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Teen Drivers: 10 Things You Must Know About Your First Car Insurance Policy
So, you’re behind the wheel now and ready for your first car insurance policy. When it comes to car insurance for teens, many young drivers and their parents have a lot of questions.
Fortunately, we’ve got you covered—from driver education to taking off for college.
1. You’re Young and Inexperienced
You’ve just now gotten your permit or license and you don’t have as much experience under your belt as seasoned drivers. Teens are among the highest risks for car accidents, and auto insurance providers are well aware of it.
Don’t worry too much, however; as long as you keep at it and take advantage of some teen driver discounts, you’ll soon have your own affordable car insurance policy.
2. You Can Save Money With Driver Education
Your car insurance company will love seeing a driver education certificate; it means you’ve taken the time to learn the rules of the road as well as get some behind-the-wheel experience.
Even though you’re young and inexperienced, Driver’s Ed helps you get a jump on what to expect (and how to handle it), which often leads to car insurance discounts.
3. Better Grades Earn Teens Cheaper Car Insurance
Hitting the books can help you hit the road—affordably, that is. Many auto coverage providers offer better rates to students who make good grades (usually in the A- to B-average range).
Often called good student discounts, these discounts financially reward students for excelling in school. Some car insurance companies extend these discounts a few years after you graduate!
4. Your Own Policy vs. Your Parents’ Policy
Unless you don’t have a parent or legal guardian with a car and insurance policy, you don’t actually need your own policy; your parents can add you to theirs.
Essentially, this saves everyone money because instead of purchasing a new car insurance policy outright, your parents (or you) will just pay the extra percentage accrued from adding you to theirs.
It’s always a good option to ask for quotes for a separate policy vs. an addition to your parents’ policy to make sure you pick the best and cheapest option.
5. Safer Vehicles Are Better Options
When it comes to teen drivers, fast and flashy cars are red flags for insurance companies. Not only do they cost more to insure, but also you’re a teen, so you’re facing increased rates anyway.
Your best bet is a modest vehicle with a high safety rating—the kinds of vehicles that get better premiums no matter the driver’s age.
6. Consider Usage-Based Insurance
You can save money by utilizing usage-based insurance. This is a type of insurance the driver/policy owner can elect. It is not required, but it can result in savings if you drive well.
Simply put, it means insurance companies can use telecommunication devices installed in your vehicle to see how you’re driving and determine your rates. They view:
- How many miles you drive.
- The time of day you drive.
- Where you drive.
- Driving behavior such as hard breaking and hard cornering.
- Any air bag deployment.
Remember, you only get discounts if you drive safely! This system can be a great reminder to practice good driving habits, and you can get cheap car insurance for letting your provider view just how well you drive.
7. Driver Permits and Car Insurance
Usually, your parent's or legal guardian’s car insurance company will extend coverage to you once you get your driver permit. Consequently, this helps save cash while you’re learning the ropes.
Your parent should notify their provider that they now have a teen with a learner’s permit on the road. The coverage provider will walk your parents through additional steps, if any.
After you’ve graduated to your full license, though, you’ll need to be covered on an insurance policy.
8. Going to College Can Save on Premiums
So, you’re ready to head to college? Consider leaving your vehicle behind. Many offer discounts on auto insurance if teens leave their vehicles at home while they take off for higher learning—especially if the university is 100 miles or more away from home.
Going away to school and leaving your car behind means your parents could:
- Switch you over to an occasional driver.
- Apply for a “resident student” discount (again, this generally applies to students at least 100 miles from home).
- Drop you from their policy altogether (as long as you’re no longer driving).
NOTE: It’s crucial you or your parents notify your car insurance company once you pack up for college. For example, if you bring your car, you could face higher premiums. Failing to notify your provider could bring penalties.
9. Clean Driving Records Can Keep Rates Down
Technically, once you have a driving permit in hand, you have a driving record. Driving records are exactly what they sound like: records of your driving history.
Car insurance providers use driving records, or motor vehicle reports, when determining the risk of insuring a driver, no matter the age; generally, the worse the driving record, the higher the premium.
You’re at an advantage because, as a driver who’s just starting out, you can work at keeping your record clean from the beginning. This means closely following the rules and keeping traffic infractions at bay.
Understand that each traffic infraction can increase your rates and, in some states, lead to permit or license suspension or revocation.
10. Higher Deductibles Often Mean Lower Premiums
Car insurance premiums are what you pay for coverage; deductibles are what you pay should you become involved in an accident. Generally, the higher the deductible you choose, the lower the premium you get.
Because you pay premiums much more often than you pay deductibles (you only pay a deductible after an accident), some drivers opt to pay higher deductibles to keep their regular payments down.
However, you should keep in mind that accidents can happen, so the deductible you choose should be one you can reasonably afford.