Parents of teen drivers have a lot to worry about. In addition to the likely terrifying thought that their baby will be behind the wheel, they also have to figure out how to cover the cost of teen car insurance.
Paying for auto insurance for teen drivers doesn’t come cheap, since insurance companies view young people as high-risk motorists to insure. But, finance expert Dave Ramsey has some tips parents may wish to consider following in order to help keep costs down when getting a policy in place for their kids.
Ramsey’s suggestions for saving on coverage
Ramsey recommends taking the following steps to help cut the cost of getting insurance for a teen:
- Have kids complete a driver’s education course: “Carriers offer discounts for taking driver’s ed or any other public safe-driving course that’s offered by the state,” Ramsey said. These courses can both reduce insurance premiums and help kids learn how to make safer choices on the road.
- Take advantage of good student discounts: Ramsey explained that most insurers offer these discounts for kids with at least a B average. Parents may want to make driving privileges conditional on earning this discount, both to save money and encourage their kids to hit the books.
- Buy older used cars: Ramsey said this will result in premiums that are about 13% lower than the cost of insuring a new car. It’s often best to avoid buying a brand new vehicle for teens too, since they are likely to be more prone to minor fender benders as they’re learning.
- Consider a device that tracks driving. Ramsey said many insurers offer discounts if drivers are willing to plug in a device that tracks their mileage and driving behaviors. Kids may also be more careful if they have this device installed and it can give parents peace of mind to see how their kids are actually driving.
Ramsey also suggests shopping around for the most affordable coverage with an independent insurance agent and making sure to choose a policy based not just on price alone but also based on coverage needs.
“Let’s face facts — at some point, your teen may be in a fender bender,” Ramsey said. “If that happens, you’re going to want to have the right insurance in place. That means having the right amount of liability insurance and other coverages to protect your teen. Plus, you’ll want an advocate fighting for your best interest throughout the claims process.”
Should you listen to Ramsey’s advice?
Ramsey is absolutely spot-on with most of his advice here. Parents will get better premiums if their kids get driver’s education, earn good grades, and drive an older used vehicle. And those who are comfortable with any privacy-related issues can indeed find less expensive coverage if they allow insurers to track driving behavior (assuming the device actually shows them behaving safely).
Ramsey is also smart to advise shopping around, although parents can do this by themselves or work with an independent agent to help them, depending on their personal preference. The important thing is to remember that coverage needs change once a teen is on the policy, so parents can’t assume their current insurer is the best one without first seeing what else is out there.
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