Auto insurance companies have a way of ranking drivers as either risky or not. Unfortunately, teenage drivers are naturally ranked as risky drivers, mainly because of their inexperience. This means they have to pay relatively higher premiums than other drivers. This post discusses 5 actions that can be taken to lower auto insurance costs for teenage drivers.
Using a Cheaper Car
As hinted earlier, motor vehicle insurance companies use several factors to come up with their insurance rates. One of these factors is the cost of the car to be insured. This consideration is based on the premise that expensive cars tend to get stolen more, and that they also cost more to replace or to repair. Unfortunately, the sports cars favored by many young drivers fall into this category. The same argument can be extended to cover new cars versus old cars, with the latter being cheaper to cover. Therefore, if you are a teenage driver or you have a teenage child, you need to buy a relatively old car to enjoy low premiums. It might be more interesting and showy to drive a new car, but the amount of money you will cough up in terms of insurance premiums will be staggering. If you really want to enjoy low premiums, you should go a step further to buy cars deemed as safe by the insurance companies because they’ll have lower rates too.
Go For Student Discounts
Did you know that there is a direct link on the amount of car insurance premiums paid by young drivers and the grades they get in school? Yes, insurance companies tend to have attractive discounts for children who get good grades in school, so you should motivate your young ones to study extra hard if they want to enjoy low premiums. For most companies, the grade to aim for is at least a B average in college or even high school. If you are a college student, you will need to take an average of 12 or more credits and maintain healthy grades to enjoy these discounts. Since different car insurance companies have different discounts, it’s advisable to comparison shop before buying a policy.
For a teenage driver in a family of other drivers (parents), there are also family discounts to take advantage of. If you are a parent, you can bundle your child’s car in your car insurance coverage. In fact, this is the most obvious way teenage drivers can enjoy lower premiums. This method works because the young driver’s car is covered by a policy held by an older person who is classified as a good driver with a stable income. It has the effect of lowering insurance premiums drastically, and you will appreciate the difference when you learn that it can be as much as several hundred dollars. You can even go a step further by bundling your auto and homeowner’s insurance, a practice that gets you multi-policy discounts. In this case, even your homeowners’ insurance rates may be reduced.
Take Safe Driving Classes
Insurance companies are always looking for ways to minimize risks, and encouraging safe driving is one of the ways they do this. So, teenage drivers who are deemed safe drivers may get discounts on their insurance rates. How does one achieve the safe-driver designation? The most obvious way for young drivers to become safe drivers is for them to take advanced driving classes. When, for example, teenagers take approved car accident prevention courses, some insurance companies will give them a discount. Here, the Pass Plus test (which can only be taken after getting a license) is very useful. As part of the test, drivers are taught how to be safe on the road among other useful driving skills. Even with the initial cost of the test, the discounts you can receive make it worthwhile.
Raise Your Deductibles
If you really want to keep your teenage child’s insurance premiums low, you should also think about raising the deductibles. The deductible is the amount of money you have to fork out of your pocket in case of an accident. Remember, insurance does not cover your vehicle 100%; there is a percentage you have to pay. Raising your deductible simply means raising this percentage. In effect, you will be reducing the financial load for your insurance company, and they will reward you by offering you lower premiums. It will also protect you from making unnecessary small claims that will only ruin your no-claims discount. Be very careful with this method, though, because you will need to part with a good amount of money if and when your car needs to be repaired after an accident. A good way of dealing with this is to put aside some funds to use in emergency situations.
As you can see, there are several things you can do to get lower premiums for teenage drivers. It is also common sense to shop around for the best rates available in your area. You should not have to pay exorbitant premiums just because you are insuring a teenage driver’s car.
Kevin Beene blogs about saving money. His articles appear on a wide variety of personal finance blogs. Click to get auto insurance rates to see if you could save money.