It’s tough being a young driver! You finally reach that age of semi-independence with keys to conquer the world (or at least a 15 mile radius of your home town) only to realize that your hefty car insurance premiums have the potential of wiping out your entire paycheck from that part-time job. And some states even require the young driver to put a special label on the back of the car – talk about embarrassing!
The good news is there are a few ways to make insurance more affordable for a young driver, whether in their teens or early twenties. Let’s explore!
The reasoning behind the high premiums
Younger drivers often face paying higher car insurance premiums because of experience. Less driving experience leads to more accidents and statistically, insurance companies’ experience with young drivers is not good – more accidents lead to more claim payments and therefore higher rates.
Ways to offset the high insurance premium costs
If you are a parent of a young driver, you can work with your Insurance Agent to determine if your young driver qualifies for any auto credits to make the high insurance premium costs more manageable. Here are a few things to keep in mind.
Good grades matter
Good student discounts can be a great way to save money on car insurance for young drivers in their teens or early twenties. Here are typical rules to qualify for the good student discount:
- Licensed driver age 16 to 25
- Must have a 3.0 or higher grade point average
- Student attending high school full time or college student with 12 credit hours or more
- Verification of report card required
- Home-schooling can qualify with proper documentation
- Discounts only apply for a year so keep the grades up or recover for a discount next year
Driver’s Ed is not old-school
Teen drivers who are under the age of 21 are often rewarded with special savings through a Driver Training Discount if they complete a qualifying program.
Good credit = lower premiums
You can never be too young to start thinking about your credit score. Young adults face a lot of credit temptation – especially when they get to college – with freebies and discounts just for signing up for a new credit card account. However, what the credit card companies don’t tell them is that the ‘free’ gifts will ultimately end up costing them tons in interest and fees, as well as in insurance premium. Your young driver may not realized it, but insurance companies factor in credit score when determining premium – the higher the credit score the lower the premium. And although just applying for credit cards to get freebies seems harmless, it’s not: applying for credit repeatedly can lower your credit score.
Safe drivers laugh all the way to the bank
Having a young driver on your insurance policy can be expensive, but if your young driver maintains a safe driving record by driving carefully, avoiding tickets, and not making unneeded claims, you will be rewarded with lower premiums over time.
Minimal access can result in big savings
If your young driver is more than 100 miles away at school, you may qualify for a discount – finally something to reduce the cost of college education! The discount is intended for students who do not have regular access to a car while living on campus. Your young driver would still be listed on your policy and have driving privileges when they came home.
Finally, a quick message for parents – continue to be involved in your kids driving and be a good influence!
- Set high standards – I was driving in town a few months ago and pulled up next to a new driver with his father in the passenger seat. The new driver behind the wheel was texting while driving and the father sat unconcerned in the passenger seat! Needless to say I was shocked – please don’t let this happen, your kids’ lives depend on it!
- Keep letting them drive – It’s also important to continue to let your kids drive when you are in the car – even after they’ve gotten their “real license.” Good driving habits are acquired over years not months so continue to be involved in developing their good habits!
- Practice what you preach! Lastly, this poll shows kids would like their parents to put the cell phones down while driving. Set a good example because they will justify sending that text while driving because “Daddy does it all the time!”
How are you keeping costs down for your young driver? Tell us in the comments below!