May 18, 2024

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What you need to know about Young drivers and car insurance

As soon as your teen son or daughter is old enough to get a license, you should contact your auto insurance company and notify them of the new driver in the house. That being said, expect the price you pay for your insurance to increase, probably up to 50% more than the current price, since young people tend to be involved in more accidents because of their inexperienced drivers.

The chances of a teenager being in an accident are high. According to a study by the Organization of Students Against Destructive Decisions or SADD ( Students Against Destructive Decisions ), adolescents spend 44% more time driving during the summer than during the school year. What’s more, 16-year-old drivers are more likely to be involved in crashes than any other driver group, while motor vehicle crashes are the leading cause of death among 15-20-year-olds.

According to the US Department of Transportation , 3,490 drivers in this age group were killed in car accidents in 2006 and some 272,000 were injured. That same year, drivers between the ages of 15 and 20 accounted for 12.9% of driver deaths in fatal crashes and 16% of all reported crashes.

So the next questions to ask yourself are: 

  • How to protect your young driver?
  • How to protect yourself financially? Or what is equal to how to keep the cost of insurance to a minimum amount?

Below is a list of ideas and recommendations for both cases.

Protection for your young driver

Here are some recommendations from the Insurance Information Institute to improve the safety of your teen driver:

  1. Select a car that is safe.
  2. The type of car a young adult driver drives will definitely affect the price of insurance. You and your teen can choose a car that is easy to drive and provides protection even in the event of a crash. Avoid very small cars and sports cars that are designed for high speed and performance as they can tempt the young person to drive at excessive and dangerous speeds. Avoid SUVs, vans, or trucks, as they are more likely to roll over.
  3. Have the teen take a driving course.
  4. A young person who learns to drive through a driving course is seen more favorably by insurers than one who learns to drive with his parents. In fact, in some states, teens must take a course if they want to be licensed at age 16, or wait until age 18 if they don’t take the course. Learning to drive safely will not only keep your son or daughter well, safe and secure, but it will also save you money. Taking a driving course can mean a 15% discount on the price of the insurance premium. Before enrolling in the course, make sure that the course you are going to take is accepted by your insurance company.
  5. Enroll the young driver in defensive driving courses.
  6. Some insurers offer what they call safe driver programs. In order for young drivers to participate in these programs, they must sign a contract in which they agree to be a “safe or responsible driver”, for example, they cannot drive and consume alcohol, etc. Ask if your insurer has these types of programs and if the teen completes the course they will be eligible for a discount. Some insurers also have programs that include car monitoring with equipment installed in it. Parents can see where the kids are on a device similar to a global positioning device that is placed on the dashboard of the car. Parents can see where the teen is on a Web page and if they exceed speed limits in the area or venture into areas far from their home or school,
  7. Talk to the young driver about the dangers of combining driving with the use of alcohol, drugs, lack of sleep or distractions.
  8. Constantly teach, stress, and remind them not to drive under the influence of alcohol, drugs, or when extremely tired. Creating this awareness in your children will help keep them safe and sound by preventing them from having an accident, and it will also help you save money. If they maintain a good driving record, their insurance costs will go down over time.
  9. Put a lot of emphasis on the behavior of young people while behind the wheel.
  10. Car accidents occur each year to young people who drive while talking on the phone, texting, or because they are distracted by the radio or conversation with friends. Also, show them the dangers of being the one to distract the driver because of inappropriate behavior in the car when another teen is driving. Stress, nudge, and constantly remind them to avoid distractions, whether it’s talking on the cell phone, playing the music player, or friends in the car. Encourage them that when traveling with passengers, everyone is respectful of the person behind the wheel and does not distract them.
  11. Give a good example.
  12. New drivers learn by example, so it’s best to avoid careless or irresponsible driving so they don’t imitate you. And don’t neglect to always wear your seat belt and never drink alcohol when driving.
  13. Ask about graduated driver license programs.
  14. New drivers are often restricted in what activities they can do, such as driving with passengers in the car until they have a license that is of a particular type or have held it for a certain minimum time, such as six months. A number of states have been able to reduce the number of teen crashes by restricting the amount of time drivers spend on the road without supervision. If you live in one of these states ask if this applies to get additional discounts. And even if your state doesn’t have this policy, you can institute a similar program for new drivers living in your home.

