrier. This will have an even bigger impact on the premium compared to the previous point.

Is it better for my teen to just get his own policy?
This depends on your definition of “better”. It would be better for you as a parent since any losses (accidents/claims) would not negatively impact your insurance. On the other hand, your teen’s independent policy would be infinitely more expensive on his/her own. Your teen is benefiting from your insurance history. Your age, marital status, claims history and policy discounts, all help to aid in the reduced premium your teen will benefit from by being added to your policy. On their own, they not only lose those benefits, but are subjected to a reduced number of companies willing to offer them a policy. Many carriers will not insure newly licensed drivers on their own policies. The ones that do, charge quite a bit.

Can I add a car that my teen bought themselves?
If your teen purchased a vehicle on their own, meaning it is titled in their own name, they will need to get their own separate policy. This happens a lot with older teens who have established a little credit history and finance or lease a used or new car. A vehicle must be registered to the same person who has taken the loan. New York vehicle registration requires proof of insurance. That insurance must be in the name of the person registering the vehicle. If you are hoping to avoid having your teen get his/her own policy, you’ll want to ensure that any car they have is titled and registered to you.

What could happen if I didn’t tell my insurance company?
Your existing carrier might never find out that you now have another licensed driver in the household. Since it is the responsibility of the insured (you) to make it known to them or your agent, it’s possible they might not become aware. Tread cautiously though. Should your teen driver be involved in an accident, regardless of fault, your insurance company will then find out. They will run a motor vehicle report, which will determine the original date of licensure. At their discretion they will charge for back premium, otherwise known as “premium avoidance”, and very likely non-renew your policy. When seeking new insurance afterward, you will likely be asked if any carrier has ever cancelled or non-renewed an insurance policy for you. Having this in your history could cause problems when looking for a new carrier. By ensuring your teen is added to the policy, you help to establish what’s known as “insurance history”. When the time comes to get his/her own insurance policy, they will receive better rates and opportunities with more carriers if they have a longer insurance history.

Is there anything I can do to reduce this new expense?
While you’ll still experience a significant increase in insurance costs, there are some opportunities that could reduce the price. Options will vary from company to company, but some of the most common ones include:

– Driver’s Training – This discount applies when a teen driver completes a dedicated driver’s training program. This is typically done through a driving school or academy. The discount can stick around from 3-5 years depending on the insurance carrier.

– Good Student – Many carriers will apply a “Good Student” discount for drivers on the policy who maintain a “B” average. This can extend to college aged students as well. Typically, the discount becomes unavailable after the driver turns 25.

– Defensive Driver Course – This discount can be very helpful if your teen is going to have a car assigned to only themselves. This is a specific 6-hour course, and it is not the same as the 5-hour course your teen took to obtain her license. This course requires the driver to attend an in-person class or complete it online. The cost of the course usually runs at around $25.00, and the discount is good for 36-months. After that period, they can take it again! Note: This discount is available to any driver assigned to a vehicle on your policy. You can take it too if you’d like!

– Additional options – Some carriers have specific module type programs that your teen driver can complete. One such option is “Teen Smart”. Be careful here as these can be costly, and not move with your teen if you decide to change insurance carriers.

Knowing what to expect with your insurance can play a huge role in deciding on the best steps for the licensing of your teen. This can eliminate surprises as well as help educate your teen driver as to the extent of costs and responsibilities that go into having a driver’s license. If you’ve read this far, you’re better prepared than most!

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