Teenage drivers – is it better to insure their own cars or add them to the family car?

Question:

Is it better to buy my teenager a used car and then add it to my auto insurance or should I just let him/her drive my car?

Answer:

The answer to this question depends on the exact situation, but we will try to limit the discussion to how auto insurance companies view teenagers and what kind of discounts you may be able to leverage to lower you quotes.

It’s no secret that teenagers are considered the most dangerous drivers on the road by auto insurance companies. So, regardless of whether you add your teenager to your auto insurance policy as a part-time or full-time driver, you will see a significant increase in your rates.

So let’s look at the first option: buying a used car for your teenager and insuring him/her on it. Setting aside maintenance and repair costs for an additional vehicle, from an auto insurance perspective, your teenager now has his/her own car and will be considered as a full-time driver on that car. That means that you would have to add the additional car to your auto insurance policy with your teenager as the primary. Generally speaking, this route is going to cost you more in additional auto insurance premiums than the next option.

This second option would be to have your teenager drive one of your family cars. Assuming that your teenager would not be driving your car all the time, you could then list them as a part-time driver, which will generally give you a lower rate than buying another car and listing your teenager as a full-time driver. However, if you drive a high-value car, you may not get much of a reduction after all – again, it all depends on your exact circumstances.

Regardless of your choice, there are a few potential discounts that might be available to you that may help you save on car insurance if you have a teenager on your policy. Potential discounts include a good student discount, driver training discount, and a loyalty discount if you’ve been with your auto insurance company for a number of years (that said, adding a teenager to your account is a great time to shop around for better rates). Also, if you have not yet looked into bundling your auto and home insurance together, you could also receive a significant overall discount from that as well.

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One Comment on "Teenage drivers – is it better to insure their own cars or add them to the family car?"

  1. Maggie June 20, 2012 at 7:51 am · Reply

    I work in insrnauce, not car insrnauce, but technically no. Paying off a car does not make you less likely to not get into an accident. The only way to lower premium, is to be a safe driver and prove it for a time: no tickets, no accidents. Next, lowering your coverage will also lower your premium. But, since you are paying off your vehicle soon, why not keep the premium you pay now? You will already be saving money. Dropping to liability will only ruin your day when you get into an accident and that car you just paid off is trashed and you must start the monthly payment process all over again. It is better to have the insrnauce and not need it, then need the insrnauce and not have it. All it takes is one bad accident to realize how little the insrnauce costs. Stick with your current premium because you will already be saving money when your vehicle is paid off.

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