You can expect the many conflicting emotions you might have as your son or daughter grows old enough to drive. On one hand, it’s great to see a teen become more independent (especially when that means the end of your chauffeur duties).
But on the other hand, you may worry about whether he or she is ready to get behind the wheel. And you may also dread the significant financial strain that having an additional driver in the family can put on your budget.
Consider the following six tactics to cut costs when you have a teen driver on the road.
[See: 10 Unexpected Costs of Driving.]
1. Postpone permission to drive. Not allowing your teen to get a driver’s license for a year or two will probably be an unpopular decision. However, according to an insuranceQuotes.com study, for every birthday your teen driver celebrates, he or she becomes less expensive to insure (and probably a little more mature).
So postponing that debut behind the wheel by even one year means you’ll save money on auto insurance premiums and lessen the chances of your teen having a car accident.
Here are the national average rate increases for adding a teenage male driver to an existing auto policy, according to the insuranceQuotes study:
— 16 years old: 105 percent
— 17 years old: 95 percent
— 18 years old: 85 percent
— 19 years old: 69 percent
Rate increases for teenage females are high, but lower than for male drivers:
— 16 years old: 81 percent
— 17 years old: 72 percent
— 18 years old: 63 percent
— 19 years old: 49 percent
[See: Basic Money Lessons You (Probably) Missed in High School.]
2. Complete a driver safety course. Many insurance companies offer a discount in the range of 5 percent to 10 percent if a teen successfully completes a driver safety or defensive driving course in person or online. Class costs vary widely, from $25 to more than $500, depending on whether it’s given in-person or online.
Most driver education courses give participants a review of traffic laws, tips for avoiding accidents and respect for dangerous road situations they may encounter.
3. Report good grades. If your teen driver has good grades, be sure to report them on a regular basis to your auto insurer. Most carriers offer a good student discount that could cut your insurance bill by up to 30 percent.
To qualify, the driver must be under age 25 and a full-time high school or college student. You simply provide academic records showing your teen driver has a grade-point average of B or better, a combined 3.0 GPA or made the dean’s list or honor roll.
4. Purchase an auto club membership. If you’re not already a member of an auto club such as AAA or the Allstate Motor Club, consider joining. Benefits such as 24/7 fuel delivery, locksmith services, towing and safety tutorials can give you peace of mind with a young driver on the road. In some cases, there’s no charge to add a teen.
5. Enroll in a pay-as-you-drive insurance program. Never heard of pay-as-you-drive insurance? It’s offered by many of the nation’s largest companies and is slowly catching on.
Each insurer’s program works a little differently, but all offer discounts based on how you drive. Some companies watch multiple metrics, such as your average speed, the time of day you typically drive, how many miles you cover and how hard you hit the brakes. And some insurers monitor mileage only.
If your teen or any driver in your household enrolls, and is considered a safe or low-mileage driver, your discounts could range from 10 percent to 40 percent. Insurance companies say that any detected bad driving habits can exclude you from discounts, but won’t raise your rates.
[See: 10 Money Leaks to Shut Down Now.]
6. Shop and compare auto insurance rates. One of the most important ways you can save on a teen driver is to shop and compare insurance rates at least once a year. No two auto insurers give the same quotes because the marketplace is always changing. Plus, insurers have different business models and evaluate potential policyholders differently.
Some companies give more weight to factors such as the make and model of your car, where you live and your driving record. Others may put more emphasis on years of driving experience or your credit (in states that allow it).
Refer to your existing policy to verify your current deductibles and coverage amounts. Get at least three apples-to-apples quotes from different insurers, so you never leave any savings on the table.
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6 Ways Parents Can Cut the Cost of a Teen Driver originally appeared on usnews.com
