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Properly Insure a New Driver


Cost of Insuring a New Driver

You might have guessed that auto insurance for a new driver is expensive; and you’d be right. To insurance carriers, new drivers are a major liability, and must charge additional premiums to leverage the losses they’ll inevitably incur. 

We’re going to discuss exactly what factors drive that increased cost, and how you can improve them to get the best deal possible.

What do carriers look for when charging rates?

1. Age
Not all new drivers are teenagers, but teenagers are the most expensive to insure. This is because statistically, younger drivers are more likely to cause an accident. Driving Permits are issued as early as 15 and 1/2 years old, usually requiring an additional 6 months of driving experience to be eligible for a license. At 16 years old, teenage drivers have almost twice the likelihood of being involved in an accident as a 20 year old.

2. Gender (California excluded)
This might come as a surprise, but insurance carriers are allowed to discriminate based on gender; as long as there is statistical evidence justifying it. It was previously concluded that men were higher risk drivers than women, being involved in more accidents on-average per year. Most insurance carriers still abide by this finding, despite the fact that more recent findings suggest that gender plays a smaller role than previously thought. Either way, it can differ between companies. 

California has banned insurance discrimination based on gender.

3. School and GPA
Teenagers who do well in school are assumed to be more responsible and cause less accidents. This translates into a discount for most carriers. If your child is away at college (up to 25 years old), they may be eligible for an additional discount, with rate-cuts as high as 30% depending on the carrier.

4. Car
Your high-risk driver shouldn’t be getting around town in a luxury vehicle if you care about monthly premium. An accident will inevitably happen at one point or another. Even if it’s a minor incident, repairs for luxury vehicles are always more expensive than for an economy car. Insurance carriers must account for this and will charge more, just like they would for a standard-risk driver.

5. Driving Record
Similar to age, this factor plays a huge impact on rates. Tickets, infractions, and even DUIs are possible. Make sure your new driver is responsible, and doesn’t cost you an arm and a leg for less-than-savory behavior. Bonus Tip: For readers too conscious to ask about their underage driver getting a DUI, auto insurance carriers are liable to drop coverage for them entirely, or charge you thousands of dollars in increased annual premium. This is assuming that the state has not revoked their license until 21, which would make insurance coverage pointless anyways.

Cars and Coverage

What car should they drive?

As we stated, luxury vehicles and sports cars a big no-no when it comes to price. Insurance carriers create rates for vehicles based on specific factors like the frequency of accidents for a particular vehicle, average cost of repairs, habits of drivers who buy certain vehicles, etc… 

Drivers who purchase vehicles that are highly rated for safety features or eco-friendliness are saying something about their personality. They’re typically more cautious, reserved, and principled, meaning they’re less likely to cause an accident. Even if you have been a high-risk driver in the past or are insuring a new driver, you will benefit from the research done by insurance carriers on cars with the lowest rates. 

The list of vehicles with the lowest rates is always evolving. A good practice would be to look for car models that have been in production for a long time. This gives insurance carriers a better picture of how to price those vehicles, and will result in a more reliable monthly premium for you in the long run. 

Vehicle safety is something to consider heavily. In addition to safe cars having better rates, it’s important to remember that new drivers are more likely to cause accidents. In the unfortunate event of a serious one, protect them as best you can. Used cars are one hundred percent fine, as long as the airbags operate and the safety features are working as expected. Do not let your new driver operate a vehicle with faulty seat belts, cracked windshields, or busted mirrors. 

How much coverage is needed?

Liability Coverage is king for new or teenage drivers. It’s also mandated by-law. It protects you by paying for the other party’s medical expenses and property damages if your new driver was in an accident. If you have done extensive research on Liability limits for your own policies and think you have enough, consider having even more for your new driver. We would never recommend getting the state-minimum limits, as it simply isn’t enough coverage for most scenarios.
Comprehensive and Collision coverage should be considered if your new driver is driving a new or expensive vehicle, or a vehicle that hasn’t been completely paid off. It covers repair costs of the insured’s (new driver’s) vehicle if the damages were caused by a collision, colliding with objects, rolling the vehicle, “Acts of Nature”, and most other hazards you can think of. Coverage for Comprehensive and Collision is valued based on a percentage of the Actual Cash Value of the vehicle. That percentage can vary between insurance carriers, so let Haven Insurance Services shop around on your behalf if this coverage is a must.
When your vehicle is of low value, repair costs might not be worth the hassle. In that case, foregoing Comprehensive and Collision could be a smart idea. It’s an especially expensive coverage for experienced and new drivers alike.
Uninsured and Underinsured Motorist coverage is important for new drivers as well. It covers damages to the insured’s vehicle and medical expenses if the third-party was found at-fault or partially at-fault in an accident. Less experienced drivers may not have the reflexes to avoid an imminent collision being caused by a third-party, making Uninsured Motorist insurance still a solid choice. If you have to choose between coverage types because of financial restrictions, it’s much cheaper on average than Comprehensive and Collision, but we still recommend being insured for every coverage type.

Adding a New Driver to a Policy

Family Plan

Adding a new driver onto your family plan is going to be the preferred choice 90% of the time. Carriers give discounts for bringing them more business, so any additional cars you add onto the plan will net you some savings. Your family plan’s rate will see a large increase in premium, but it’s still cheaper than putting the new driver on their own policy. 

Solo Plan

There’s only one scenario we would suggest putting the new driver on their own plan: they have a terrible driving record. Some insurance carriers are unforgiving with bad driving history. Rate increases for young drivers with bad records can become astronomical, and keeping them on the family plan might outweigh the benefits it previously had. Your best option may be to insure the new driver with a separate carrier, one that gives more leeway to bad drivers. 

Discounts for New Drivers

Most discounts that apply for experienced drivers can apply for new drivers as well. For instance, Multi-vehicle Discount, Loyalty Discount, Defensive Driver Discount, etc… check out our full write-up on every discount out there. 

For new teenage drivers specifically, there are a few select discounts that are available:

  • Good Student Discount. Maintain a B-Average (GPA 3.0) or higher to be eligible for this discount.
  • Student Away at School Discount. This applies for situations such as attending a boarding high school, or living in a dorm on a college campus.
  • Good Driver Discount. After your teen driver obtains their license, explain to them how important it is to drive responsibly. If they are able to maintain a spotless driving record for multiple years, they could be eligible for this discount.
Haven Insurance Services can provide you competitive pricing from multiple companies with discounts available for your teen driver. If you don’t already have a family policy with us, consider asking for a full quote to see how much we could save you!

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Frequently Asked Questions

My teenage driver caused an accident and my rates increased. Should I move them to their own policy? 

It depends. Consider moving your teenage driver to their own policy if the amount you’re saving on a new solo policy (likely with another insurance carrier) is more than what you’re saving with them on your family policy. You’ll have to do some quote comparisons between companies to make an educated decision, or let us do the work for you.

Does a new driver need insurance if they only have a learner’s permit?

Most states do not require a driver with a learner’s permit to be insured. It may already be covered as a free endorsement on your policy, but it’s best to check. Once they have moved on to a full-blown license, be sure to insure them immediately to stay legal. 

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