Nine ways to cut your teen’s car insurance costs
Got a new driver in the house? Car insurance for your kid doesn’t have to cost a small fortune, and affordable plans aren’t too hard to find. Before you add your child to your car insurance policy, check out these nine ways to save some cash.
1. Pay up.
Ashley Hunter, an insurance risk specialist in Austin, Texas, who is a former insurance agent, says you can save money by paying your premiums in full rather than making monthly payments. That’s because some carriers tack on fees if you sign up for monthly payments. Discounts vary from company to company.
2. Pay as you drive.
Car insurers like State Farm and Progressive have launched “pay as you drive” plans, which use electronic devices to track your driving behavior. State Farm’s Drive Safe & Save program offers an initial 5 percent discount to policyholders in states like California who agree to have their driving habits monitored.
3. Rave about your car’s safety.
Brag about your vehicle’s safety features, such as anti-lock brakes, anti-theft devices and automatic seat belts. Even though your agent runs your vehicle’s identification number (VIN), he may inadvertently overlook an equipped feature or two. Allstate, for instance, offers a 10 percent for anti-lock brakes and up to 10 percent for anti-theft devices.
4. Join the club.
Membership at Sam’s, Costco or BJ’s isn’t just for buying bulk toilet paper or giant bottles of ketchup. Discount clubs can save as you much as 20 percent on car insurance sold through such providers as Ameriprise.
5. Shop around.
It certainly doesn’t hurt to look around for a better deal. “Often companies will try to ‘price match’ competitors’ quotes to maintain a customer,” Hunter says. In fact, comparison shopping can save you hundreds of dollars a year, says Eric Poe, chief operating officer of CURE Auto Insurance, a nonprofit insurer in New Jersey. The first step: Review your current policy. Then, visit insurance websites and contact insurance agents to obtain quotes.
6. Buy a ‘beater.’
Donna Hosfeld, owner of Hosfeld Insurance LLC in Macungie, Pa., says that putting your young driver behind the wheel of an older car — affectionately known as a “beater” — instead of giving your kid the keys to your newer car can help keep costs down. “We often suggest considering a car whose value may be lower to sidestep the need to purchase … collision coverage on it,” Hosfeld says.
7. Dig into discounts.
Hunter suggests investigating whether you qualify for any discounts resulting from your membership in a labor union, a fraternal organization, a professional organization or a church; your military service; or your employer. Also, be sure to let your insurer know whether your teen driver is a good student. A student with a B average or a 3.0 GPA can qualify for a premium discount of up to 20 percent, says Steve Brooks, president of B&B Premier Insurance Solutions Inc. in Agoura Hills, Calif.
8. Keep track of their driving.
Sedgrid Lewis owns Spy Parent LLC, a company that sells and rents GPS trackers to parents who want to monitor their children’s driving habits. For example, a parent can tell when a teen driver has been speeding or has braked suddenly. Also, parents can be alerted when their kids drive outside designated zones. Spy Parent has teamed up with State Farm to offer a 30 percent discount on the GPS trackers in addition to the 10 percent discount that State Farm will provide if a teen driver uses the device, Lewis says. Allstate also offers a premium discount for users of the Spy Parent devices; Lewis declines to specify the amount of the Allstate discount. Most real-time GPS tracking devices cost $300 to $500, plus a monthly subscription fee of $20 to $50 a month, according to Lewis. Installation typically runs $20 to $75.
9. Raise your deductible.
Hosfeld says the amount of savings for raising your deductible varies greatly by car insurance carrier. “If you deal with an independent agent, ask them to show you the difference based on several deductibles for three car insurance carriers,” she says.