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  • Dan Frankel

Your Kids Are Driving; How to Keep Your Rates Low

Updated: May 16

The thought of a teenager behind the wheel is enough to cause most parents substantial stress. Your primary concern is naturally for their safety, but you’ve probably also wondered how much insurance will cost when they start driving.

When selecting coverage, consider this statistic: 43% of drivers will be involved in an automobile accident their first year driving. If your son or daughter is driving a newer vehicle, lowering your collision deductible to $500 may pay for itself.

Smart strategies to reduce premium

There’s no doubt about it, your rates will go up with an inexperienced driver under your roof. But all is not lost—the steps you take to minimize the impact on your rates can actually assist your child in becoming a responsible and safe driver.

  1. To begin with, enroll them in a driver-training course. While 43% of first year drivers may have an accident, that drops to just 4.6% when drivers take Advanced Driver Training, based on a four-year study.

  2. Once your kids have earned driver training certificates, it’s time to pass the "mom and dad school of driving." Make sure you are comfortable with all aspects of their driving skills before they have carte blanche access to the keys.

  3. Open up a dialogue with your kids as they learn to drive so that you can reinforce the importance of responsible driving, the risks involved and the emotional and financial impact of their actions. Crashes are the #1 killer of teens, and more than half are due to driver error. Make sure they know that speeding tickets, running red lights and fender benders are expensive and have long-term consequences. It may even impact their ability to purchase insurance. Set out the rules clearly and the actions you’ll take if they’re broken.

With the ground rules in place, it is time to focus on logistics: getting insurance for your child, selecting the right coverage, and putting them behind the wheel of a safe car. If they'll be sharing a car with mom and dad, consider a $500 deductible to hedge the cost of repairs after an accident. If the value of the vehicle your child is driving is low, you might consider dropping collision and comprehensive coverages all together. The combination of a $500 deductible and annual premium may be more than the car is worth. Either way, be sure the car your child is driving has suitable safety features.

And on the topic of what car the kids drive—consider the differences between being considered an occasional driver and a principal operator. Your child will be considered the principal operator of a vehicle if you buy a third car—or a second car in a single parent scenario – giving him or her exclusive use of the car. If your child is deemed a principal operator your rates will increase substantially. If this is a concern to you, you may want to think twice about buying another vehicle for the family.

But what if your son or daughter needs their own car? One approach is to have them buy a car, register it and insure it on a separate policy. They will still be insured on all the household vehicles, but this keeps their young driver status and driving record from affecting your insurance premium on the other vehicles. If this is the route you choose, it is a good idea to ensure your child doesn’t scrimp on liability insurance. Too little liability will leave your family exposed in the event of an accident and could prove financially devastating for years to come.

Ready to learn more?

Acacia Insurance has been helping to make the unexpected uneventful since 1988, and we look forward to working with you. Please contact us with questions and for additional information.

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