Auto insurance

Teen drivers: ways to trim costs

Tuesday, May 7, 2013by  Jon Osterberg

Teen driving can be expensive. In some families teens share those costs, while in others it’s the parents who provide the car and pay the insurance.
   I envied my neighbor in high school. We were the same age. His parents let him use both of the family cars, paid for his insurance, and even gave him gas money for joyriding.
   In my house driving was a privilege, not a right, so I hauled hay on an Idaho ranch every summer to earn money for my insurance premium. All too seldom I was allowed to drive my mom’s car, and when I did I bought gas with my own money.
   Halfway through my senior year I bought my own car, an 11-year-old Impala, and found cheap coverage with a Missouri company called Medallion Insurance. Two years later, Medallion went bankrupt – right after I’d mailed my hard-earned premium. It was a hard lesson in “you get what you pay for.”
   But that’s another story.
   Today’s post, from a PEMCO consumer-tips fact sheet, is aimed primarily at parents of teen drivers. But these tips also apply to any teen who might be paying for his or her driving privilege.

   * * *

Parents: get ready, get smart, and brace yourself.
   If you’re about to add a teen driver to your policy, your family budget – if not the family car – is about to take a hit.
   The National Highway Traffic Safety Administration points to teens ages 16 to 19 as the drivers most likely to be involved in fatal crashes.
   That fact isn’t lost on insurers. The Insurance Information Institute says to expect a 50% to 100% increase in insurance costs when you add your teenage son or daughter to your policy. The Consumer Federation of America says to triple your rates if you’re adding a 16-year-old boy; double them for a girl.
   Parents and teens can trim the bill with these tips.
   Delay licensing. Teens tend to be safer drivers at age 18 than 16. Also, PEMCO rates usually drop when drivers reach ages 19, 21, and 25.*
   Keep a clean driving record. A reckless-driving conviction or DWI can raise teen insurance rates from a few hundred dollars a year to thousands of dollars.
   Shop for safety features. If you get a car with devices like electronic stability control, side air bags, and automatic seat belts, you can lower your rate considerably.
   Choose a safe car. A teenager’s rates could be cut in half if he or she drives a safer car, like those recommended by the Insurance Institute for Highway Safety. Newer cars with front and side air bags cost less to insure, and they’re safer to drive. Sports cars, luxury cars, high-performance cars, and SUVs cost more to insure because they present higher risk.
   Take advantage of good-student discounts. Almost all companies reward kids for good grades, but not all their discounts are equal. PEMCO shaves 20% off liability, collision, comprehensive, and PIP premiums for students who average a “B,” make the dean’s list, or rank in the top 20% of their class.
   Sign up for a distant-student discount if your teen attends college 75 miles from home and doesn’t have a car. Keep the teen on your policy, though, for when he or she visits home and wants to drive.

*Insurance changes throughout a driver’s life. Premiums (and risk) are highest for people under 25. Rates dip during mid-life and may climb again as we age. Statistically, fatalities among drivers over age 70 nearly equal those for teens. (Although some studies indicate an increased accident frequency, most agree that the higher fatality rate comes from elderly drivers’ diminished ability to heal after traumatic injury – a consequence of aging. However, drivers age 80 and older hit more pedestrians than drivers in any other age group, according to the Insurance Institute for Highway Safety.)

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