Inflation has caused the prices of just about everything to rise. From the cost of groceries to gasoline, families are feeling the impact on their budgets. In fact, a recent Experian survey found that 76% of Americans are actively looking for ways to significantly trim expenses from their monthly budget. Inflation is affecting other expenses as well, including car insurance rates. According to the survey data, 23% of Americans listed auto insurance as one of the expenses that hurts their wallets the most. While rates reportedly are projected to increase across the board, this can be even more daunting for parents with teenage drivers.
Due to their inexperience behind the wheel, teens are considered high risk to insurers. This factor alone may cause your premiums to spike when you add your teen to your car insurance policy. Couple that with inflation-driven price increases, and parents may see a surprising jump in their premium.
How to Reduce Your Car Insurance Rates
While you can’t control how insurers price their policies, you can take action to try to avoid shouldering higher costs. One way to set yourself up to receive the best rates available is to ensure you have a good credit score. Many states have credit-based auto insurance scores which help insurance companies assess risk and determine appropriate premiums, in conjunction with other information such as driving records. Before making the switch to a new carrier or adding your teen to your policy, review your free Experian credit report so you know where your credit stands.
Here are more ways you can reduce your car insurance rates while insuring a teen driver.
- Compare insurance quotes. Experian’s survey found that 24% of Americans are trying to save money by using online price comparison tools. This is a great way to ensure you are paying the least amount you can for the coverage you and your family need. Experian’s new auto insurance comparison service can take the hassle out of finding better car insurance rates, delivering multiple, tailored rates from more than 40 leading and well-established auto insurance carriers. Shopping around can potentially save you more than $900 per year.
- Check for discounts: Your teen may qualify for discounts. Auto insurance companies often offer discounts for high school or college students who maintain a certain grade point average. Many companies also offer “away-from-home” discounts for college students who live far from home, don’t take a car to college, and drive the family car only when they’re home on break. Additionally, insurance companies may reduce rates if your teen takes a driver education or driver safety course approved or offered by the company.
- Update your policy coverage: Cutting out unused add-ons such as coverage for rental cars, replacement rentals when your car is in the shop, or other nonessential insurance can help offset the cost of your teen’s insurance. If your teen will be driving an older car, consider dropping collision and comprehensive insurance, which cover damage to your vehicle.
- Use driver tracking programs. While your teenage driver may shudder at the idea of being tracked while driving, auto insurance companies often offer discounts for drivers who opt in to driver tracking programs. Your insurance premiums are determined by the information the insurer collects to calculate the level of risk of insuring you. If you provide them with more information about your specific driving habits by using an app or a recording device in your vehicle, it could reduce your costs. With more information about how you drive, the insurance company may drop your rates by 25% or more.
- Pay off your auto loan. If your teen is driving a vehicle that is still financed, the lien holder may require that you hold a higher level of insurance, such as comprehensive and collision. If you’re close to the end of your loan, pay it off and consider reducing or dropping your insurance coverage to something more manageable.
Auto insurance premiums are expected to rise this year and adding a teenage driver to your policy can drive those costs higher. Luckily, there are several ways you may be able to trim your expenses. You might need to invest a little bit of time to explore all your options, but it can pay off in a big way by helping keep more money in your wallet this year.
Thanks to Rod Griffin, Senior Director of Consumer Education and Advocacy for Experian for sharing this timely information with us!