Time flies and this is the time you wish you could stop the clock but here it is the moment that you have been dreading; your baby passed their driving test and now officially has their Driver’s License. It does not matter what they are driving; it could the family car, or maybe they were given a solid but not too fancy car for their birthday, or they have been saving up to buy their own ride but one thing remains constant, they are going to need auto insurance. And as a new driver, we won’t lie to you it is not going to be cheap, whether you add them to your policy or they get their own.
Below are some valuable tips we have put together; that all parents should know, as well as a few real-life stories that add some perspective to all the insurance lingo that gets pitched at you!
For instance, take John; a new driver; who set out to get his first auto policy. He was shocked at the cost. John had a reliable, four-door sedan, nothing too fancy. John’s parents were long time clients with an auto policy with Progressive that allowed them to add John to their policy because he lived in the household. They too were shocked at how much their auto policy rate increased when they added him. However, when John moved out and came off of their policy the rate decreased significantly but John needed still needed to get his own auto policy, and he did so by staying with Progressive, who is one insurance carrier that recognizes what we call “proof of prior insurance.” Because John was a driver in his parent’s household, they recognized that he had had auto insurance all along; basically building “insurance credit.” This helped John in the long run, saving him money by not purchasing his own expensive auto insurance.
The Basics About Getting Auto Insurance:
1. Generally Required
- Most carriers require parents to add their teens or new drivers to their policy once they get their learner’s permit or license. Check with your carrier (or call your broker) for their exact rules.
- DO tell your insurance carrier that you have a new driver in the house! If an accident happens while they are driving, they may not have accident forgiveness and cover any damages and liability. It is important that you list or exclude all drivers in your household.
- Most states and countries require at least liability insurance to cover damages or injuries you may cause to others in an accident.
- Driving without insurance can result in fines, license suspension, or even legal issues.
- Let your Broker know if your teen is taking their car out of state to college.
2. Assume Higher Premiums
- Young and inexperienced drivers are perceived as high-risk, so adding them will increase your premium, however, adding your teen to your auto insurance policy will be less expensive than if they get their own policy.
- While your rate may increase, you are helping your teen driver build insurance credit.Think of it like establishing a Credit Score, you will pay more now, but in the long runyou will both pay less later.
- Rates drop as the driver gains experience and maintains a clean record.
- Weigh your options of putting your teen immediately on their own policy or adding them to yours. Talk over your options with your Agent; there are always options!
3. Factors That Affect New Driver Premiums
- Age & Experience: Young and new drivers usually pay more because they’re considered as high-risk.
- Type of Car: Sports cars and luxury vehicles typically cost more to insure.
- Driving Record: Accidents or tickets will increase your rates.
- Location: Insurance cost will be more in areas with high accident or theft rates such as cities, etc.
- Credit Score (in some states): May play a factor, a lower score might mean higher premiums.
4. Ways to Save Money
- Good Student Discounts – Many carriers offer discounts for teens with a B average or higher.
- Defensive Driving Courses – Completing an approved course can lower rates.
- Safe Driving Apps/Programs – Some insurers have apps that track driving habits and reward safe driving.
- Choose a Safe Car – SUVs, sports cars, and luxury vehicles cost more to insure; opt for a safe, reliable car instead.
- Higher Deductibles – Increasing the deductible lowers premiums but means paying more out of pocket for claims.
5. When to Remove Them
- If they move out permanently and have their own vehicle, they may need to purchase separate coverage.
- If your driver is away at college without a car, some carriers offer a “student away at school” discount.
Another client of ours has a more atypical situation when it comes to adding a new driver. Kate called and wanted to add their daughter-in-law to their auto policy. She was moving to the area from another country and had no proof of prior insurance technically making her a new driver in all insurance carriers’ eyes. Normally, we would tell our clients that we could not add an in-law to their policy, but in this case, she was going to be living in their household, so, in fact, under their insurance carriers’ rules, she HAD to be added to the policy or excluded.
The daughter-in-law, who owned the car, had previously gone to another insurance carrier and the rate that she was given was $1000 more than what we were able to attain adding her onto her family’s policy, PLUS she would have had to add all of her family to her own separate policy because they were living in the household.
Many times, you get a better rate adding new drivers to your policy, but it’s these rare cases that pop-up that make us all remember to call your Broker, no matter the question. And Landmark Insurance handles all kinds of situations. We have a been in business for a many, many years, with many long-time loyal clients we have handled it all.
Don’t forget to keep reading our blogs, look for us on Delmarva Life, follow us on Facebook and call us for all your insurance needs. If Landmark Insurance can’t manage your Insurance Requirements, No one can!
Landmark is “Large Enough to Serve You, Small Enough to Care!”®
