If you’ve got a teen under your roof, we don’t have to tell you that their car insurance doesn’t come cheap. On average, teenage drivers with their own policy pay more than $5,000 each year for insurance. That’s why most teens are added to their parent’s policy—it’s cheaper, but that will still likely double the parent’s car insurance rate.1 Ouch!
If those prices make you want to force your kid to ride a bike everywhere, we don’t blame you. But you can’t keep your teen off the road forever! The next best thing you can do is teach them the ways of the road and find ways to save on Junior’s car insurance. We can help you out with that last part!
6 Ways to Save Money on Teen Car Insurance
We asked Brandon, one of Dave Ramsey’s recommended independent insurance agents in Montana, for some simple ways your teen can lower their car insurance rates. Here’s what he had to say.
1. Get Hands-On Experience
According to the CDC, car crashes are the leading cause of death for U.S. teens and inexperience tops the list of leading causes of teen car crashes.2 Learning the rules of the road can help your teen stay safe—and earn some serious extra credit in the process.
Don't let car insurance costs get you down! Download our checklist for easy ways to save.
"Driver’s Education always helps," Brandon says. "Carriers offer discounts for taking Driver’s Ed or any other public safe-driving course that’s offered by the state." Ask your insurance provider which driver education programs qualify for a discount in your area.
2. Hit the Books
Most parents have college on the brain when they encourage their kids to make good grades in school. But did you know your teen’s report card could save you money too? It’s true!
So how stellar do your teen’s grades need to be? "It’s going to vary from state to state, but a B average or higher will definitely help with rates," Brandon says.
3. Resist That New Car Smell
Dave never recommends buying a brand-new car because the value drops as soon as you drive it off the lot. But new cars also cost more to insure because the parts and technologies are more expensive to replace if you wreck.
Besides, giving your teen the keys to a new car is like cosigning a loan with your broke cousin Joey for his latest business venture—it’s a really bad idea.
That’s why Brandon suggests buying a used car with cash. Bonus points if you choose a used car that’s also known for safety. In fact, you can save 18% on car insurance by purchasing a five-year-old vehicle instead of the new model.3 "The older the vehicle the teen is driving, the lower the rates," he says.
Our Car Guide can help you learn how to get the best deal on a car you love!
4. Track Your Driving Habits
"A lot of companies are coming out with features for additional discounts where they rate drivers based on their driving tendencies rather than a matrix that says you’re 18 driving this vehicle," Brandon says.
Here’s how it works: You plug a device into your vehicle and drive around with it on your car for 30–90 days. Insurers look at things like daily mileage, hard brakes, rapid acceleration and the time of day (or night) you drive—all of which can affect your risk. For teens, that can be an incentive to pump the brakes and drive more safely.
So, is it worth it? Some insurers take $25 off your premium just for trying it, while others might offer 50% off at the end of the test period for super safe drivers.4
5. Don’t Base Your Decision on Price Alone
We love saving money as much as the next guy, but you can’t put a price tag on your child’s safety—or, for that matter, your sanity.
Here’s the thing: Half of all teens will be involved in a car crash before graduating from high school, according to the National Safety Council.5 So, at some point, your teen may be in a fender bender. If that happens, you’re going to want to have the right insurance in place. That means having the right amount of liability insurance and other coverages to protect your teen. Plus, you’ll want an advocate fighting for your best interest throughout the claims process.
That’s where an independent insurance agent comes in handy. An independent agent will see your claim all the way through to the end. There’s no passing you off to a call center where you’ll never talk to the same person twice. There’s no pitting you against the adjuster. Just good, honest customer service through and through.
"We’re here in your community. Our kids go to school with your kids," Brandon says. "I see a lot of people who get frustrated at a claim being denied because the captive or online agent isn’t there for them. They never fully understand or explain the process or why it is or isn’t covered."
6. Work With an Independent Insurance Agent
Of course, working with an independent agent can be a money-saver too. That’s because they’re not limited to a single provider’s options. With access to a whole network of insurers, an independent agent can help you find the best coverage for your family for a price that fits your budget.
Looking for a great deal on car insurance? We can help! Dave’s insurance Endorsed Local Providers (ELPs) are experts who have a solid track record of providing excellent service. In fact, many people who work with our recommended pros save hundreds of dollars on car insurance or get much better coverage for about the same cost! Find your ELP today!