Teen drivers: How to ensure their safety - and insure yourself
Wayne Cohen spends a lot of time thinking about car insurance. As the father of three sons in their teens and 20s -- the most expensive group of drivers to insure -- he pays big car insurance bills. And as one of the most aggressive personal injury attorneys in Washington, he has won big car insurance cases.
"Thinking about teenagers on the road is stressful as is, let alone when they are your own kids," Cohen said. "I can't tell you how many catastrophic cases I have had over the years where the parents of a teenage driver were underinsured."
When parents add a teenager to their car insurance policy, their rates are likely to go up an average of 78 percent, according to a study by InsuranceQuotes.com. Based on the average national car insurance bill, that's $1,028 more. Prices jump even more for boys -- 89 percent -- but girls are expensive too, raising bills 66 percent.
Teen drivers are expensive to insure for a reason. They are more likely to cause accidents than any other group, according to Centers for Disease Control and Prevention. In fact, motor vehicle accidents are the leading cause of death for teenagers. And studies show teens are more likely to kill other people in these crashes than to die themselves.
This adds up to two needs: to increase safety for these young drivers, and to decrease the cost of insuring them. Here's advice from the experts to tackle both.
Decreasing teen care insurance costs
Don't be tempted to try to keep your teenager a secret from your insurance company. Instead, inform the company as soon as your child gets a learner's permit. Honesty is the best policy and disclosing new drivers is the law in several states.
"The worst insurance mistake parents make when their teen starts driving is not notifying the insurance company that they have a licensed young driver," said Mike McCartin, president of Joseph W. McCartin Insurance in Beltsville, Maryland.
If you don't inform your insurance company, some will cover an accident caused by your teen as a courtesy to you, but others will refuse. There's a third scenario: "Many companies will backdate the addition of a driver to the day they were licensed ... which can be a big outlay if it goes back a year or more," McCartin said.
It's cheaper to add your child to your insurance policy than it is to get them their own. (If they're under 18, many states don't allow them to enter into contracts anyway.) But that doesn't mean you should automatically add them to your existing policy. Instead, this is a good time to shop around for a new insurance company since some companies charge more than others to insure teens. Consumers Checkbook found that switching car insurance providers is one of the easiest ways to save as much as $1,500 a year. You may be able to recoup the cost of insuring your teen driver by getting a cheaper policy overall.
Student status is another way to save on car insurance for teens. Many insurance companies offer discounts of as much as 25 percent for good grades. You may score another 15 percent off if your teen takes a defensive-driving class. And finally, if your child is moving more than 100 miles away for college and won't be taking a vehicle, that's yet more ammunition for a price break as the insurance company could list him as an occasional rather than regular driver.
Another way to save is based on the car your teen will drive. Instead of giving kids free rein to drive any car, limit them to the vehicle that's cheapest to insure and let the insurance company know that's their designated vehicle to bring down the cost. Better yet, buy a used car, which is less expensive to insure. You may even be able to skip collision and comprehensive coverage if the car is not worth repairing in the event of a wreck.
On the other hand, Consumer Reports says to avoid too old a car. Inexperienced drivers should have as many modern safety features as possible. The magazine emphasizes the importance of anti-lock brakes, electronic stability control and air bags, particularly side-curtain air bags.
Cohen, the attorney and dad, suggested buying a solid car insurance policy but also getting an umbrella liability policy. "In a lot of states, the owner of the vehicle is responsible for any negligence caused by the driver," Cohen explained. "So if a teenage driver causes an accident, the parent could be responsible for costs above and beyond the car insurance."
Insurers require you to have a certain amount of car insurance in place before they'll sell you an umbrella policy, but after that, umbrella policies are cheaper. For example, McCartin said, $1 million in auto liability would cost a family more than $500 a year, but they could get $2 million in umbrella liability for just $400 a year -- and that umbrella coverage would protect them against many different problems, not just car accidents.
Finally, some insurance companies will offer a discount if you agree to install computerized equipment that monitors things like your teen's seat belt use, speed and hard braking. Ideally, this kind of oversight will also make your teen a safer, more mindful driver.
Increasing teen driver safety
Consider installing and using apps that turn off your teen's phone while he is driving. They work by tapping into the phone's GPS capability to determine speed, which could prevent texting-and-driving accidents. Consumer Reports tested several apps and gave them positive reviews.
There's also a low-tech safety technique: a driving contract. "This is not a legally binding contract," McCartin explained. "It is a tool we use to facilitate discussions on safety."
Lay out rules of the road that your teen must agree to, in writing, to drive your car and be on your insurance policy. Some suggested clauses:
- No more than one underage passenger. Studies show accident rates go up for every additional peer riding in a teen's car.
- No drinking or drugs. The CDC says substance abuse and driving are even worse for teens than for older drivers.
- No talking or texting while driving. The Federal Communications Commission says cellphone use while driving kills more than eight people a day.
Getting to drive is the carrot in these contracts. The stick is up to you. If your child fails to uphold the contract, you can take away the keys, take away the car, or require him to pay some amount for something if they are in an accident or get a ticket.
I caused a fender-bender at 16, and my parents made me pay the deductible on their insurance policy to get the car repaired. I still remember it. You may want to put car safety rules in place that are just as memorable for your teenagers.
- Leamy hosts the podcast "Easy Money" and is a 25-year consumer advocate for programs such as "Good Morning America" and "The Dr. Oz Show."