Wayne Cohen spends a lot of time thinking about car insurance. As the father of three sons in their teens and 20s — the most expensive group of drivers to insure — he pays big car insurance bills. And as one of the most aggressive personal injury attorneys in Washington, he has won big car insurance cases.
"Thinking about teenagers on the road is stressful as is, let alone when they are your own kids," said Cohen. "I can't tell you how many catastrophic cases I have had over the years where the parents of a teenage driver were underinsured."
When parents add a teenager to their car insurance policy, their rates are likely to go up an average of 78 percent, according to a study by InsuranceQuotes.com. Based on the average national car insurance bill, that's $1,028 more. Prices jump even more for boys — 89 percent — but girls are expensive too, raising bills 66 percent.
Teen drivers are expensive to insure for a reason. They are more likely to cause accidents than any other group, according to Centers for Disease Control and Prevention. In fact, motor vehicle accidents are the leading cause of death for teenagers. And studies show teens are even more likely to kill other people in these crashes than to die themselves.
All of this adds up to two needs: the need to increase safety for these young drivers, and the need to decrease the cost of insuring them. Here's advice from the experts to tackle both.
Don't be tempted to try to keep your teenager a secret from your insurance company. Instead, as soon as your son or daughter gets a learner's permit, inform the company. Honesty is the best policy and disclosing new drivers is the law in several states. "The worst insurance mistake parents make when their teen starts driving is not notifying the insurance company that they have a licensed young driver," said Mike McCartin, president of Joseph W. McCartin Insurance, Inc. in Beltsville.
If you don't inform your insurance company, some will cover an accident caused by your teen as a courtesy to you, but others will refuse. There's also a third scenario: "Many companies will back-date the addition of a driver to the day they were licensed," said McCartin, "which can be a big outlay if it goes back a year or more."
It's cheaper to add your son or daughter to your insurance policy than it is to get them their own. Plus, if they're under 18, many states don't allow them to enter into contracts anyway. But that does not mean that you should automatically add them to your old, existing policy. Instead, this is a good time to shop around for a new insurance company, since some companies charge more than others to insure teens. Consumers Checkbook found that switching car insurance providers is one of the easiest ways to save as much as $1,500 a year. That means you may be able to recoup the cost of insuring your teen driver by getting a cheaper policy overall.
Student status is another way to save on car insurance for teens. Many insurance companies offer discounts for good grades, and those discounts can be as much as 25 percent. You may be able to score another 15 percent off if your teen takes a defensive-driving class, which is good for your insurance — and for them. And finally, if your son or daughter is moving more than 100 miles away for college, and will not be taking a vehicle with them, that's yet more ammunition for a price break. The insurance company will list them as an occasional — rather than regular — driver and shave more money off your bill.
The next way to save is based on the car your teen will drive. If your son or daughter will be using existing family vehicles, instead of giving them free rein to drive any car, limit them to the vehicle that's cheapest to insure and let the insurance company know that's their designated vehicle. That can bring down your cost.
If you will be buying your son or daughter a vehicle, research the cost to insure that car. By choosing one that costs less to insure, you will also be buying one that's safer. The Insurance Institute for Highway Safety publishes a list of safe cars for teens. Better yet, buy used rather than new. Since used cars are less valuable, they're less expensive to insure. You may even be able to skip collision and comprehensive coverage if the car is not worth repairing in the event that it's in a wreck.
On the other hand, Consumer Reports says not to put your child in too old a car. You want these inexperienced drivers to have as many modern safety features as possible. The magazine emphasizes the importance of anti-lock brakes, electronic stability control and, of course, air bags — particularly side-curtain air bags.
Attorney and dad Wayne Cohen offers another cost-saving idea: He suggests buying a solid car insurance policy, but also getting an umbrella liability policy. Why? "In a lot of states, the owner of the vehicle is responsible for any negligence caused by the driver," Cohen explained. "So if a teenage driver causes an accident, the parent could be responsible for costs above and beyond the car insurance."
Insurers require you to have a certain amount of car insurance in place before they'll sell you an umbrella policy, but after that, umbrella policies are cheaper. For example, in one scenario McCartin ran, $1 million in auto liability would cost a family more than $500 a year, but they could get $2 million in umbrella liability for just $400 a year — and that umbrella coverage would protect them against many different problems, not just car accidents.
Finally, some insurance companies will give you a break on your rate if you agree to install computerized equipment that monitors things like your teen's seat belt use, speed and hard braking. Ideally, this kind of oversight will also make your teen a safer, more mindful driver.
Speaking of safety and technology, consider installing and using apps that turn off your teen's phone while they're driving. They work by tapping into the phone's GPS capability to determine speed. This could prevent the texting-and-driving accidents we hear so much about. Consumer Reports tested several apps and gave them positive reviews.
There's also a low-tech technique for making your teenager drive safely: a driving contract. "This is not a legally binding contract," McCartin explained. "It is a tool we use to facilitate discussions on safety." You lay out several rules of the road for your son or daughter and they have to agree to them, in writing, if they want to drive your car and be on your insurance policy. Some suggested clauses:
• No more than one underage passenger. Studies show accident rates go up for every additional peer riding in a teen's car.
• No drinking or drugs. The CDC says substance abuse and driving are even worse for teens than for older drivers.
• No talking/texting while driving. The Federal Communications Commission says cellphone use while driving kills more than eight people a day.
Getting to drive is the carrot in these contracts. The stick is up to you. If your child fails to uphold the contract, you can take away the keys, take away the car, or require them to pay some amount for something if they are in an accident or get a ticket.
I caused a fender bender at age 16, and my parents made me pay the deductible on their insurance policy to get the car repaired. I still remember it today. You may want to put in place car safety rules that are just as memorable for your teenagers.