New Driver Auto Insurance: Tips to Saving for Your New Driver
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UPDATED: Apr 12, 2020
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No! New driver auto insurance isn’t difficult to find, but it will generally be expensive to purchase and maintain. New drivers, especially males under the age of 25, are rated by insurers as the most likely to be involved in accidents and other automobile mishaps.
New drivers will pay significantly higher auto premiums until they have at least a few years of driving experience.
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Most new licensees are teenagers, eager to gain the freedom and mobility of driving a motor vehicle.
Unfortunately, the benefits and pleasures that new drivers enjoy come with new risks as well. Studies show that new drivers have higher crash rates. This is especially true of drivers under the age of 18.
Graduated Licenses for Teen Drivers
Novice drivers are often at risk because they lack the driving skill and good habits that come with experience. It’s also widely believed that younger drivers may lack maturity and suffer lapses in judgment.
As drivers get older and gain experience, car insurance becomes cheaper and easier to obtain. All U.S. states have enacted laws creating a graduated license program for teen drivers. These programs allow beginners to gain experience while reducing the risks of driving.
All 50 states and the District of Columbia currently use a three-stage system for licensing teenage drivers.
According to the Insurance Institute for Highway Safety (IIHS), these systems will vary from state to state in the strength of their specific rules and procedures.
The first stage involves obtaining a learner’s permit for a specified period of supervised instruction and practice. Most states require at least a written exam to obtain this permit.
Once an initial driving test is passed, an intermediate license is issued that places restrictions on new drivers, such as driving after dark or carrying passengers. These restrictions are in place to limit the risk of accidents and injuries while new drivers get acclimated to driving on their own.
After successful completion of the first two license stages–the learner’s permit and restricted license–a license granting full driving privileges is granted. For most states, the process begins at age 16.
For all states, a full license may be granted when the new driver turns 17 or 18, if all other requirements have been met.
The Insurance Institute of Highway Safety
The IIHS website provides users with links to maps detailing license regulations in each state, the ages for each stage, and the restricted hours for night driving.
Visitors to the site can also find the minimum age for unsupervised driving in each jurisdiction, as well as each state’s restrictions on carrying passengers during the first two stages of the licensing process.
As mentioned above, the IIHS publishes motor vehicle laws and regulations affecting all drivers in every state.
The Institute’s website also contains links to other consumer-oriented pages, providing drivers with invaluable information about crash and safety ratings for passenger vehicles, along with research and statistical information.
Brochures and videos are available for consumers, as well as current news items and articles relating to automobile insurance for new drivers and more experienced drivers alike. Interested motorists can sign up for a periodic member newsletter.
Preparing Teenage Drivers for the Road
Edmunds, an authority on automobile ownership in the U.S., gives advice on how to prepare your child to be a careful and conscientious new driver.
Edmunds encourages parents to help teens learn motor vehicle laws and regulations, and follow them. The best way to keep insurance premiums down is to obey traffic rules and maintain a clean driving record.
Parents can set a good example when they are behind the wheel by obeying the rules of the road and teaching their children to do the same. Children will mirror the behavior of their parents. As the old saying goes, “Actions speak louder than words.”
Enlist your child’s help and support in the process of obtaining car insurance. The more involved your teen driver is in the process, the more aware they will be of the need to be a safe and responsible driver.
Be open and frank in discussions with your teenager about alcohol and drugs. Not only is drinking and driving illegal, driving while impaired is a major cause of injuries and deaths on American roads each year.
If necessary, send your teenager to traffic school to avoid insurance penalties from traffic tickets and citations. A few hours in a classroom are preferable to several years of increased auto insurance premiums.
Parents should also avoid sports cars when shopping for a suitable vehicle for their child to drive.
Sports vehicles are always more costly to insure and offer far too many temptations for younger, more impressionable, drivers. They may whine and complain, but a family wagon is generally the safest vehicle choice and the least expensive to insure.
