Sending your teenage kids out into the world behind the wheel of a car can be a truly nerve-wracking experience. Not only are you worried about the decisions your kids will make when they’re out from under your watchful gaze and in the thrall of peer pressure (or the heady rush of freedom that comes with a license to drive), but you also have to face the financial realities that come with having teen drivers in the household. They are expensive! You can, of course, cut costs by allowing them access to a shared family vehicle rather than their own cars. But there’s just no getting around the fact that this high-risk age group comes with concurrently high insurance premiums. However, there are ways to reduce your stress, at least where auto insurance is concerned, and here are a few tips to help you lower your payments.
For starters, you should take the time to call or visit your insurance agent to ask about potential discounts. You might be surprised by how many apply to you and your teens. Many will rely on you, such as a multi-car discount (should your teens have their own vehicles), a multiple policy discount (if you decide to take your home and auto policies to the same insurance provider), or discounts for safety devices on the vehicle (such as LoJack or other anti-theft measures). But you may not realize that your teens can also contribute to the cause. Although they aren’t yet eligible for responsible driver discounts, many companies have provisions in place to lower the cost of insuring otherwise responsible teens, based on the grades they receive. And considering that you could save hundreds of dollars a year via good student discounts, perhaps you should make a high GPA a condition of having the keys to the car (it’s certainly motivation to study).
You should also consider the vehicle that you choose to let your teens drive. Although a portion of the cost of insurance is based on the individual operating the vehicle, the cost can also fluctuate due to the relative safety of the car being driven (amongst other factors). For example, a two-door sports car is obviously going to come with a higher insurance premium than, say, a minivan or other family-type vehicle. And a brand new car with a bank loan is going to require the highest level of insurance (the lender usually demands it). So by giving your teens an older, safer car to drive you stand to bring down the cost of insuring them, at least a little.
Of course, you could drastically reduce your own contribution by making your teens take on some of the financial responsibility. Owning and operating a vehicle is by no means cheap, and unless you want your teens to receive the shock of their lives when they get into the real world and have to pay their own way, you should think about making them pay for at least a portion of vehicle expenses (from insurance to gas to registration). This will relieve the burden on you to shell out the hefty sum for their driving experience and it will increase your teens’ awareness of the responsibilities and costs associated with this so-called freedom.