Managing Insurance Costs When Your Teenager Drives

Managing Insurance Costs When Your Teenager Drives

Over half of all young males will have an accident in the first year of obtaining a license.

Over half of all young males will have an accident in the first year of obtaining a license.

My son Dominic is 18 and a high school graduate, as of this week! Knock on wood, he’s had only one near-miss since he began to drive. Only days after receiving his permit, he and his dad were driving to school when a kamikaze deer leaped in front of the car. Devon, his younger brother, was waiting at the school bus stop and witnessed the event. Unfortunately, the deer had to be put down. That said, the car was undamaged; everyone was shaken, but unhurt.Besides the emotional stress teenage drivers can place on a family, there are costs and liabilities to consider. Rocco Esposito of Esposito Insurance Group shares his insights in this guest blog.

Auto Insurance Costs and Teenaged Drivers
By Rocco EspositoAuto insurance can become very expensive when you add a teenager or other newly licensed driver (such as an au pair), to your policy. Over half of all young males will have an accident in the first year of obtaining a license. Auto insurance companies tend to charge for their presence on the policy with this in mind.Things to keep in mind when insuring new drivers are as follows:

  • A permit operator who has not yet passed his road test must be listed on your policy, but a fee is not charged for his presence on the policy.
  • Once a youthful operator passes a road test and is fully licensed, she is required to be added to the policy as a driver.
  • If your child goes to college but retains your home as his permanent address, he is required to stay on your policy.
  • If your driver goes to college more than 100 miles away and does not have a car in her possession at school, she usually qualifies for a discount.
  • If your young driver goes to college and does have a car in his possession, the 100-mile rule does not apply.

To help discount your policy, the following may decrease your pricing:

  • Good grades for the driver, generally B or better (3.0)
  • Having certified classroom and behind-the-wheel training within the last three years.
  • Having more drivers than cars, which allows a company to price a young driver as a part-time operator on a car.
  • Having an older, liability-only car for your teen to use. If all you have are newer sports cars, the pricing will be much higher.

Also, here are two recommendations regarding liability exposure related to your young driver:

  • Avoid separate policies. It is almost never a good idea to have a separate policy just for your young driver. This almost always costs considerably more money than having everything together. It also presents the temptation to decrease coverage for your son or daughter, thereby increasing your exposure to a catastrophic lawsuit.
  • Revisit your umbrella coverage. Consider obtaining or increasing your family’s umbrella coverage when you add a youthful operator. This will allow you to more adequately fend off a lawsuit if a serious accident occurs.

About the Author
Guest Author Rocco Esposito is the principal of Esposito Insurance Group, a New Jersey Insurance agency. He joined Esposito Insurance Group in 2003 after working as an executive with several large companies in technology, manufacturing, retail and software services. He specializes in personal risk management and small business insurance, and advises his customers in making appropriate insurance choices.

zipSage Serendipity: Ever hear of the “zipper merge” in driving? You’ve probably done it a million times without ever knowing that there is a surprising art and science to it.

Sheri Iannetta Cupo, CFP®, Founding Partner (Retired) & Director
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