Top reader questions about insurance for teen drivers

According to the Insurance Institute for Highway Safety, 16-year-olds are the riskiest drivers on the road — and the most likely to get into car accidents.

So it shouldn’t come as a big shock that adding a teenage driver to your automobile insurance policy will cause your insurance premiums to rise.

Click through to find the biggest issues facing parents of teen drivers.

1. When do I have to add my teen to my insurance — when he or she gets a learner’s permit, or a driver’s license?

Your insurance company’s guidelines and your state’s insurance rules determine when you are required to add a teen to your insurance policy.

Some insurers require you to add a teen to your policy once your child has a learner’s permit, but most insurers allow you to wait until your teen is fully licensed, according to Penny Gusner, consumer analyst at CarInsurance.com.

A learner’s permit allows your teen to drive only when a licensed adult is in the car. Once your child is licensed, most states require him or her to have at least a minimum amount of car insurance. So it’s best to contact your insurer to find out the specific requirements.

The sooner your child gains valuable driving experience, the sooner he or she will become eligible for driving discounts.

“In California, you can get your learner’s permit at age 15 ½,” says Steve Lehman, owner of Lehman Insurance Agency in Dublin, Calif.

Lehman notes that in the Golden State, teens who go three years without accidents or tickets qualify for a good-driver discount of 20 percent. So assuming a teen driver obtained a license at age 16, by age 19 he or she could be eligible for a California good-driver discount “because the clock ticks from the time you first add them to a policy” as a licensed driver.

Insure.com’s Don’t hide your teen driver from your insurance company explains why it’s important to add teen drivers in your household to your policy.

2. Can my insurance company force me to add my teen to my policy even though I don’t allow him or her to drive yet?

“Yes,” says Gusner. “Most car insurance carriers require you to list all licensed members of your household on the policy.”

Rich Webber, co-owner of Webber & Grinnell Insurance in Northampton, Mass., agrees. “In Massachusetts, if you have a newly licensed teen living in the household, then you have to list them,” he says. “But you don’t have to list them if they’re not going to be driving your car, their own vehicle, or any car whatsoever.”

Because rules can vary by state or insurer, contact your insurance company or agent to learn the requirements.

3. Is it cheaper to put my teen on his or her own policy, or on the family policy?

Insuring a teen driver can easily double, triple or quadruple your car insurance rates. But it’s usually less costly to add a teenager to your family policy than getting separate insurance coverage for your teen.

In one hypothetical situation, CarInsurance.com found that it would cost about $1,800 more to insure a teen separately, compared with adding that teen driver to a family policy.

4. If my teen isn’t on my insurance and crashes the car, is the damage covered?

Your car may be covered in the event your uninsured teen crashes it, but expect some ramifications. For starters, your rates could go up. An insurer may also decline to renew your coverage in the future if you hadn’t originally reported your teenager as a driver.

But if your teen was specifically excluded from the policy, your insurer isn’t obligated to pay anything — meaning you could be financially responsible for fixing your damaged vehicle.

5. When do auto insurance rates for teens start to go down?

Insurance agents say that once young drivers get three clean years of driving experience under their belts, their rates drop significantly.

In California, after two years without a ticket or accident, teen drivers with Farmers Insurance save about 15 percent, says Lehman. “After year three, they’ll get another 20 percent off their rate as a good driver discount,” as required by the state. After nine years of driving experience, Lehman adds, they’ll get a standard rating and lose the “youthful driving” surcharge.

Meanwhile, in Massachusetts, car insurance rates for teen drivers typically drop by about 50 percent after three years of driving with a clean record, and then fall another 50 percent after six years of good driving, Webber says. Generally, insurance rates also decline around age 25.

6. How can I minimize the insurance costs of a teen driver?

To lower your child’s insurance costs, seek a good-student discount for teens with a 3.0 or higher grade point average. Farmers Insurance says it offers a 25 percent discount for good students.

You may be able to get other discounts — typically about 5 percent to 20 percent — if your teen takes a defensive-driving class or has a vehicle with special safety features, like air bags, anti-lock brakes or a security alarm system.

If your teenager only uses the car sporadically or perhaps to drive to and from a weekend job, also ask whether your insurer offers a low-mileage discount.

7. How much will my rates go up if my teen crashes or gets tickets?

“You should expect a 20 percent to 40 percent increase in your rate after that first accident or ticket,” Lehman says. “Not just because of the incident itself, but also because you may lose any good driver discount you may have had.”

Insurers have good reasons for charging more for teen drivers. A study by the Governors Highway Safety Association found that teen driver deaths were on the rise in 2011. To minimize the risk of crashes, stress to your teen the importance of avoiding distractions, like texting or talking to friends while driving.

8. Will the type of car my teen driver uses affect my premiums?

For the lowest insurance premiums, the best cars for teen drivers are minivans or sedans; just say “no” to sports vehicles and new cars. Also, look for safety features like automatic seat belts and daytime running lights.

“Parents often want to be nice to their kids or reward them for good grades by surprising them with a new car,” says Webber. “But sometimes, a little bit of common sense helps too. Just buy an older, safe car.”