Teen Drivers and Auto Insurance

Hello, I’m Thom Fox and welcome to Personal
Finance 120 – information for managing your financial life in less than 2 minutes. Every parent has mixed emotions about their
child entering adulthood. We’re equal parts excited and terrified. One item in particular we all struggle with
is when our teenager is ready for their most important rite of passage – getting their
driver’s license. The prospect of your son or daughter behind
the wheel can fill you with a tremendous amount of pride, but also create a fair amount of
nervousness, especially when you consider auto insurance. It’s no secret that inexperienced drivers
are considered a huge risk for insurers. For instance, a new report from InsuranceQuotes.com
finds that, on average, a married couple will pay 84% more for car insurance when adding
a teen to their policy; parents of male teenagers pay an average 96% more in car insurance,
versus 72% higher to cover female teens. Yikes! Mind you, these are estimates and Insurance
is regulated at a state level, making different factors impact teen driver coverage rates. As expensive as that sounds, there are some
things you can do to help offset the costs of insurance. Perhaps the easiest thing to do is to wait
to insure your child until they are 17 or 18, as drivers age 16 are more expensive to
insure. There are also discounts for kids who excel
in their studies. Students age 16-to-24 who maintain at least
a ‘B’ average can save as much as 25% on premiums. Also, encourage your teenager take a defensive
driving course, which can cut the cost of insurance by 10%. Even with these cost saving measures, we encourage
you to shop around to compare policy costs. Not all insurers are created equal, and coverage
differs, so make sure you’re comparing ‘apples-to-apples.’ A note of caution: don’t skimp on coverage
to save big on premiums. Accidents happen, and you want to be sure
that you and your family are adequately protected. Finally, to encourage ownership over the privilege
of driving, have your son or daughter contribute to paying the premium. They don’t have to pay a lot, but even a
little bit instills responsibility, and helps save you money. Until next time, I’m Thom Fox for Cambridge
Credit Counseling.

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