Car Insurance for Teens: It's Going to Cost You Big Time

Call your insurance company as soon as your teen gets her permit or starts driver's education. After that, get prepared for the news you know is coming.

It's common to see insurance rates double—and even triple—upon adding a teen to the family insurance policy. Why? Because teen driving statistics are so poor. According to the Insurance Institute for Highway Safety, a teenage male driver's chances of having an accident are almost 100 percent, and while girls have slightly better driving histories, their records are deteriorating, too.

Though there's no way to avoid an increase, there are ways to minimize the damage to your pocketbook.

Shop around for the best rates. You may find someone who can write a policy for less than your current insurer. When you call, be aware of the following points—each one may cut your premium by 10 percent or more:

• The type of car you're insuring makes a big difference—you'll pay more if your teen drives a sports car or high-performance car.
• Add your teen to the policy as an occasional driver. (The family member who drives the car more than half the time is considered the principal driver; all other family members are considered occasional drivers.) If it's your teen's car or you've got more cars than parental drivers, then this isn't an option.
• If your teen is an honor roll student, you may be able to save. Good students tend to be good drivers, and insurance costs reflect that. Ask insurers how your teen can qualify.
• Some states offer premium discounts for young drivers who complete driving courses.
• Is your teen a nonresident? If your teen is at boarding school or college and has no car, discounts are usually available.
• Accept a higher deductible if you can afford it—you can save.
• Ask about insurance company client discounts. Some companies offer a discount for long-term customers or customers who have both home and auto coverage with the company. Or, families may get discounts for having all their cars on the same policy.
• Insurers may offer breaks for automatic safety belts, anti-lock breaks, and anti-theft devices.
• If your teen will be driving an older car, which would be damaged beyond repair in an accident, you might be able to forego collision insurance.

Under no circumstances should you skimp on your liability coverage. For bodily injury liability (medical expenses and legal fees arising from accidents you cause), carry at least $100,000 per person and $300,000 per accident. For property-damage liability, consider at least $50,000 coverage. For extra protection, you might also consider a $1 million umbrella liability policy. Check with your insurance agent.