Financial protection for you

You can minimize the financial effect of increased insurance costs of adding a new driver by taking these precautions:

  1. Insure your son or daughter under your own auto insurance policy.
  2. It is generally cheaper to add a teen driver to your car insurance than it is for them to get separate insurance of their own. If they’re going to drive their own car in your name, insure it with the company that insures yours so they can ask for a multi-policy, multi-car discount.
  3. Ask how new drivers are assigned to your auto insurance.
  4. Some insurers assign the most expensive driver to insure (in this case the novice driver) to the most expensive car to insure. If possible, ask that your new driver be assigned to the least expensive car to drive. This may be allowed as long as the number of cars equals or exceeds the number of drivers on the policy. But with this arrangement there are no exceptions, the novice driver must only use the car for which he has been assigned, even in case of an emergency. Otherwise, if the young person is in an accident with a car that he is not assigned to – nor allowed to drive – there may be penalties when acknowledging the damages or his insurance premiums may increase.
  5. Increase your liability coverage.
  6. The minimum liability coverages are probably not enough to cover you in the event of a lawsuit if the teen driver is involved in an accident. Many vehicles today cost well over $15,000, and medical costs for damages in an accident can easily exceed $20,000 per person. If your teen is found negligent in an accident and the damages exceed your insurance maximum amounts, you will be personally financially responsible and may be sued in court for those amounts not covered by your insurance.
  7. Increase the deductible on your policy.
  8. Selecting a deductible of $500 instead of $250, or going from $500 to $1,000 can save you between 10% and 20% of your monthly premium. You can use part of those savings to increase the liability part of your insurance.
  9. Notify the insurance company when the teen driver is not home and moves to the University.
  10. You may receive lower premiums once young drivers are out of your home, when they go to college, as long as they leave the car at home. Many insurers can lower your premiums if the kids are at a college at least 100 miles from home and if they don’t own a car while on campus.
  11. Encourage young drivers to maintain good grades in school and take driver training courses.
  12. Many insurance companies offer discounts if young drivers have good grades (at least a “B”) in all subjects, and may also give discounts for driver training classes or courses.
  13. Compare prices.
  14. Car insurance prices vary dramatically between insurance companies, which is true for teen drivers as well.
  15. Get young people to drive a safe car.
  16. The type of car greatly influences the price of the policy, but it also affects how the children behave. A powerful or sports car might motivate them to drive risky or at high speeds just for show. Other vehicles such as trucks or SUVs (“all terrain”) are prone to rollovers, so it is best to avoid them. You can review the safety ratings for in-market vehicles provided by the Insurance Institute for Highway Safety.
  17. Set up your own driver’s license preparation program that you can implement with new drivers.
  18. Many states have these programs set up, either by the school or the Highway Patrol office, but if they are not available in your community, you can set one up at home. First, take an active part in teaching your children to drive, practice with them in different circumstances (day, night, on the main road, on small roads, in the rain, in the snow… etc.). Give them practice time and supervised opportunities to drive from one site to another. Little by little they will acquire greater dexterity and will be able to perform with ease without your help.

Teen Licensing Preparation Programs

Restricted driver license (GDL) programs have already been implemented in 20 states. These require teens to learn to drive gradually. They also require teens to improve their driving skills and prohibit driving at night, when most accidents occur. A license in one of these programs can be obtained as follows:

  1. Learner’s permit with trial period.
  2. It has restrictions and any offense that has to do with the consumption of alcohol or a traffic violation, can cause your permit to be revoked. Requires that the youth wear their seat belt at all times.
  3. Intermediate or provisional license.
  4. The restrictions are almost the same as with the previous permit.
  5. Standard driver’s license.
  6. This license is usually issued after driving for some time without violations and after passing a driving test. Although no state has issued any of the recommended components, Florida’s law is considered standard because it includes a six-month probationary period and also prohibits persons under the age of 16 from driving between the hours of 11:00 p.m. 6:00 a.m., and 1:00 a.m. to 5:00 a.m. for drivers 17 and older.

Another measure used by many states to prevent accidents is the variation in alcohol levels under which driving is allowed. According to the National Highway Traffic Safety Administration , 50 states and the District of Columbia have set a lower level of blood alcohol content ( Blood Alcohol Content ) for drivers under the age of 21.