Tuesday, January 17, 2012

Car Insurance For Minors

The moment your kid starts to drive using his underage driver’s license, you can expect your premiums to hit the roof. Kids aged 15 -16 with parental consent can get a learner’s permit after passing the required DMV tests, Some states allow even 14 year olds to have one.  But getting a car insurance under 21 becomes an issue as it is often a wallet draining concern for parents, especially if your kid is a boy.

The premium is often paid monthly and depending on the state where you live and the type of car your kid drives, itt is quite common for you to pay more for teen boy rates insurance companies uniformly charge than for you and your spouse’s combined car insurance premium in one year.  And should your kid meet a road accident of his own making, you can expect the premium to triple for three years after making a claim. It’s not unusual for average families to give up their kid’s licenses when this happens, unless the kid can find work to afford them.

While statistical data on road accidents tend to justify a hefty increase and an unforgiving set of policy content for auto insurance under 21, it’s not as if you have no choice but accept what is offered to you. You as a parent or guardian has several options that can keep your premiums within more tolerable limits, lower than if you did nothing about it. 

For starters, it would be wise to start your teen driver with a second hand or pre-owned car that has a good safety reputation like a Volvo or a Honda and none of those exotic cars that are more prone to theft. Older and less inviting cars generally have lower insurance premiums up to a point.  But the last thing you will want to do is get your teen boy behind the wheels of a Porsche or a Ferrari in any model year of the last decade.  Not only will your premiums skyrocket, you are effectively inviting you kid to enter the gates of heaven sooner than later.

Here are a few other things you can do:

·         Take advantage of multipolicy discount insurance companies provide when taking out your kid’s auto insurance from the same company that covers yours.  This type of discount applies when you get several non-life policies from a single company like having both your homeowners and auto insurance from one.. See if you can obtain an umbrella policy that can cover more liabilities especially as your teen driver starts to get exposed to road hazards in college.

·         It’s still a good idea to compare rates, though.  The insurance company that gave you and your spouse the best rates may not do likewise when adding a kid to your coverage even with those discounts, so do shop around.  But having said that, if the difference is only a few dollars, there are benefits to remaining loyal to your present insurer, like being more forgiving.

·         It will require a one-off expense but your premiums get lower once your raise the collision and comprehensive deductibles of your auto insurance.  $1,000 would be the minimum.  In addition, it keeps you from filing small claims that could compromise any future discount insurance firms are known to apply for a claims-free period.  In addition, you may want to lose your collision and comprehensive coverage when getting older cars which often get you less than what your premiums pay for. 

·         If your kid gets high grades, at least a B on 12 credits of college work or a 3.0 GPA in high school, your insurer may offer significant discounts on your kid’s premium.  Check with your insurance company if it does. Many do.  It certainly won’t hurt to encourage your kid to do well in school.

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