One of the scariest prospects that many parents face is that of having a teen driver. Many of us worry about what happens when our kids are old enough to drive. My son is still more than six years away from his driver’s license, but it’s something that I think about from time to time.
Teen drivers cost more to insure than most adults, so you have to take that aspect of the situation into account. On top of that, you also need to review your liability coverage, since your teen’s auto accident could result in having your own assets tapped if the damage is severe enough. Your auto insurance  situation has the potential to become very different once the kids start learning to drive.
Are You Prepared for the Increased Costs of a Teen Driver?
One of the first things you need to realize is that a teen driver is going to cost you a little bit more than what you are paying right now. The biggest cost is likely to be in insurance premiums. According to CarInsurance.com, adding a teen driver to your policy can cause premiums to jump as much as 200%. That’s a huge difference in what you’re paying for coverage.
You also need to be prepared for other costs, such as wear and tear on a car that is getting more use, as well as added gas costs. One more person driving the car — and possibly driving in a way that doesn’t exactly increase the fuel efficiency  of the car — can add to your regular costs.
As you get ready for a teen driver in the family, talk to your insurer about what to expect, and about what you can do to change your coverage, as needed. Some states only require $250,000 in liability coverage, and it is tempting to only get the minimum coverage. However, if you are concerned about the damage your teen driver might cause, you might want to increase that liability coverage, or even spring for umbrella coverage . If your child causes an accident and the liability limit is exceeded, and you don’t have the right coverage, your assets could be up for grabs.
Reducing the Cost of Coverage for Your Teen Driver
There are some things you can do to reduce the cost of insuring your teen driver. Some discounts, such as multi-car discounts, or discounts for having home and/or life insurance with the same company as your car insurance, are available with almost any policy. Additionally, you can also raise your deductible. As long as you have an emergency fund that can handle the higher out of pocket expense, this can be a way to reduce your insurance premiums, even if you do have a teen driver.
Check into other discounts that might be offered by your insurance company as well. Some companies (like mine) refunds 25% of your premiums each year when you go three years claim-free. This can be one way to recoup some of the higher premium costs — assuming your child doesn’t get any tickets or have an accident. Another option is to ask about a good student discount. Many companies offer discounts for teen drivers who maintain good grades.
You can also encourage more responsible driving by your teen by telling him or her that any increases in premiums will have to be covered from their own pockets. There is no way to completely alleviate the costs of a teen driver, but you can do your best to reduce the pain to your wallet.
(Photo: FrancoForeshock )