There's no way around it. The minute your sixteen year old is handed a driver's license and reaches for your car keys your insurance rates are going to climb. The question is, what can you do about it? You might be surprised. Most auto insurance companies aren't completely unreasonable when it comes to teen drivers. (Relatively) cheap insurance coverage might be closer than you might think!
Before we go into ways to save money when your teen insists on being behind the wheel let's talk about why your insurance rates are going to climb. It's a statistically proven fact that motor vehicle accidents are the leading cause of death among teens of all age groups. According to the CDC, in 2005 2,544 teens between the ages of 16 and 19 died from injuries caused by motor vehicle accidents, and over 400,000 passengers and other drivers sustained injuries that sent them flying to the nearest emergency room.
When you consider the fact that most emergency room visits START at $1,000 a pop, and treatment in the ICU can cost as much as $5,000 a day, it's easy to see why these numbers might leave auto insurance companies feeling a little concerned. The numbers show that drivers under the age of 25 are responsible for a whopping 30% of auto insurance claims filed each year, numbers that total over $19 billion in paid damages.
As you can see, teen drivers represent a significant threat to your insurance company's profit margins and, as a result, are virtually guaranteed to send your annual premiums flying through the roof to cover the difference.
Teen drivers do have some benefits at their disposal going into the insurance game that will help keep your auto insurance rates reasonable, however. Most teens don't have a credit score (or if they do they don't have enough credit for it to really count in their favor); however, chances are good that your sixteen year old is still a full time high school student. If your child is an honor roll student they have an excellent chance at shaving 5-10% off of their annual premiums.
Most teens don't spend a whole lot of time on the highways; their travels tend to be limited to the distance to and from work, school, their friends and the local movie theatre. Because of that, if you can afford to purchase a $2,000-3,000 secondhand vehicle exclusively for your teen's use they'll be able to enjoy low mileage discounts and the insurance savings that go hand in hand with driving a vehicle that costs a lot less to replace than the $12,000 family sedan-or worse, your $50,000 Porsche.
Is your teen driver going to drive up the cost of your auto insurance? Absolutely. The good news is if you do your homework and work hand in hand with your auto insurance provider it doesn't have to straw that breaks the back of your cheap auto insurance rates.
