Read this before buying auto insurance for a teen driver.
- It can be very expensive to get car insurance for teen drivers, but there are ways to save on coverage.
- Dave Ramsey has some tips to help lower premiums when insuring a new driver.
- Parents can save by making sure their teen has taken a driving course, drives an old car, and comparing quotes from different insurers.
Car insurance is priced according to risk, with insurance companies charging more for people they believe are likely to cause collisions. Unfortunately, teenage drivers are considered risky to insure. Not only do teenagers lack driving experience, but they are generally not known for always making responsible decisions.
This means that parents who add a teen driver to their car insurance policy can usually expect a large premium increase. The good news, though, is that financial expert Dave Ramsey has some tips on how to save on car insurance costs for teens — and following them could help ensure premiums don’t go up. arrow.
1. Make sure teens take a driving course
Ramsey recommends teens take a driving course before hitting the road. This can not only help reduce insurance costs, but also reduce the likelihood of an accident, to help young motorists stay safe behind the wheel.
2. Aim to win a good student discount
Another way for teens to save, Ramsey says, is to do well in school so they can get a discount based on their academic record. “Your teen’s report card could save you money,” Ramsey said. He said young drivers generally need a B average or better to qualify for savings based on being a good student.
3. Buy an older car for teenagers
Ramsey’s next tip is to avoid buying a brand new vehicle for young drivers.
“Giving your teenager the keys to a new car is like co-signing a loan with your broke cousin Joey for his latest business venture – it’s a really bad idea,” Ramsey warned. Even a car model that is only a year old can be much cheaper to insure and cheaper to buy.
4. Sign up for driver tracking
For teens who actually drive responsibly, Ramsey recommends opting for a program where insurers can monitor driving. Many insurance companies now offer an app that tracks policyholders’ driving and offers a discount to those who adopt safe driving behaviors.
“You plug a device into your vehicle and drive it on your car for 30 to 90 days,” Ramsey explained. “Insurers look at things like daily mileage, hard brakes, quick acceleration and the time of day (or night) you drive, all of which can affect your risk. For teens, this can be an incentive to pump the brakes and drive more safely.”
5. Compare premium prices
Finally, Ramsey’s final tip is to be sure to compare policy rates between different insurers, as some charge significantly more to provide coverage for teens than others. Ramsey suggests working with an independent agent to check the prices offered by different suppliers, but motorists can also do this themselves by going online.
By following these five tips, we hope parents and teens can ensure that getting the right coverage in place doesn’t break the bank. Since auto insurance is required by law and essential to protect assets, it’s worth the effort.
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