If you're the parent of a teenage driver, you probably cringe at the thought of providing car insurance for him or her. Although there are dozens of factors that contribute to the final cost of an auto insurance policy, the age of the covered driver is particularly crucial. Insurance premiums are typically several times more expensive for newly-minted teenage drivers than for experienced middle-aged drivers with few blemishes on their driving records.
This discrepancy is due to two understandable and related factors: the actual age of the driver and his or her level of experience behind the wheel. When considered independently, both factors can have a sizable impact on the cost of insurance. For instance, a newly-licensed 35-year-old driver is likely to pay 50 percent more for his or her auto insurance policy than an otherwise-identical 35-year-old driver with 18 years of driving experience. However, most auto insurance providers find the intersection of youth and inexperience to be particularly troublesome. In fact, the auto insurance industry's lobbying efforts have been a key factor in pushing graduated-licensing laws through state legislatures across the country.
The cost of auto insurance for teenage drivers drops precipitously with each additional year of driving experience. Whereas monthly premiums for a "safe" 17-year-old driver are likely to cost between $300 and $500, the same policy's monthly premiums are likely to run between $150 and $350 for a "safe" 20-year-old driver. Once a covered driver turns 25, his or her insurance costs will drop even further.
If your teenage driver doesn't have access to his or her own car, it may be possible to list him or her as an "occasional driver" on your family's insurance policy. While this will probably raise the cost of your auto insurance premiums by a significant degree, it's unlikely to be as costly as insuring your teenage driver under his or her own policy.
If you choose to do this, you'll need to have a frank conversation with your child about his or her responsibilities as a new driver. You'll also need to ensure that he or she remains in full compliance with any applicable graduated-licensing laws. If your teenage driver is involved in an accident or receives a traffic citation while driving your vehicle, your insurance premiums will rise by a significant amount. As such, you should carefully consider the pros and cons of including him or her on your insurance policy before agreeing to do so.