If your teenage child will be driving a car, he or she most certainly needs insurance coverage. However, you may wonder exactly when you should obtain insurance, as well as whether you should include the child as an additional driver on your policy or purchase a new one just for the teen. Below are some facts to help you make the decision.
Insurance for Teens is Expensive
Individuals between the ages of 16 and 24 are considered the most risky drivers to insure. Because of this higher level of risk, insurance companies tend to charge much higher premiums when a teen is listed on the policy. For this reason, some parents choose to leave their children off the policy for as long as possible. However, keep in mind that some insurers require you to list your child on your policy as soon as he or she obtains a permit. Even if this requirement doesn't apply, your child must be insured before he or she starts driving alone.
A Named Exclusion May be Cheaper
Adding a teen to your policy can be very costly, especially if your car is expensive or considered high risk. If your teen has his own car, it may be more affordable to designate the child as a "named exclusion" on your policy and then purchase an additional policy in the teen's name that insures only his or her car. However, keep in mind that, under this arrangement, your child won't be covered if he or she drives your car and crashes.
Savings are Available
You can save money on your teen's car insurance by purchasing older vehicles, reducing coverage amounts and avoiding vehicles that are known to be more risky for teens, such as sports cars. You may also be eligible for other discounts for your teen, such as a "good student" discount, which typically applies to teens with a good academic record. Finally, some insurers may lower the rate if several months pass with no accidents or other claims.