When Should I Add My Teenager To My Insurance?

“When Should I Add My Teenager To My Insurance”

The best time to add your teenager to your insurance is when they officially get their driver’s license. Many times, concerned parents will ask if they should take care of this when their son or daughter gets their learners permit, and our recommendation is “no”.

The reason we say “no”, is because your teenager will not be driving by themselves until they are legally licensed. Therefore, since you will be in the car with them while they are driving, there is implied permission and coverage would extend.

Below are the most frequently asked questions we hear when it comes to teenagers and insurance

When I Add My Teenager To My Insurance, Will My Price Go Up?

There is no getting around it, when you add your young driver to your policy, you will see higher rates. The reasoning from the insurance companies is clear. According to them, statistically speaking, it is not a matter of “if”, but a matter of “when” a claim will be filed, and they will have to write a larger check to cover damages because of your son or daughter.

How Do I Reduce the High Costs When I Add My Teenager To My Insurance?.

The best way to reduce the surging costs is to follow these steps.

  • Make sure your teenager has a minimum of a 3.0 GPA. Companies will reduce the cost of the premium if your teenager qualifies for a “Good Student Discount”. This discount can range from company to company, but it is typically 5-10%.
  • They drive a liability only car. It is not uncommon for a parent to reward or gift their new teenage driver with a nicer car. The thought process is “They need something reliable” or “They worked really hard for this, this car will be a reward”. While those two schools of thought are commendable, it will also lead to higher insurance premiums

We see it as a common occurrence where a parent will sign up for a hefty car payment, or drop a large sum of money on a car that is valued above $10k and then wonder why the insurance premium is high. From the perspective of the insurance company, they see that $10k+ vehicle as a check amount they will inevitably write.

Our advice is to get a reliable car but to make sure it is liability only. This will greatly reduce the premiums, and even save you as the parent thousands of dollars in a potential vehicle purchase.

After I Add My Teenager When Will My Rate Go Down?

The basic answer to this question is that your premiums will reduce as long as this new driver keeps their record clean. It now becomes a time-based strategy, meaning, the older they get, the more driving experience they get, and the cleaner they keep their record, the more the premiums will level out. This, of course, depends on the appetite of the current company. Some companies have better rates for younger drivers, while other companies make the rates even higher to persuade you from taking a policy out with them

Of course, the best thing you can do is make sure a trusted independent insurance agency is looking at this profile for you to find the best company with the best insurance protection.


Is It Better To Add My Teenager To Their Own Insurance Policy?

Typically, the answer is “no”. The reason is because when you consolidate your risks onto one policy, you often get discounts that are not applicable once you segment your situation.

If you have a home or renters insurance policy bundled with your auto insurance, you are receiving a policy level discount that would not be applicable if you split your teenager off.

If you have a multi-car discount on your current policy, then that discount would be forfeited on an individual policy for your teenager

Aside from just the “price” argument, the real reason why you wouldn’t want to split your teenager from your policy is that you run the risk of their being a gap in coverage if your son or daughter ever drives your car.

If your teenager’s car is registered to you in any way, you have run the risk of being liable in the event their policy is insufficient coverage wise. It is for these reasons that we advise our clients to combine all of their risks together into one policy.

How Much Should My Teenager Pay For The Insurance?

Our answer is typically “however much you want to collect from them”. They will add a significant portion of the premium to your policy. In fact, they will account for the majority of your premium. What you decide to charge them is purely your discretion.

An insurance company does not segment the billing, they only produce one bill. Their only concern is that the bill in its entirety is paid. How much you collect is up to you.

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