What’s the most important milestone for a teenager these days? Graduating high school? Making the football team? Your first school dance? Or maybe it’s that first real date with the girl or guy of your immediate dreams? If you ask a local Palm Beach County teen they’d unequivocally say getting their driver’s license was atop their list, miles and miles above anything else pre the legal drinking age. While we all may agree, almost immediately we realize what our children won’t; that type of freedom most certainly comes at a steep cost these days
According to carinsurance.com young adults are still by far the most expensive drivers to insure in the United States. The price of admission for young adults (fifteen through twenty-six) will cost you more than double your current rates, skyrocketing to somewhere between $2900 and $1450 annually. As outrageous as that seems it’s still cheaper than a standalone policy.
Fortunately, there are a few tips that may cut your insurance premiums to a slightly more manageable level.
1. SHOP YOUR CURRENT INSURANCE COMPANY
Up until the mid-2000s, it was uncommon to annually shop your insurance company. In fact, even in 2021, about six out of every seven drivers did not switch their car insurance provider, and that’s not because the market had record-breaking rates. That said, adding a new driver more than justifies shopping around.
Some of the key factors that ultimately can affect your child’s insurance premium are:
The vehicle type, the color and safety features. Red vehicles are more expensive because they’re more likely to be pulled over. More features mean more to repair or replace. While it’s likely they’re driving this vehicle the most anyway, be sure to insure your child on the vehicle with the least value to the insurance company. Oddly enough they will likely be covered to occasionally drive the other vehicles, as most insurance policies cover that of the vehicle and not the person driving it (but it is somewhat of an honor system).
Gender unfortunately still matters. Only seven states have taken action toward gender-neutral rating factors. Male teens and even early twenty-somethings will still have to pay more to their insurance companies than their traditional counterparts.
The deductible will make all the difference. The general rule of thumb is the higher the deductible the lower the rate. It’s as simple as that. You should still consider the value of the vehicle vs. what you will ultimately need to come out of pocket for.
Type of coverage. Make certain you understand the difference between collision and comprehensive, and that an older vehicle may not need it if it’s worth a few thousand dollars or less.
There really isn’t a reason to over-insure your young adult or teenage driver. They only need one policy, so if you’re divorced or separated you can get away with the more affluent of parents handling the bill
2. DISCOUNTS ARE EVERYWHERE – TAKE TIME TO LOOK
Nearly every insurance company out there offers a discount for young or first-time drivers. Companies like USAA (if in armed forces), Nationwide, Progressive, Geico and even State Farm have discounts in the range of 12 to 25 percent in discounts; you just have to ask for them. Just remember these discounts may actually be contingent upon good or great grades (anything over a “B” average is usually enough to get the discount conversation started)!
3. ADD ACCIDENT FORGIVENESS – IT’S AWESOME
More drivers mean more opportunities to get in a wreck, bottom line. It also helps to know that the majority of “at fault” accidents will raise the rates of the entire family. If not, at minimum an accident equals a hike in your rates somewhere.
Adding accident forgiveness to your policy can (and most likely will) save you hundreds in increased rates. Thanks to Progressive, most companies now offer a once in a 3-5 year mulligan, and you’d be naïve not to think your child will follow the trend. While some companies are still on the fence about selling such a policy to anyone under the age of 21, it is most certainly worth the ask.
4. UNINSURED OR UNDERINSURED MOTORIST FUND (UM)
If you are lucky enough to know a personal injury protection attorney (PIP attorney for short), he or she will likely recommend seeking UM coverage. This coverage is somewhat of an extra layer of protection for the driver from not only him or herself but, from other drivers. If the driver is uninsured you are very much covered. If they are underinsured you’re covered. This type of coverage isn’t just a few select or specialty fees; it covers everything from death, sickness, pain or bodily injury to loss of employment, wages or a need to cover any medical bills.
5. CONSIDER AN UMBRELLA POLICY
If you decide against the UM policy, an umbrella may be your next safest bet. For less than $30 per month, you cover the great majority of your expenses. It’s been proven that with at least a few insurance companies out there, adding an umbrella actually lowers your overall auto premiums in the long run. Actually, many insurance companies are offering UM policies with umbrella packages in 2022.
No matter if you have your young adult contribute to your insurance premiums, pay it entirely outright themselves or in fact, you cover the cost, it’s a discussion worth having. In 2022-23 it’s even easier to shop insurers and save, so why not rock the boat a bit? The dollars you save could go to that next pair of shoes your son or daughter just can’t live without.
