Adding a teenage driver to your car insurance policy will raise your rates. But you can control how much they'll climb.
Having teens drive a Camry rather than a Corvette, encouraging them to make good grades, and urging them to keep their driving records clean can all have a major impact on rates.
"Putting your teen in a big, boring vehicle is going to be a lot easier on the wallet than giving them the zippy small car they may want," says Russ Rader, spokesman for the Insurance Institute for Highway Safety.
There is a reason teenagers cost more to insure.
New drivers are among the most dangerous on the road, racking up tickets and accidents at rates several times the rate of a typical driver.
A teenager does not have to drive. Bicycles and bus passes are cheaper, if you live in a place where that's feasible.
But if it's not, here is what every parent needs to know about the cheapest ways to insure a teenager.
Yes, you have to insure your teen driver
Virtually every insurer will require that all licensed family members in a household be included on your policy, whether they drive your cars or not. You should let the insurer know when the child gets his or her learner's permit, but typically the teen isn't listed (or your policy charged) until he or she is licensed.
If you are divorced and have only part-time custody of your child, you'll have to consult your insurance company. Each company has its own rules. The best case is that the parent with primary custody adds the new driver; the worst case is that both parents do.
The only way to avoid paying the premium for a teenage driver on your own car is a named exclusion. Through an endorsement to your policy, you and your insurer agree that the driver is not covered. Any claim caused by that driver isn't covered, either.
Your teen could insure his or her own car, but state laws governing teen ownership of cars differ widely. In general, a minor cannot own property or sign contracts, such as an insurance agreement, without a parent's consent and signature.
It is almost always cheaper to add teenagers to an existing policy than to exclude them and instead buy an additional car and insure that, says CarInsurance.com consumer analyst Penny Gusner.
Not-so-hot wheels
If your household has several cars, it can help to have your new driver assigned to a specific one -- the one that's cheapest to insure.
If your child will have a car of his or her own, one place to start when looking for a car is the IIHS website, which lists insurance losses by make and model for vehicles built prior to 2010. Those vehicles with lower auto insurance losses will typically have lower auto insurance rates, while providing more protection if your teen is in a crash, Rader says.
The site also has a listing of the IIHS's top safety picks for 2011 and older model years.
June Walbert, a Certified Financial Planner for USAA, says a vehicle with a "bigger, faster engine costs more money to insure and more money to repair."
And just having a car with a powerful engine can be a temptation, Walbert says. "If you have that kind of power available, perhaps you'll use it." Instead, she recommends four-door sedans and crossover vehicles.
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