Everyone knows that kids cost money – and for different reasons at different ages. If you're not expecting it, you're liable to find yourself blindsided by a hefty auto insurance bill when your child begins driving. Fox Business reports on a 2010 Nationwide survey that indicated parents' premiums jump about $800 a year when they add their teenagers to their policies.
Permits Vs. Licenses
The good news is that most insurers don't require you to add your child to your policy when she gets his permit, and those that do probably won't increase your premiums during this time period. The bad news is that if your teen has her permit, it won't be long until she takes her driving test and becomes a licensed driver – typically in about two to six months. Even without adding your child when she gets her permit, she's generally covered while driving your vehicle because you or another licensed driver must be in the car with her. Some states further restrict these young drivers to operating vehicles only during daylight hours. Getting an actual license changes these rules – your teen can drive by himself, typically any time he likes, but some states do impose a few restrictions for the first year or so.
Why Age Affects Premiums
As with any new skill, the longer you practice driving, the more accomplished you become. When your child graduates from her permit to her license, the difference on your insurance bill will be quite apparent. Although it typically costs more to insure teenage boys than girls, statistics indicate that young people of both sexes are more likely to cost insurers money in claims. They not only have less experience, but they sometimes use faulty judgment. According to the Esurance website, 16-year-olds are more than twice as likely to be involved in an automobile accident as drivers in the 20 to 24-year-old age range.
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Laws Regarding Coverage
After your child gets her driver's license, you probably won't have any choice but to insure her. Even if you don't buy her a car of her own, she has the potential of driving yours because she lives in your household. Typically, all licensed drivers in a household must be listed on your policy unless they have policies of their own. In this case, you can buy your teen a separate policy, but this might actually be even more expensive.
What You Can Do
Now that you know that your budget is going to take a hit when your teenager trades in her permit for a real license, you can plan a little to mitigate the expense. If you do buy her a car of her own, older vehicles are less costly to insure than new ones. Certain vehicles, such as sports cars, will break the bank. If you don't get her a car and you're absolutely sure she won't be driving yours, some insurers might allow you to exclude your young driver from your policy. This involves a special endorsement, and the downside is that she can never get behind the wheel. If she does and if she has an accident, the damage won't be covered. You can also ask your insurance company about good student discounts and the possibility of having your teenager take a safe driving course. These measures can cut your premiums as well.