Sign up for our FREE Monthly Email Newsletter
In addition to keeping in the financial know, you may be interested in checking your credit score and report.
¹The credit scores provided under the offers described here use the Equifax Credit Score, which is a proprietary credit model developed by Equifax. The Equifax Credit Score and 3-Bureau scores are each based on the Equifax Credit Score model, but calculated using the information in your Equifax, Experian and TransUnion credit files. The Equifax Credit Score is intended for your own educational use. It is also commercially available to third parties along with numerous other credit scores and models in the marketplace. Please keep in mind third parties are likely to use a different score when evaluating your creditworthiness. Also, third parties will take into consideration items other than your credit score or information found in your credit file, such as your income.
²The Automatic Fraud Alert feature is made available to consumers by Equifax Information Services LLC and fulfilled on its behalf by Equifax Consumer Services LLC.
³Equifax Credit Report Control™ is only available while you have a current subscription to Equifax Complete Premier. Locking your credit file with Equifax Credit Report Control will prevent access to your Equifax credit file by certain third parties, such as credit grantors or other companies and agencies. Credit Report Control will not prevent access to your credit file at any other credit reporting agency, and will not prevent access to your Equifax credit file by companies like Equifax Personal Solutions which provide you with access to your credit report or credit score or monitor your credit file; Federal, state and local government agencies; companies reviewing your application for employment; companies that have a current account or relationship with you, and collection agencies acting on behalf of those whom you owe; for fraud detection and prevention purposes; and companies that wish to make pre-approved offers of credit or insurance to you. To opt out of such pre-approved offers, visit www.optoutprescreen.com/.
4We will require you to provide your payment information when you sign up and we will immediately charge your card $4.95. After that, we will charge the card $19.95 for each month you continue your subscription. You may cancel at any time; however, we do not provide partial month refunds.
Equifax® is a registered trademark and Equifax Complete™ Premier is a trademark of Equifax, Inc. © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved.
Last spring, when my 16-year-old nephew told his father he was excited to get his learner’s permit, my brother cringed. He had dreaded this day. Driving lessons and driving permits would help his son get the necessary practice to be a confident driver, but my brother knew that the number one threat to his son’s safety was driving or riding in a car with a teen driver.
However, it wasn’t just safety issues that had my brother worried about his son driving. There was also the financial impact to consider. Young, inexperienced drivers cost more money to insure. In fact, according to a study by InsuranceQuotes.com, adding a teenage driver to a married couple’s car insurance policy leads to an average 79 percent increase in annual premiums.
So what makes it so expensive to insure a teenage child?
Immaturity and lack of driving experience are two main factors that lead to a high crash rate among teens—and, therefore, higher insurance rates. Teens’ lack of experience affects their recognition of, and response to, hazardous situations, and it results in dangerous practices, such as speeding and tailgating. Teens are also more likely to engage in risky behaviors when they have peer passengers in the car with them.
Despite all the risks, there are a few things you can do to keep your costs down as your teen prepares to take the wheel:
1.Research different insurance companies. Every company prices policies for young drivers differently, so investigate what the costs are for you and for your teen.
2.Delay driving altogether. Most American teenagers are delaying getting their driver’s license, according to an August 2013 study conducted by the AAA Foundation for Traffic Safety (the most recent available). The study notes that approximately 44 percentof teens get their license within 12 months of the minimum age for licensing in their state. Having teens put off driving until they turn 18 gives them a chance to mature—and it could also give parents lower auto insurance rates.
3.Add your teen to your own auto insurance policy. Once your teen starts to drive, he or she needs to be added as a primary driver on one of the family vehicles, which will result in a significant increase in your premiums. That said, this can be a less expensive strategy than for your teen to get his or her own insurance policy. If your teen is going to drive his or her own car, you still might want to insure it with your current auto insurance company so that you can get a multi-policy discount.
4.Designate your teen to the least valuable car. If possible, ask your insurer to exclude your teen from certain cars in your household. Some insurers will allow you to do this if the number of automobiles equals or exceeds the number of insured drivers on a policy. Bear in mind that if your teen is involved in an accident with an unassigned car, there could be stiff penalties, including increases in your premiums.
5.Up your deductible. Going from a $250 to a $500 or $1,000 deductible can save you 10 to 20 percent on your annual premium. You may want to use those savings to increase your liability insurance.
6.Make sure your teen gets good grades and driver training. Most insurance companies will give a discount on auto insurance to students who maintain at least a B average or better in school. Another way to earn a discount is by having your teen take a recognized driver-training course.
7.Keep the car at home if your teen is college bound. You may be eligible for lower premiums if your teen goes away to school and doesn’t take a car. Many insurers will reduce rates for a student when his or her status changes from a primary driver to an occasional driver.
Keeping insurance costs down is important, but there are other things to consider when insuring your teen as a new driver.
Additional considerations when your teen starts driving
When choosing a car, consider important factors such as side-impact protection, stability control, and rollover risk. Teenagers should drive vehicles that offer state-of-the-art protection in case they do crash. Sport utility vehicles and pickup trucks can be less stable than cars (their height can cause a rollover risk), but small vehicles offer much less protection in crashes than larger ones. Fortunately, many mid- and full-size cars offer adequate crash protection and stability. Check out the safety ratings for mid-size and larger cars before you head to the dealership.
Before your teen gets behind the wheel, make sure to give him or her “the talk.” Explain the effects of driving while impaired as well as the dangers of texting, taking selfies, or socializing with friends while driving. Even something as simple as changing the radio could result in an accident.
When your teen is ready to get a learner’s permit, have a conversation with your insurance professional about more ways to save money. The good news is that as your teen gets older, insurance rates will drop—providing he or she has a good driving record.
Loretta L. Worters is vice president of the Insurance Information Institute, whose mission is to improve public understanding of insurance – what it does and how it works. Ms. Worters is an author and woman’s advocate frequently quoted in leading publications including The Wall Street Journal, The New York Times, USA Today, Business Week, Forbes, U.S. News & World Report, and appears regularly on television networks including ABC, CNBC, CNN and Fox. Follow her on twitter at @LWorters.
The information contained in this blog post is designed to generally educate and inform visitors to the Equifax Finance Blog. The blog posts do not give, and should not be assumed to provide, personalized tax, investment, real estate, legal, retirement, credit, personal financial, or other professional advice. Before making any financial decision, you should always consult with the appropriate professionals who can explain your options, rights, and legal responsibilities, and advise you on any tax, legal, credit, or business implications that may result from those decisions. The views and opinions expressed by the authors of blog posts are their own views and may not be the views or opinions of Equifax, Inc. and/or its affiliates.
Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.