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Parents often both long for and dread the day their teenagers can sit in the driver’s seat of a vehicle. It frees up time but also comes with safety concerns — and costs.
“Let’s say that Mom or Dad pays $100 a month in auto insurance,” said Pam Hansen Alfred, an insurance agent with State Farm. “As soon as you add a youthful driver, it goes up three times what they were paying before.”
This increase usually remains until teen drivers get their own insurance or turn 20, when rates start to drop. However, those rates won’t be the same as other adult drivers until age 25.
Fortunately, parents and teens can keep the rate as low as possible with these tips.
Qualify for the Good Student Discount
Teenage drivers’ grade point average will impact their insurance rates.
“The number one thing to lower teen insurance rates is to have a 3.0 or better GPA,” Alfred said. “To tell you how impactful that is, it gives them a 30% discount on their auto insurance.”
Parents can require teens to contribute to payments to help them understand the cost of driving and the importance of the discount, Alfred said.
Sign up for Steer Clear
State Farm offers another discount program, Steer Clear.
“What a young teen driver does is download an app called Steer Clear,” Alfred said. “After each drive, it will ask them questions like, ‘What time of day did you drive? What was your experience? Was there anything you could do differently?’ Participating in this can get them a 10% discount.”
This optional program is available only for young drivers.
Insure the right vehicle
The older a vehicle and the lower its value, the lower the rate will be.
“It’s best to have an older vehicle valued at $3,000 or less, so you can just put liability insurance on it,” Alfred said.
As such, a teen should be insured on the oldest vehicle the family owns.
“If the teen doesn’t have their own vehicle and the number of drivers outnumber the number of vehicles, the rate will be lower because the insurance company knows, since the teen will be sharing the car, they won’t be driving it as often,” Alfred said.
Give teen drivers experience
Some parents put off allowing their children to get a license to save money and reduce the risk of an accident. However, this won’t save money or risk in the long run, Alfred said.
“One of the critical components of a person learning to drive is experience,” she said. “It doesn’t matter if they get that experience at 16 or 20; they still need that experience. So, I encourage parents to get them licensed as soon as they can.”
Drive Safe and Save
Another State Farm discount program, Drive Safe and Save, provides drivers of all ages a beacon to keep in the car. A smartphone app then tracks and scores drives.
“You put that beacon into your glove box and then it monitors speed, turns, sudden brakes, sudden accelerations, and phone usage,” Alfred said. “If my kids were still teens, I would want to see on the smartphone the trip they just made — not to spy on them but just as a little accountability.”
The tracking allows users to see where they were when they sped or braked suddenly. The score determines the discount, with an average discount of 10 to 15%.
For more information on State Farm discount programs for teens or to get a rate quote, visit pamhansenalfred.com.
