Thoughts of your children driving are stressful enough without thinking about insurance needs, yet it is very important that you consider them. Insurance issues are more important than ever with the added cost of high-risk drivers. Even if they are not high-risk to you, they are to insurance companies, and that’s what truly matters.
Statistics bear this out. According to Esurance, 16-year old drivers have a 2.5 times greater chance of being involved in a car accident than drivers aged 20-24, and the numbers are worse when other teens ride along.
You have one big choice to face. Should you add your children to your policy, or should they have their own policy?
In most cases, it is more economical for you to add them to your policy. Your premiums will increase, but generally not as much compared to a separate policy for your teen. You can take advantage of your good driving record and other discounts and terms, and coverage options may be greater.
On the downside, adding a high-risk driver may remove benefits that you currently have. Check with your insurer.
One reason to consider getting your child his or her own policy is if your driving record is sketchy. With DUIs or multiple accidents on your record, it may be best to give your kids a separate policy.
Other factors that affect you and your child’s policy:
- Teen-Specific Discounts – Many companies offer discounts for good grades and completion of driver’s education and separate safe driving courses. If your current insurer does not do so, consider shopping for other insurers.
- Number of Cars - If your child is going to have their own car but stay on your policy, a multi-car discount may apply.
- Type of Car – Insurance rates depend partially on the type of car you drive. The combination of a teen and a sports car is guaranteed insurance trouble, whether it is yours or theirs. States differ on their approaches to exclude certain drivers from certain cars, or assigning and/or matching primary drivers to all your cars – check the rules where you live.
Consider getting a safer but older car and a separate policy without comprehensive and collision. This type of policy covers damage to your car and non-collision events such as flood or theft, and is not useful for an older car. The Insurance Institute for Highway Safety (IIHS) offers suggestions for safer, older models of cars.
- Deductible – You may be able to switch to a higher deductible amount to lower monthly costs. It would be wise to work out something with your teen driver on payment terms, and hold them responsible for at least a portion of the deductible.
- Liability Limits – With a high-risk driver, it is even more important that you don’t skimp on liability coverage. The coverage should be scaled to the assets you need to protect. You do not want a lawsuit to force you to lose a home or other valuable asset by trying to save a few dollars on the monthly insurance bill.
- Type of Driving – Will they be driving for long distances or at high-risk times? Will they be using the car for a job, such as delivering pizza? You may have to adjust your coverage up for these situations.
In the end, you are going to be paying more no matter what, but the one thing you do not want to do is cut your overall coverage to save costs – because this is the time that you are more likely to need that extra coverage. With a teenager, you need all of the peace of mind that you can get.