Protecting Your Youthful Driver

youthful-driverWow, I’ve been in the insurance business for 20 years! I can still remember how I felt 20 years ago as a young, inexperienced insurance agent, when a client would call to add a youthful driver to their auto insurance. After making the change to their auto policy, I would apologize for the difference in auto premium because it seemed extremely high. The difference in premium when adding a young driver to your policy is always more than the client expects; usually twice as much. After 20 years and many youthful drivers later, I no longer apologize for the increase in auto premiums. As a matter of fact, I am unapologetic.

With a youthful driver, it is not if, but when will they have an auto accident. I always hear from my clients that their “little Johnny” is a great kid and will not have an accident. Yet, statistics show that most youthful drivers have accidents. Thus, the high premiums for youthful drivers. My hope is that when the young driver is involved in an accident, it will only be a little fender bender. That experience usually gets their attention and helps them realize the seriousness of driving an automobile. A small accident with property damage goes a long way in showing a youthful driver how quickly things can happen behind the wheel of a powerful vehicle. Property damage alone is one of the biggest reasons insurance for youthful drivers is so expensive. Couple that with the liability connected to youthful driving accidents, and you can see why the rates increase.

Many laws have changed to make youthful driving safer, but the number of accidents is still astounding. According to the CDC, 2,333 teens ages 16-19 were killed in motor vehicle crashes in 2015 and 235,845 were treated in emergency departments for injuries suffered in motor vehicle crashes. Add distracted driving, the less responsible youthful driver, and the parents who buy big, powerful vehicles for their children and you have a recipe for disaster and a blueprint for higher premiums.

Youthful Driver Discounts

Several approaches can make your youthful drivers more responsible, and lower youthful driver auto premiums. Many insurance companies offer a discount when youthful drivers complete a safety program. These programs usually involve watching a video and signing a contract with their parents. Most agents can administer these safe driving programs in their office. Believe me with the youthful driver premiums, a 5% discount can make a difference. Driver’s education or training from a high school or driving school can also earn a discount. Make certain you enroll your young driver in a credible driving school if you choose that route. Sadly, some schools have dropped driver’s education due to budget cuts.

Good grades merit a great discount as well on youthful driving insurance premiums. Auto insurance companies believe that good students tend to be more responsible and therefore, a good student discount can be considerable. I have one company that gives 25% discount for good student grades. Good student can be defined differently, but most times it is the cumulative grade point average of the previous semester. Most companies allow the good student discount to extend through college and up to a Master’s degree or 24 years of age. I encourage parents to use the good student discount as a reward to get a car. Driving is a privilege, and if this good student incentive is used correctly, it can help both financially and in the classroom.

Driver Monitoring Programs

Some companies offer driver monitoring programs that can lower insurance premiums depending on the results of the driving. Progressive and Safeco are two of our companies that offer this program. They provide a device to plug into your auto, and this device monitors driving for three months. You as a parent can also see the results of your youthful driver and determine if a discussion needs to occur about their driving habits. Auto insurance premiums can be reduced as much as 25% using these programs, so I highly encourage driver monitoring programs for the youthful driver.

With many of my clients, I advise parents to make youthful drivers pay a part or all of their insurance premiums. If you will not make your child pay their insurance premiums initially, I strongly encourage you to make them pay the increase in premium if they get a speeding ticket, moving violation, or are in an accident. I show my clients the initial premium and then the increase with just one of these incidents, so they can see the consequences before anything happens. Anything we can do to help the youthful driver see the significance of driving and the responsibility attached to it can help the situation.

Lowering Your Premium

To keep premiums lower, I also advise my clients to buy a lower value car that does not require collision coverage. Of course, this means if an accident occurs, the car is not replaced. Many parents want to buy their child a “better than I had” car, so they spend too much money and need to add collision coverage to the policy to adequately protect their investment. Collision definitely adds a hefty insurance premium to the auto policy.

I also advise clients with property damage claims only, to pay out of pocket and not report to the insurance company. You either pay for the damage or pay in increased premiums for the next 3 years. This has to be your own personal pain point, but it is worth considering.

Umbrella Policies

Whatever you decide to do, discuss the situation with your agent. I recommend the highest liability limits you can afford. Any client with a youthful driver should consider adding a one million-dollar umbrella policy. This reminds me of a story several years ago. We wrote an auto policy, homeowners policy, and a one million-dollar umbrella policy for a new client. Two weeks later, the client made an appointment to speak with me in my office. When he came in, he asked several questions about his umbrella policy, so I asked what had happened. He had friend who did not have an umbrella policy. This friend’s son was driving back from the beach and ran off the interstate with three friends in the car who were tragically killed. This friend had millions of dollars in assets that were not protected. My client wanted to make certain his assets were protected. I assured him they were. The cost of an umbrella with a youthful driver runs between $300 and $500 per year, but what a small price to pay for peace of mind in knowing all you have worked for is protected.

I’ve been fortunate. I’ve not lost a youthful driver in my 20 years in the business, but I have experienced plenty of auto accidents with youthful drivers. I always tell parents, “we can repair property damage such as other cars, mailboxes and guardrails, but we cannot replace your child.” Before a youthful driver gets behind the wheel, make certain you have a discussion with them and your agent, so you have proper protection in place. Letting them see the significance of driving safely will hopefully help them be more responsible.