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Cutting Car Insurance Rates for Teen Drivers
We’ve already determined that auto insurance rates for teenagers are higher. Parents will have to shop wisely and make a number of important decisions when considering whether to add a teenage driver to their policy or to purchase separate insurance for their child.
This article, which was first featured in Kiplinger’s Personal Finance Magazine, provides a number of tips for parents shopping for new driver insurance. Following this advice could help you save big bucks on your teenager’s first policy.
Newer drivers are involved in more accidents–this is a given in the insurance industry. The IIHS estimates that a 16 year old is six times more likely to have an accident than a driver in the 30-59 age bracket.
Most of these accidents, however, are minor fender benders that usually don’t involve injuries, and may only cost a few hundred dollars to repair.
Kiplinger’s advises parents to raise their collision and comprehensive deductibles to at least $1,000. This cost-saving move will substantially reduce insurance rates. Filing even a small claim could further jeopardize policy rates, especially if you’ve been accident-free for a period of time.
The magazine recommends that you maintain an emergency fund to cover repairs or the cost of the increased deductible.
For older vehicles, it is recommended that you drop collision and comprehensive coverage completely. A single accident could easily cause damages to the vehicle in excess of the car’s value. The total cost of the premiums could be more than you could recover from the insurer in the event of a claim.
Consult with the Kelley Blue Book to determine the value of your used car, and if it would be worthwhile to pay for collision or comprehensive coverage for your teen driver. Kelley Blue Book is the acknowledged authority for trade-in, wholesale, and retail automobile values.
All car insurance companies offer premium discounts for vehicles that are equipped with the latest safety features. Use the IIHS website to obtain the latest safety and crash test ratings, and to buy a safe vehicle for your new teenage driver.
The vehicle will not only be safer to drive, but cheaper to insure.
Most auto insurers offer large discounts for younger drivers who maintain a solid “B” average or better in college or high school. Getting good grades is often an indication that a young driver will be more cautious and responsible while behind the wheel of a motor vehicle, thereby causing fewer accidents.
Make sure you let your insurance provider know if your son or daughter is attending college more than 100 miles from your home. Your insurance rates will drop, but your child will still be covered when they come home on break or for summer vacation.
Most insurance companies grant premium discounts for drivers who complete safety programs. This is true of adult drivers as well as newer teenaged drivers. Check with your local AAA chapter for sponsors of driver safety classes in your area.
Homeowners and renters alike are always eligible for multi-policy discounts for their automobile insurance. Likewise, auto discounts are offered if you also purchase life insurance, disability, or other coverage from the same provider.
An umbrella policy is also a good way to save on car insurance while providing additional liability coverage for all of the drivers listed on your policy.
The last bit of advice that Kiplinger’s gives is for policyholders to, shop, shop, shop!
Insurance requirements and premium rates can vary greatly from state to state and even from region to region in each state.
Car insurance will cost more in heavily populated urban centers than it will in rural areas. Drivers should examine a number of insurance companies and options before purchasing a new policy.
While there may be some advantage to purchasing a separate policy for your teenage driver, it’s usually cheaper in the long run to add your son or daughter to your existing policy.
Stay with your Insurance Provider
There are also advantages to staying with the insurance company that you’ve been with for a number of years. Your current provider is much more likely to be forgiving in the event that your teenage driver has an accident and you’re forced to file an insurance claim.
A newer company might not think twice before cancelling a policy after only a single mishap. Also, consider the multi-policy or other discounts you may already be receiving from your current insurance provider before making a move.
The few dollars you might save by switching companies might not be worth it in the long run.
Maintain a High Liability Coverage
Experts agree that it is vital to maintain high liability coverage on your vehicle, especially if it is to be driven by a newer, younger driver.
You never want to skimp on liability coverage. Even though most states require far lower minimum coverage amounts, liability coverage amounts of 250/500/100 are usually recommended.
These amounts provide $250,000 coverage for injury to a single person involved in an accident, $500,000 for two or more persons, and $100,000 coverage for property damage.
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