Now that your teen is driving, you
need to purchase auto insurance for him or her. That means you need to decide
if the family's newest driver will have an individual auto insurance policy or
be added to the family policy. Learn the pros and cons as you make this
important decision.
Pros
1. Teens reduce their future insurance costs when they get an individual
policy. By proving that they're responsible and safe drivers, teens build a
track record that can gain them favorable auto, renters and other insurance
policy rates in the future.
2. Building credit is possible with a teen auto insurance policy. Of course,
teens have to pay their premiums on time to earn this benefit, but they'll reap
the rewards when they go to rent an apartment or open a credit card in a few
years.
3. Teens have access to several unique auto insurance discounts. Taking a safe
driving course, maintaining good grades, holding a steady job and paying
premiums on time are four unique discounts that some insurance companies offer
to teen drivers.
Cons
1. Many insurance companies won't give risky teen drivers an individual policy.
Statistically, teens are the most dangerous drivers on the road because they
are inexperienced and easily distracted. Remaining on a parent's policy may be
the only insurance option available to teens.
2. Teen policies are expensive. Insurance companies typically charge higher rates
to drivers under 25. Plus, teens can't take advantage of multi car and multi
policy discounts. Because of these factors, teens face high auto insurance
costs.
3. Parental auto insurance rates can increase by hundreds of dollars thanks to
teen drivers. Not only does adding another driver and car cause the policy
premiums to rise, but any claims also increases insurance premiums.
If your teen really wants his or her own auto insurance policy, shop around for
the best rates and coverage. In cases, the higher premium costs for a teen
policy provide benefits are a good trade-off for teens and their parents.