One of the most frequent questions we receive at the agency is about teen drivers. Youthful drivers (or teen drivers more commonly known) are drivers that are between the ages of 16-25. This risk pool of drivers is one of the highest risk factors for insurance carriers. And quite frankly, a stressful financial impact to most families. Many times when a family looks to add a teen driver to the policy it more than doubles the cost of the policy. With that, many parents want to immediately look to having the child obtain their own policy. Let’s take a look at why most of the time, that option is not the best available option.
Q-If my child is living in the home full time, either in or out of school do I need to continue to carry them on my insurance?
A- Unfortunately, the answer is “yes”. Until your youthful driver is living on their own and has purchased a car themselves or has a bill or car payment in their name, most of the time parents are still liable to carry their children on their policy. Removing your teen from the policy is called “excluding”, some companies will allow you to exclude a driver, but that being said, your child will have to obtain their own policy without the additional benefits of multi-policy etc. The second reason is that since the child is “excluded” from your policy they would be unable to drive ANY vehicle in your home. They would not have any coverage.
Q – If my child is away at college can we remove him from our policy?
A- If your teenage driver is away at school without a vehicle and over 100 miles away you can receive a discount from some insurance companies for the months they are away. However, you really cannot remove them from the policy. Removing them means that if they drive ANY person’s car at ANY time, they would not have any insurance coverage. This obviously is not a good idea. In the event your teen did drive, and did have an accident, there is a large percentage of chance you will be sued for his actions. Until they have graduated college, moved out on their own, and purchased their own vehicle it is likely not a good idea to remove your teen.
Q- Can I get lower coverage’s for my teen driver to save money?
A- We “get it”, you just want to find ways to save a few dollars since your insurance may as much as doubled since adding your teen to the policy. You just want to look for ways to cut costs. Reducing coverage’s, particularly liability is definitely not recommended. Insurance companies know the industry. They don’t just make up “hypothetical” reasons why youthful drivers cost more to insure. They cost more to insure, because they are a bigger risk. Reducing your liability or overall coverage can ultimately cost you a “LOT” more if your youthful driver has an accident and your coverage’s are too low. Find other ways to offset the cost, don’t reduce coverage.
Q-My child is out of school (high school), not going to college and has his own job now. Can I remove him from our policy?
A-They are 18, legally an adult, you have met your commitment as a parent to get them raised to adulthood, NOW you finally can remove them from your car insurance, right? Unfortunately, the answer is most of the time “no”. Even though your youthful driver is 18, if he still lives at home in the same house as you, he will need to remain on your policy. Most carriers today will not let you “exclude” your son as a driver on your policy. Many policies today expect that you will insure everyone in the house on the same policy. “Excluding” your youthful driver from the policy then forces your teen to get a policy on their own with no grade, multi-policy, stable job, or home discounts available. Most carriers make the cost of coverage so great, most family’s have no choice but to leave your teen on the policy until they purchase their own home, and car.
Q-My son’s car is much older than mine, why did both mine and his coverage go up when I added him to the policy?
A-In the past, carriers rated policies based on who was driving the car, and at what percentage. Now, most carriers rate everyone on all vehicles. So if your 16 year old son is added to the policy and you drive a 2016 Mercedes, he will be rated on that vehicle, not necessarily the 1996 chevy cavalier he is driving.
Q-Does it make a difference how many cars are on the policy?
A-If you have the same number of cars as you do drivers in the home, you will be rated as though everyone is driving the car full time. If you have less cars than you do drivers, then clearly one person will have to be rated as a part- time driver. Many carriers will allow a discount for part-time drivers.
Q- Do grades and driver’s education really matter?
A-YES! Taking an accredited drivers education course as well as maintaining A’s and B’s in school will get you a discount with most insurance carriers.
Q-My child just received their learners permit. When do we add them to our insurance?
A-In most states, your child does not have to be added to your insurance until they receive their actual driver license. Check with your agent to be sure.
Q-So when can you REALLY remove your teens from your policy?
A-Technically there is not an exact age that parents are required to remove their teens from their current policy. It is more life changes that dictate when they are removed. Here are some examples of when you can/should remove your youthful driver from your policy.
- Get married, move away
- Purchase their own car in their name
- Move out of state and have bills in their name
- Driving record dictates they can no longer be covered under your policy
- Active duty military. (These have restrictions on when/how you remove them from the policy, check with your agent).
In summary, adding youthful drivers to your policy is expensive. Many parents are not prepared for just “how expensive” it can be. Here are some suggestions/tips I have received from some of my clients that are creative ways to help manage the large expense of adding your teen to the policy.
- I have one client that for every 6 months their child has zero incidents (tickets, accidents), they give them $200. While this may seem like a lot of money when you are already paying “a lot of money”, it is still cheaper than them having just one accident. It pays for itself, and teaches your teen responsibility and positive consequences for their actions.
- Expect the teen to share the cost with you. Many times it is hard to evaluate and charge your teen exactly the difference between before they were on the policy and after, consider charging them an amount each month that helps offset some of the cost of adding them to the policy.
- Evaluate the vehicle they will be driving before adding it to the policy. If you are purchasing a vehicle for your teen when they get their license, be sure to find out ahead of time, generically how much it is going to add to the policy before purchasing the vehicle. Some cars add more than you think they will. While the rating of the car will not be directly tied to just your teen driver, adding a 2016 vehicle to the policy versus adding a 1996 vehicle will make a difference. Evaluate these options before adding the car to the policy so you understand your cost impact upfront.
- Pay for good grades. Keeping the grades up on a youthful driver can help get you a discount of up to 10% or more on most policies. Consider a financial reward for keeping the grades up.
- Encourage good driving habits when with friends. Make sure your teen understands how they drive, where they park, the places they visit, the weather, texting, not paying attention, speeding can all VERY much affect what happens to them while they are driving or out on the road. And unfortunately, in most cases it takes just a split second for a decision to change everything. Talk with your teens, make sure they understand the responsibility they have being behind the wheel.
- Make sure your teen driver understands the costs of adding them to the policy, as well as the implications of their driving habits. It is very important for your teen to understand just exactly how their actions can impact your insurance rates.
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