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Five Tips to Save Money on Car Insurance for Teenage Drivers
Your car insurance premiums are likely to go through the roof when your teenage kid gets his driver’s license and starts using your car. However, there are a few key moves that will help you cut costs significantly. Here are five tips that will help you save money on coverage.
1. Raise comprehensive and collision deductibles
Deductibles in the range of $1,000 and up will get you significantly lower premiums. An increase from $250 to $1,000, for instance, gets you between 15 and 30 percent off the yearly bill with most providers. Such a deductible would also keep you from filing small claims that would damage your no-claims discount. It’s advisable that you set some of these savings to an emergency fund to cover the increased deductible.
2. Drop comprehensive and collision insurance on old cars
If the value of the car is close to the deductible, then it’s quite pointless to keep an insurance policy altogether – you would be paying for premiums year after year and getting nothing in return. You will also want to drop anything on top of the liability insurance if you pay more than 25% of the current market value in premiums every year. Use Kelley Blue Book for guidance on current market values.
3. Encourage the kid to get good grades in school
Most insurance providers will offer you a discount in the range of 10 to 15% if the kid is enrolled in an accredited educational institution and maintains an average of at least B (a GPA of 3.0). College students have to take at least 12 credits per semester to be eligible for this discount.
4. Shop around for the best rates
Shopping around is a prerequisite to getting top rates with whatever you are shopping for, not just car insurance. This site will provide you with plenty of information on how and why to use a car insurance rates calculator and compare quotes from various insurance providers.
5. Don’t switch carriers unless you have to
It might seem a good idea to switch providers when you have found a better deal. However, it’s not always advisable to do so:
- If the savings are insignificant (i.e. $50 a year or so), moving to another carrier may not be worth the hassle. You might spend more with phone calls or mailing documentation back and forth if you aren’t too keep on using the Internet.
- If you switch carriers, you will no longer be eligible for a loyalty bonus that can be around 10%. If you pay, for instance, $3,500 right now and another company offers to pay $3,350 for the same level of coverage, it might look like you are saving $150. In fact, you are no longer getting the loyalty bonus of $350 and saving $150, which yields a net loss of $200 a year.