Insuring your Teen Driver

Listen to the podcast HERE

Watching our babies grow up can be hard on a momma's heart. Some milestones are harder than others and some are just down right scary. The driver's license is one of those moments. After a year of riding alongside them (with our eyes closed a good bit of the time), we all of a sudden turn them loose. We pray they stay safe and make smart decisions. There are so many distractions these days, notably the phone, that weren't an issue for us parents. On the flip side, we also have (for the most part) safer vehicles now and apps like Life 360 so that we can keep dibs on our teens. I watched that Life 360 app like a hawk those first few weeks after my son got his license.

Side Note: I am not affiliated with Life 360 but if you haven't checked this app out, I recommend it. There is a free version and a paid version. We didn't use it until my son got his license but we are thankful to have it. Here are some of my favorite features:

• you can set alerts for certain locations. I get an alert once he arrives at school and when he leaves. I also get an alert when he arrives at his girlfriend's house. LOL

• it tells you how fast they drove. You can actually track them as they drive and see how fast they are going.

• it tells you if they accelerate aggressively or have any hard breaking.

• and probably my favorite, it alerts you if there is phone usage while they are driving.

Okay, back to the topic at hand.

I am generally prepared for most things. I keep a tight rein around our family finances and household items. I talk with lots of mom friends (as well as dads) about lots of topics and have always felt very in tune. However, there was one item that caught me completely off guard and that was the sticker shock when I added my son as a driver on our insurance policy. I thought it was an error for sure. Sadly, I was wrong. So I am here today to give y'all a heads up on the insane cost of insuring teen drivers. If you already have a teen driver then you know exactly what I am talking about and you are probably still recovering from the sticker shock yourself!

States vary on their insurance laws and regulations. I live in NC and the minimum coverage requirement is 30/60/25 coverage. That is coverage that pays up to $30,000 for bodily injury for one person, up to $60,000 for the total bodily injuries, and up to $25,000 in property damage. The property damage doesn't have to be another vehicle. It could be a fence or something like that. As you can imagine, costs from an accident, especially a bad accident, are going to be well beyond those limits. If you (or your teen driver) are found at fault for an accident then you are responsible for the damages.

I don't like to think negatively or focus on the worst case scenario BUT what if your teen driver causes an accident that totals a Porsche? Or what if your teen driver runs off the road and hits a pedestrian on the sidewalk? You are going to want much higher coverage limits and so a full coverage policy may be ideal! If you are unsure what your limits are, I encourage you to check and if they are the minimum then you may want to look at increasing them. Yes, your premium will go up if you increase the limits but it is definitely something worth evaluating for peace of mind!

Speaking of premiums, how much is it going to be to add your teen driver? According to the website carinsurance.com, your current premium will increase anywhere from 50-100%! Yes, you heard that correctly! Ouch right?

Except for a few states (like NC) that prohibit this, male teen drivers pay more than their female counterparts due to a higher crash rate.

It is usually cheaper to add your teen driver to your existing policy and list them as a secondary driver. Quotewizard.com states that you can pay up to 48% less by adding your teen to your policy rather than them getting a stand alone policy. The site also lists out average prices by state. (I will link this information in the show notes). It states that the national average for a two parent policy is $302 per month and adding a teen to that policy will add another $278 per month for a total of $580. However, the average stand alone policy for a teen is a whopping $532 per month!

And according to insurance.com "When you add a 17-year-old driver to your policy you'll see an average rate increase of $2,102 a year for full coverage. The average cost of car insurance for a 17-year-old on their own policy is about $5,924 a year. For a 16-year-old driver, the average rate for full coverage is $7,203."

If your teen doesn't have any accidents, speeding tickets, or the like then the rates will decrease and once they are 25 with a good driving record, they will decrease substantially.

You may be wondering, what would happen if my teen caused an accident or got a speeding ticket, how will that affect the rates? The national average is a 25% increase from a speeding ticket and if your teen got that speeding ticket and they are on your policy, then your rates are going up!

The good news is that your teen may be eligible for some discounts. Insurance companies don't always let you know about these discounts so be sure to inquire. Good student discounts, extra driver education, low mileage, as well as a few others. It's definitely worth checking to see if any are available!

If your teen is nearing driving age, do your homework and shop around for rates because you may end up needing to move your coverage to another company and if you bundle your insurance with your home that process could take a little longer. If you or your teen are buying their own car, check insurance rates before you buy. As you can imagine, sports cars come with higher rates but things like certain safety features can bring rates down. Bottom line, getting the driver's license is a big deal and while it comes with a lot of excitement for the teen, it comes with a lot of scary for the parents! A serious conversation with your teen so that they fully understand the responsibility they are taking on with their license is a must.

I do want to note that when your teen has their learner’s permit, it doesn’t affect your insurance, only once they become a licensed driver.

The content in this blog is educational in nature and is not considered financial advice.