Helpful Tips For Insuring Your New Teen Driver

You probably never thought this day would come, but it’s finally here. Ready or not, your child is about to become a licensed driver! It’s time to put plans in place to add your new teenage driver to your auto insurance policy.  There’s a lot to know and a lot to consider when you are ready to start insuring your new teen driver. I’d like to help simplify things and offer some guidance to make things easier for you.Hi, I’m Alex Cole and I’ve been a licensed insurance agent serving Colorado for over a decade. Let’s dive right into some of the questions I often get asked about teen driving.

My teenager just got their permit, do I need to add them to my auto insurance now? 

Make sure to check with your carrier because when to add them really depends on who will insure your teen driver! Many insurers don’t require young drivers to be added to their parent’s policy until they are officially licensed. Additionally, some insurance carriers allow for up to 180 days post-licensing to add them to the policy. It’s important that your child is on the policy within that 180-day window. If your child has an accident and coverage wasn’t in place at the time of the accident the claim could be denied.

My kid is just going to use one of our existing cars. Our insurance premium should stay pretty much the same right? 

Unfortunately, no. Young drivers are one of the most challenging risk segments for insurance carriers to set rates for. This is because young drivers are just learning. Statistics show that they have a lot more accidents than experienced drivers. According to the CDC, in 2017 teens from ages 15-17 represented just over 6% of the population. However, they accounted for over $13 billion (8%) in costs for motor vehicle injuries. That includes both fatal and non-fatal accidents.  Additionally, the risk of an accident is higher during the first months after a young driver gets their license. Data from the 2017 National Household Travel Survey indicate that the crash rate per mile driven is 1.5 times higher for 16-year-olds than it is for 18-19 year-olds.For every $1 in premiums charged to insure a teen driver, companies pay out an average of $3 in claims. That means higher premiums when you add your teen to your policy. estimates that you can expect that, on average, your insurance premiums may rise by approximately 130%. 
New teen driver calls insurance agent after accident

That seems like an awfully big increase, is there anything I can do to minimize the impact to my premiums? 

Yes! Insurance carriers offer a variety of different discounts, some specifically designed for young drivers. Most carriers offer some form of discount for good grades (typically requiring a 3.0 GPA or higher). They also typically offer discounts for driver training. Due to MasterDrive’s strong reputation, many carriers offer a bigger discount for drivers that complete their classes versus other programs.In addition to discounts specific to your young driver, there are often discounts you may currently be missing out on. This may include paperless billing, automatic payments, paying your policy in full, etc. It’s a good idea to review your insurance portfolio with your agent at least once a year. They can assist you in identifying those discounts and evaluating your other policies as well for additional savings opportunities.

Can’t I just go find a cheap policy somewhere else for my teenager? 

While it is certainly an option when insuring a new teen driver, it’s not usually a good one. It is typically cost-prohibitive to do so once the full underwriting process is completed. With no insurance history, no credit history, and no driving history they are considered a higher risk. Higher risk means a high premium.On your policy, they are getting some pricing credit for you being an existing customer and experienced driver. If they will have their own vehicle this can also mean you qualify for a multi-car discount. More importantly, if they are under 18 you may still be liable in the event they have an accident. It makes sense to have good coverage and a reputable agent. After all, you’re more likely to need them in the next few years.

Is there anything I can do to help ensure my young driver is actually driving safely? 

Absolutely! The obvious decision is to make sure your child starts with the right training. Ensuring they have the right habits before they ever get their license is crucial. The programs at MasterDrive help prepare your teen by helping them know how to drive defensively and responsibly.In addition, many carriers in today’s marketplace offer discount programs focused on driving behaviors and performance. In order to determine the level of the discount, they measure how drivers are performing. Things they look at include: how far they’re driving, how often they’re speeding, and how often they’re slamming on the brakes.Many of these discount programs offer users access to a website portal where they can see each driver’s specific performance. At Allstate, we use an app your teen can download called Drivewise. In addition to a policy discount and some other perks, it can provide personalized driving feedback and real-time alerts.Your teenager may not be too excited about you digitally “looking over their shoulder”. However, programs like Drivewise give parents a great way to work with their young drivers. It helps provide great feedback parents can share with their kids. When used in conjunction with a training program like MasterDrive, it can help kids be safer on the roads. 

Is there anything else I should consider before adding my young driver to my policy? 

Meet with your insurance agent prior to insuring your new teen driver. First, they can review all of your policies to ensure that your coverage levels are appropriate (think liability limits). This should include working with you to identify opportunities to reduce your premiums. You should be able to do this across all policies without sacrificing coverage (discounts, the structure of the policy, etc.).Second, discuss options to further insulate your assets now that you have a young driver on the policy. One such way would be to evaluate adding a Personal Umbrella Policy to your portfolio. This is an excess liability policy that comes with a minimum of $1M of coverage and is extremely cost-effective. An agent can provide more details.
Mother and daughter talk to insurance agent about insuring new teen driver
Finally, when you meet with your agent have your young driver be a part of that conversation. Why? It’s a great opportunity for your teenager to understand the magnitude of the responsibility they have now. It can make a world of difference to have your child be taught by an expert how to drive. Similarly, it can also help to have an expert explain the importance of insurance too. The hope is that when they understand the policy and what it means they will better understand the responsibility, and the consequences, of their choices on the road. They are now driving around with your assets and can affect other people’s lives and property. Having your agent help them understand your policy can help your child recognize the importance of this new responsibility.

Need More Help?

If you have any additional questions about insuring your new teen driver that are not covered here, I’m happy to help. We have two locations to serve the Denver Metro area, one in Littleton and one in Central Park (formerly Stapleton).