Adding a teen driver to an auto insurance policy comes with a pricey toll. Even though the financial shock of adding a teen to a family auto insurance plan has eased in recent years, there’s still plenty of things to be aware of. NerdWallet discovered that it costs anywhere between $1,200 and $2,200 per driver, per year, which can take a toll on a family’s budget depending on their circumstances. But there are ways in which to alleviate extra costs and keep a monthly payment somewhat more agreeable than originally thought.
Local insurance carriers can help to guide families with teen drivers through the haze of finding the right plan. Parents can consult an Indianapolis insurance agent to find the best option, but can also do some research on their own. Here are some ways to save on hefty auto insurance plans for teen drivers.
What to Know First
Teen drivers tend to be inexperienced and immature behind the wheel, which only lends a hand to boosting premiums. Insurance companies look at how much risk a driver poses to the outside world and calculates a total from there. Male and female drivers, aged 16 to 19, pose the highest risk on overage when it comes to annual crashes and traffic violations.
Adding a teen driver means more of a hit on the overall amount of a family plan. This varies by state, but in general families can expect to pay a much higher rate.
Teenage Boys Cost More to Insure
Are there any teenage boys in your house ready to hit the road? Well, even if they have the best intentions behind the wheel, insurance agencies see them as a higher risk. Insurance companies use statistics to create rates, and they have the numbers to back them up. Teenage boys are significantly a higher risk driving than teenage girls in most states.
Can they have their own policy?
While adding a teen to an family policy will cost more, it definitely will not cost as much as having them get their own policy. There are discounts that families can take advantage of like multi-vehicle plans, multi-policy (such as home and auto bundled together), length of time with carrier, homeowner, and experience driving.
Having a teen purchase their own policy may be a good lesson in responsibility, but it will ultimately lead to more money out of their pocket than pitching in to a family’s plan.
Age of Majority
Depending on the laws within a state regarding teen drivers, there needs to be consideration given to age of majority. Young drivers between 18 and 21 cannot sign binding contracts. What does this mean? Well, if a young adult driver still living in your house wants to buy a car and an insurance policy (a binding contract), they will likely need a parent to co-sign. It’s best to go over all the options a family has when thinking of adding a teen driver and see how to best prepare for the financial responsibilities included.
About McClain Matthews Insurance
At McClain Matthews, we specialize in providing comprehensive insurance solutions for Indianapolis residents, business owners and beyond. For the last 69 years, we have established relationships within our community and pride ourselves on tailoring coverages as needed by our clients. For more information on how we can serve you, contact our friendly experts today at (317) 298-7500.