Earning a driver's license is a very exciting time for a teenager. Along with purchasing your first car, it is a rite of passage to acquire a driver's license to drive your car around town. It is equally nerve-wracking for the teenager's parents dealing not only with teaching the teenager how to drive safely and defensively, but also the cost of insuring the teenager. One thing that is overlooked is the price of insuring a teenage driver. Teenagers are one of the most risky groups of drivers to insure. Auto insurance for a teenager can be very expensive. A teenager purchasing his or her own policy is usually the most expensive way of insuring. In fact, most teenagers and parents find that is more economical to be placed on their parents' policy to keep the rates lower.
Auto Insurance is Expensive for Teenagers Because They Have No Driving Experience
Teenagers have no driving experience beyond practicing for the road test. Insurance companies rely on statistics to set their insurance rates. Statistics show that teenagers are more prone to get into an accident than someone with 5, 10, 20 or more years of driving experience. Of course, there are always exceptions and some younger drivers are a lot more responsible. Some teenagers will go their entire lives without being in an accident. Some will cause several serious accidents before the age of 20. Overall though, the data shows that younger drivers are more reckless and more likely to get into an accident. Like all insurance plans, insurance companies set rates based on current statistics. We were all young once and think we are immortal behind the wheel, right?
We all have to start driving at some age and getting auto insurance is part of the deal. Student drivers are covered under their parents' insurance since they are past of the household. Once they get their license, they need to be added to the parents' insurance policy. The truth is that insurance rates might not be as high as you think. Yes, if you stay on your parent's policy, their premium is guaranteed to increase. However, in general, it is cheaper to do that than a teenager purchasing his or her own policy.
The Type of Car Matters
The type and year of car does matter. If you are trying to insure a brand new luxury SUV with full coverage (liability, comprehensive, and collision), you will pay a lot. If you have a loan on your car, you are required to purchase full coverage to fulfill your loan obligation to the lienholder. The truth is that many teenagers drive older cars with no loans. You might be able to lower insurance costs by dropping comprehensive and collision entirely and just purchasing the mandatory liability coverage.
How to Decrease the Cost?
There are several options that one can take to decrease the overall cost. Buying a car for the teen and making them buy their own policy is not one of them. The best way is to make sure your teen keeps a clean driving record. Here are several things you can do:
- Good Student Discount: If your teenager lives at home or away at school and had good academic grades, many auto insurance companies give discounts for excellent academic performance.
- Defensive Driving Courses: Completion of a NY DMV-approved Point and Insurance Reduction Program provides a 10% reduction, for 3 years, of the motorist's liability, no-fault and collision insurance premiums. Your car insurance discount is awarded on your current policy. Find a list here of NY DMV-approved courses.
- Look for a car that has safety features such as daytime running lights, anti-lock brakes, and anti-theft devices.
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