So Your Child Just Got a Drivers' License. How Do You Keep Your "Costs" as Low as Possible?

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The insurance impact of young drivers

Adding a newly licensed, youthful driver to your auto policy can more than double the cost of your insurance. The actual impact on your insurance varies according to your state's regulations. Insurance premiums for new drivers may be based on years of driving experience, the driver's age or even the driver's gender. Young drivers add another peril since some states permit policy cancellations after such operators suffer a single accident or violation. Instead of questioning whether this is fair, let's focus on ways to control the "cost" to your budget and your peace of mind, as well as how to increase the effectiveness of your insurance.

Methods for reducing your insurance premiums

• Have your child complete a driver training class. Classes can be expensive, but you gain the benefits of premiums savings and having a more competent young driver.
• If possible, take advantage of premium discounts for good students. Maintaining grades at a "B" or an "Above Average" grade level typically qualifies for this source of savings.
• Find an insurance company that charges premiums based on the car your new driver operates most of the time. (Many companies automatically assign young drivers to the most expensive vehicle).
• Does your child have to drive to school? If so, expect your company to charge a higher premium for the increased amount of driving.
• Build a long-term relationship with your insurer. Some companies reward longevity by forgiving a driver's first accident or minor traffic violation. It's important to seek companies that have a "friendlier" philosophy toward young operators.
• Help your son or daughter understand that poor driving habits can result in higher premiums or a canceled policy. Do everything you can to avoid the prohibitive expense (and often limited coverage) of substandard automobile insurance.
• Increase your collision or comprehensive deductibles or, if you have an older, low-valued vehicle, even eliminate this coverage.
• If your child independently owns a vehicle, he or she should have their own, separate policy. But be realistic. If you are handling or sharing the cost of the car and its insurance, it may make since to also own or co-own the vehicle. Parental or shared ownership permits you to take advantage of a multiple-car discount. There is another important consideration discussed later..
• Think carefully about giving a young driver his or her own car. Coverage for young drivers who have full-time access to a vehicle is very expensive. Make sure you balance convenience against cost.

Methods for keeping your young driver safer.

• Consider preparing your child with a course in defensive driving as a tool for avoiding accidents.(Another benefit is that your insurance company may give a credit for such classes).
• Require your young driver to understand, sign and comply with the Youthful Operator Driver Safety Agreement
• Be a proper model by using seat belts and never using alcohol or drugs.
• Provide your child with a well-maintained vehicle, equipped with safety devices such as air bags and anti-lock brakes. Also, avoid vehicles that are prone to being highly damaged in collisions or are vulnerable to "rolling over."
• Establish firm control over your son or daughter's driving privileges...don't hesitate to curtail or revoke them in response to poor behavior.
• Set your own high driving standards and personally test your young driver's ability to operate a car. YOU must be certain that he or she can properly pass vehicles, maintain a correct distance, park, merge and exit, change lanes make turns, obey speed limits and their awareness of pedestrians. YOU must be responsible for knowing if your child understands traffic laws and has a healthy respect for the power of the automobile. Don't let your child become licensed until he or she passes YOUR driving test. Don't forget to also test your child's ability to drive under adverse conditions (dark, fog, rain, ice, snow, rush-hour traffic, etc.).

Don't Trade Protection To Save A Few Dollars.

While it makes sense to save money on insurance...don't let the pursuit of lower premiums replace the need for proper protection. If your child has his own car and policy, he or she may be tempted to carry very low limits of liability. It may be more important to make sure that your young driver is protected from the financial consequences of causing a serious accident. Further, you may need to protect yourself since, depending upon circumstances, you could also be sued for an accident caused by your son or daughter. You might consider getting higher limits of liability by purchasing an umbrella policy.

The best advice is to talk to an insurance expert about a strategy to keep your new driver safer and to maintain affordable coverage.

Revised: 11/98

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