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How Can You Prevent Auto Insurance Premium Increases When Adding A Young Driver?

by Rick Mcguinness

Nearly every parent experiences a varied and powerful mix of emotions as their child begins one of the most important teenage rites of passage: the test to receive a driver's license. You may feel proud, worried, concerned, and nostalgic all at once. Once your child is a legally licensed driver, it's time for you to add him or her to your auto insurance policy-- and at this point, you can add financial stress to the list of emotions you're experiencing.

With the average married couple paying almost 80 percent more for their regular auto insurance after adding a teen driver, you can expect your rates to rise significantly once your child is insured on your auto policy. Are there any steps you can take to cut these costs? Read on to learn more about the factors that impact your auto insurance rate, as well as some steps you can take to reduce the effect your teen will have on your insurance costs. 

What factors are used to determine your auto insurance rate?

Much like your credit score, your auto insurance rate is derived from a variety of risk-assessment factors. Your auto insurer will evaluate things like your age, health and driving record, as well as the type of vehicle you drive and the number of miles (and route) you travel on your daily commute. The more information your insurer has, the more accurately they can assess your probability of filing an insurance claim. Other non-driving information may be used, like your credit report (those with bad credit are generally found to submit more insurance claims), or grades if you're a student.

Some even suspect that activities like voting will soon become predictors of insurance risk, with a recent NASDAQ survey finding that adults who had voted at least once in the past year had a significantly lower chance of making an insurance claim the next year. Although it's illegal for insurance companies to use this information now, if they can clearly show that voting behavior correlates to insurance risk, this may become one of the newest factors to be used in insurance calculations.

Although your teen driver should have a clear driving record, his or her rates will likely be similar to those of an adult with a DUI conviction or multiple speeding tickets. This is because teen drivers are historically one of the riskiest groups to insure, as they're less experienced defensive drivers and may be more likely to engage in risky behavior, like texting while driving or driving after drinking. And although there are certain things you can do to show that your teen is a responsible and trustworthy driver, these factors won't completely eliminate the insurance company's perception of increased risk.

What can you do to reduce your insurance rate once your teen begins driving? 

Many drivers can find themselves overpaying for insurance coverage if they haven't been proactive about obtaining competitor quotes during the last few rate increases. Reducing some of the excesses in your current policy can help keep your teen driver's rate as low as possible. 

First, you may want to consider raising your deductibles. This is the amount you will have to pay in order to have your vehicle repaired after a collision. In some cases, a high deductible can serve as an incentive for a teen to drive safely, knowing that an accident means shelling out a substantial sum of money or driving around in a wrecked vehicle. 

You may also want to look into any discounts offered by your insurance company. Many companies give discounts for students with a certain grade point average, or to those who have taken an approved drivers education course. If your child takes advantage of all the credits for which he or she is eligible, this can significantly reduce the total insurance premium.

In some cases, you may not want to reduce your auto insurance rate if doing so means cutting services a teen driver may use. For example, many auto insurance policies provide tow or lockout protection, which is better than paying a locksmith to help your child gain access to his or her vehicle or worrying about your child waiting for a tow truck on the side of a busy interstate. When decreasing or eliminating certain types of coverage, you'll want to carefully evaluate whether this coverage could be useful for your child or enhance his or her safety while on the road.

For more information, contact local insurance agencies or visit