Contributing Leavitt Group Authors: Rhonda Gimler, Megan Varela, Yessy Arroyos, Mary Kay Hale
Adding a teenage driver to your auto insurance policy might be a daunting thought, especially when it comes to the added cost of a young driver. However, there are ways to properly insure all of the drivers in your household while keeping your insurance premiums within budget. This article includes an explanation of different discount options that are available, as well as insurance pricing considerations.
Good Student Discount
The “good student” discount requires a minimum GPA of 3.0. This is a win-win for parents and children as it provides an incentive for the teenage driver to maintain a higher GPA and it gives the parents a cost break on their insurance premium.
Driving Record and Claims History
A good driving record and claims history is very important to insurance companies as these factors help determine the driver’s risk profile. Drivers who have numerous driving violations and/or who have filed a claim due to an accident (high risk profile) will pay a higher insurance premium. Drivers with a good driving record and claims history (low risk profile) can qualify for a discount on their insurance premium. Investing the time to teach your young driver good driving habits and setting a good example when you are at the wheel will pay off in lower insurance premiums over the long run. For driving safety tips, visit https://news.leavitt.com/personal/top-ten-distracted-driving-points/.
Other Discount Options
There are a variety of other discount options available, depending on your insurance company. These may include discounts for customer loyalty (including bundling your home and auto policies with the same insurance company), multi-car, homeowner, vehicle usage or low miles driven, training in defensive driving, vehicle safety features (anti-lock brakes, anti-theft features, new car, etc.), auto-payment plans, and paperless billing. Talk to your insurance agent to find out what discount options are available for you.
Insurance companies may factor in your credit score when determining your insurance premium – the better your credit-based insurance score, the better your insurance rate. While this may not necessarily seem fair, studies have found that the lower a person’s credit score, the higher risk they are when it comes to insurance. According to the FTC, credit-based insurance scores are “predictive of the number of claims consumers file and the total cost of those claims.”
Having a lapse in coverage will also affect your rates. If you find yourself in a temporary financial emergency and need help, contact your agent about options for changing your payment due date or setting up a payment plan on a temporary basis. Companies may be willing to work out a solution for you.
Vehicle Type, Age, and Value
As a general rule, the higher the value of a vehicle the more it will cost to insure. When calculating premiums, insurance companies take into consideration the cost to repair/replace the vehicle, how it is being used, and who is driving or has access it. Sports cars may not be the wisest choice for an inexperienced driver or a family with children – they are a higher risk vehicle as they tend to make us want to go a little faster (come on now, admit it), and inexperienced drivers won’t know how to handle all of the road situations that might occur. It is always best to weigh all the benefits and do some research online to review the safety record of the vehicle you are considering for your teen. You can also call your agent to get an insurance estimate before purchasing the vehicle.
It is always best to be honest and upfront with your insurance company regarding your situation – while your premium may increase by adding a teenage driver, you can rest assured you have the coverage you need in the event of an accident or loss.