One of America’s great rites of passage – a teenager getting his or her driver’s license – also brings with it an increase in the cost of insurance for the family car(s). That increase can often be as much as double (or in some places, even triple) the current rate.
Why is the increase so large? Because teen driving statistics and accident rates are alarmingly high. Many different factors must be calculated and priced into the premium-setting equation by the insurance industry: health care expenses; property damage assessments; emergency services; lost wages; and continuing care for disabled victims.
However, if you are eligible, the following discounts may be available to help trim your auto insurance bill.
- Principal vs. Occasional Driver – Insurance companies want to identify a principal driver (the person who drives the car more than half the time) and occasional drivers for each insured vehicle. Occasional driver status may cost less. However, if a family has three cars and two parents, the teen may be seen as the principal driver of the third car. Another potential cost-saving option is to designate your teen as the principal driver of the oldest car.
- Driver’s Education – Some states require insurance companies to offer premium discounts of as much as 10% for teens who finish a driver’s education course. Thus, it may pay to ascertain if your state is one that offers this type of discount.
- Honor Roll Student – Investigate whether any insurance companies in your area offer a discount if your child is an honor roll student. In some states, a discount is available, so it may be worth checking.
- Nonresident Student – If your teen is a student living away at school without a car, he or she may qualify for a discount of 10% or more (in some states). To be eligible, the student must typically attend a school located at least 100 miles from the primary residence.
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