teen drivers and insurance

Parents will not only have additional worries when their child turns 16 and starts driving; they,ll also feel it in their wallet when they buy insurance for a teen driver.

Before your child turns 16, tell your teen that getting good grades will not only help him get into college, they might also help lower his auto insurance premiums.

Doug Mercer of State Farm Insurance in Fenton said that State Farm offers a “Good Student Discount” for teen drivers having a 3.0 or higher grade point average. “Statistically, kids with good grades tend to be more responsible in all areas of their lives, including driving,” said Mercer.

That’s just one way parents of teen drivers can help lower the skyrocketing cost of insuring teen drivers. Adding a teen driver to a married couple’s insurance policy boosts rates by an average 79 percent, according to a recent report for InsuranceQuotes.com, cited in Forbes magazine.

Gender makes a big difference in cost, too. Insuring a 16-year-old son will increase the insurance bill by an average of 92 percent, while adding a same-age daughter will increase your bill by 67 percent.

Those figures are using a household’s insurance plan, not accounting for a teen who obtains auto coverage separate from the family’s plan. “It’s not a good idea to move away from your household’s multiple-policy insurance,” said Mercer. “That will always cost more, and you’re still legally responsible for your teen until he’s 18 anyway.”

Why does insurance for teen drivers cost so much? “Teen drivers and insurance are a hot issue in Michigan,” said Mercer. “Insurance premiums cost so much in Michigan because of the Unlimited Lifetime Medical Coverage that is tied to the cost of insurance premiums. You’re paying for the medical portion of that coverage because of the high rate of teen car accidents.”

Car crashes remain the leading cause of death among Americans ages 15 to 19, according to the Centers for Disease Control and Prevention.

A safe driving record is another way to lower costs. “Staying and remaining ticket- and accident-free will result in a lower premium if you’re signed up for a ‘Youthful Driver Discount,’ as long as the driver doesn’t have an accident or ticket,” said Mercer.

The best way to find out your options for teen auto insurance is to talk to a licensed insurance agent. “Every company is different, as far as when they want to be notified about a new driver,” said Teresa Taylor, CIC, personal line sales agent for Peabody Insurance Agency in Holly. “Some want to know when that teen has their full license, while others want to be made aware of the driver when they’re taking driver’s training.”

 Rates will depend on how many cars and drivers are in the household, and whether your teen is a primary driver or just “occasional.” “If you buy a car for your teen, they’ll be listed as a primary driver,” said Taylor. “Buy an affordable car you can buy ‘liability only’ on. As soon as you buy a car with comprehensive coverage, your rates will skyrocket.”

Believe it or not, teen insurance rates have actually dropped slightly, perhaps because of the drop in licensed teen drivers. A survey conducted by the University of Michigan Transportation Institute reveals that only about 60 percent of teens between 17 and 19 are licensed to drive, compared to 80 percent of teens back in the 1980s.


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