Getting a driver’s license is one of the great “rites of passage” for America’s teenagers. However, what is exciting for teens can be less thrilling, financially, for parents. A teen driver can increase the cost of insurance for family car, possibly even doubling your current rate.
Why is the increase so large? According to the National Highway Traffic Safety Administration (NHTSA, 2002), the accident rate for teenagers is three times the rate of other drivers. Therefore, if you have a teen behind the wheel, check with your insurer to see if you are eligible for any of the following discounts:
Principal vs. Occasional Driver – You will usually have to identify a principal driver (the person who drives the car more than half the time) and occasional drivers for each insured vehicle. Occasional driver status may cost less. However, if a family has three cars and two parents, the teen may be seen as the principal driver of the third car. Another potential cost-saving option is to designate your teen as the principal driver of the oldest car.
Driver’s Education – Some states require insurance companies to offer premium discounts of as much as 10% for teens who finish a driver’s education course. Thus, it may pay to check if your state is one that offers this type of discount.
Honor Roll Student – Investigate whether your insurer offers a discount if your child is an honor roll student.
Nonresident Student – If your teen lives away at school without a car, he or she may qualify for a discount of 10% or more (in some states). To be eligible, the student must typically attend a school located at least 100 miles from the primary residence..