Buying Car Insurance for Teenagers Can Be a Balancing Act
By: Ann Carrns (New York Times) August 2015
Adding a teenager to a family’s auto insurance policy is a sure way to raise the premiums, but it’s usually less expensive than buying a separate policy, according to new research.
Eighteen-year-old drivers add an average of 77 percent to the cost of their parents’ auto insurance bills, a new analysis from insuranceQuotes.com found.
While that’s a big increase, buying an independent policy is even costlier, the analysis found. Eighteen-year-old drivers pay an average of 18 percent more if they buy an individual policy, instead of remaining on their parents’ policies.
In some states, the cost of individual coverage compared to family coverage can be even steeper. In Rhode Island, for instance, 18-year-olds pay an average of 53 percent more for a separate policy; other states with a high “penalty” include Connecticut and Oregon (47 percent), Nevada (41 percent) and Maine (40 percent). Illinois, Alaska and Florida charge an average of 7 percent more for individual coverage for 18-year-olds. In New York, the figure is 11 percent and in New Jersey 19 percent. (Hawaii bars auto insurers from considering age or length of driving experience when determining premiums.)
“It’s cheaper for young drivers to stay on a parent’s policy,” said Laura Adams, senior analyst with insuranceQuotes.
InsuranceQuotes commissioned Quadrant Information Services, which provides data and analysis to the insurance industry, to conduct the analysis, based on data from the largest auto insurance carriers in each state. The sample drivers had clean driving records and good credit.
The good news is that a teenager’s premiums should decrease gradually each year if he or she keeps a clean driving record. Nationally, individual policies cost 9 percent more than family coverage at age 19, and 4 percent more at age 24, according to insuranceQuotes’ analysis. So, parents can emphasize to their children that good driving habits not only prevent injuries, but also save money.
Young drivers cost more to insure largely because they are inexperienced and have higher accident rates than more seasoned drivers, said Arthur Goodwin, senior research associate at the Highway Safety Research Center at the University of North Carolina.
To help make children better (and potentially less costly) drivers, expose them to a variety of driving experiences, Mr. Goodwin suggests. Simply letting a child drive from home to school and back probably will not provide much practice in negotiating more difficult situations. Parents should take them on the highway when they are ready, he suggests, and drive with them during bad weather, so they are not alone the first time they encounter more challenging conditions.
Here are the answers to some questions about insuring a teenage driver:
■ Does it help lower my rates if my teenager drives an older car?
In general, yes. But think hard before assigning your teenager to the family clunker, Mr. Goodwin said. While an older car may cost less to insure, newer cars are more likely to have the most up-to-date safety features, which could be lifesaving for inexperienced drivers. A wiser route may be to have your child drive the newest vehicle, even if you pay more in premiums, Mr. Goodwin said. Also, you can check out the Insurance Institute for Highway Safety’s list of safe cars for teenage drivers.
■ Are there other ways to keep costs in check when adding a teenage driver?
Some insurers offer discounts if a driver maintains good grades, so ask about student programs. If you carry collision and comprehensive coverage, consider raising the deductible — the amount you must pay out of pocket — to lower your premium. And, if you want to help your child understand the costs associated with car ownership, consider having him or her pay for all or part of the increased premium, Ms. Adams at insuranceQuotes suggests.
■ What if my teenager goes off to college, but the car stays at home?
If your student goes away to school but does not take a car along, ask your insurer whether you might qualify for a lower premium, since your child will not be driving the vehicle all year long, said Jeanne M. Salvatore, a spokeswoman for the Insurance Information Institute, an industry group.
