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Insuring Your Teenaged Driver

With insurance companies, reaching out to teenaged drivers and their parents is becoming something of a trend, and it's smart marketing. After all, if you form a business relationship with someone while they're young, they're more likely to stick with you as an adult. For parents, however, insuring a young driver is much more than a marketing trend. It's at once a rite of passage, and a financial burden, because teens pay the highest insurance rates. Helping your child transition into adulthood is something every parent can do; saving money on teen auto insurance, however, is a little tricky.

It's important to understand that the reason you will be paying more for your teenager's insurance is perceived risk. This means that the insurance industry looks at your child and says, "Hmm. Sixteen. Reckless. Inexperienced. This person is highly likely to be in an accident, and file a claim." And that's why the steps involved in saving money on insuring your teen often involve making them look like a better-experienced driver.

It's said that adding a teen driver to your auto policy will double your premium, so saving money anywhere you can becomes crucial. Strategies for saving money on teen auto insurance include:

• Shop around. Different insurance companies offer different products and pricing, and some have programs geared specifically for younger drivers. It's especially wise to do your shopping online, not only because it's a lot faster, but because studies in the UK and USA have shown you can save up to 25% by doing so.
• Take a defensive driving class. The required driver training classes are all very well and good, but consider taking a defensive class with your young driver, for two reasons: one, it's good parent-child bonding time, and two, it can net you a discount that lasts as long as three years. (A third benefit is that it will make you and your young driver more comfortable when driving in challenging situations.)
• Encourage good study habits. Even into their college years maintaining at least a B average will reduce the cost of your teenager's auto insurance, as does making Dean's List or Honor Roll. You can't (and shouldn't) do their homework for them, but do encourage them to keep their grades up.
• Put them on your policy. It may be tempting to arrange for your teen to be on their own policy, but, at least while they live at home, it's significantly less expensive to add them to your auto coverage.
• Require financial responsibility. Making your teen driver pay for (or at least contribute to) their insurance coverage in exchange for driving privileges won't directly affect your premium, but it will make them more cognizant of what insurance costs, and subtly encourage safer driving.

General strategies are all very well and good, but if you really want to offset the cost of your teenager's auto insurance, you should shop for specific teen-friendly programs. A few of them include:

• American Family Insurance launched a 'teen safe driver' program in conjunction with San Diego, California-based Drive-Cam, Inc. It involves an in-car audio/video surveillance system to monitor both your child, and the road they're driving down. In states where the program is offered, it often comes with a 10% discount on liability coverage.
• Fireman's Fund allows parents to piggyback their teen drivers' policies, allowing the young drivers to build their own insurance files, while still saving 35% or more on premiums.
• Nationwide launched a driver safety program last March. Known as "SmartRide," the program offers a 5% discount to clients who complete an online safety tutorial.
• SafeCo rolled out their program "Teensurance" over a year ago. It offers a 15% discount to drivers aged 16-25 who agree to install a satellite tracking system in their cars.

Many other insurance companies offer teen-specific discounts as well, and a few even offer transitional programs for college students who are ready to establish insurance of their own. Whatever company you choose, be sure to involve your young driver in the process as much as possible. It will make them feel more connected, and more responsible.