"XYZ Insurance Agency, how can I help you?"
"My kid just turned 16 and go their license, I need to add them to my insurance."
"Ok, let's get their information."
The parent gives me their child's information to add to the policy.
"Ok, what's the damage?"
"It looks like you're rate is going to go up $1200 a year."
"...WHAT?! I'm going to have to shop around, that's outrageous!"
"Ok, call me back when you want me to add your child as a driver to you policy."
This is a discussion that happens all the time, all across the country. Every agent DREADS this call. You've had great relationship with a client for YEARS, sometimes decades! The agent has helped the client with claims, made changes to the policy for life changes, helped them juggle payments during tight times but this call has the possibility of making a good relationship sour quickly.
The client knows it's going to be bad. They probably even remember THEIR parents having a similar discussion when they turned 16.
I distinctly remember my father taking me to go talk to the insurance agent. Having the agent giving me a stern talk about buckling my seatbelt, paying attention to the speed limit, looking in my mirrors, and essentially reading the Tennessee Driver's Handbook. It didn't make my rates any lower.
I still sped. I forgot to buckle my seatbelt. I didn't check my mirrors. I was FREE! My 1991 Honda Civic and I were able to do anything! This Honor Roll, Driver's Ed taking, church going, homework doing kid that was generally a good got behind the wheel of a 4 cylinder rusty compact sedan and thought he was king of the world.
In 2002 dollars, my Honda was $78 a month. In 2019, that's $114.02 or $1368.24 a year for an 11 year old Honda.
So, what can you do? That's the reason you're reading this blog. How or what can you do to save? I'll tell you the way to have the cheapest insurance for your kid. I'll tell you how to have the best coverage for your kid. I'll tell you how to find the best middle ground.
The ABSOULTE cheapest is don't let your kid drive. Don't let them get a license. As soon as your child is licensed, your insurance company will know the next renewal and you'll be asked to add the child or have them put as an excluded driver. If they're not driving, you're not paying for it.
That doesn't work for most parents or most children though. So the "cheapest" way to go is to get your child the oldest clunker you can (like a 1991 Honda Civic), put it on minimum coverage, and hope they don't get into a big accident.
Again, that's the "cheapest" option, but isn't really the best option for coverage.
The best coverage for your child driver is going to be on your policy. You have higher limits of liability, you have full coverage, you have towing, you may even have an umbrella policy. Your child is going to be most COVERED under your policy, but it's going to be EXPENSIVE.
Most companies allow you to "assign" a driver to a car. If you have a 2019 Lexus, a 2015 Chevy, and (the best car of all) a 1991 Honda Civic, ask your agent to assign the child to the Civic. It doesn't mean they can only drive the Civic, but it means that's the car they're rated on.
One of our companies, Hanover Insurance, recently added an endorsement called the Teen Driver that adds $1500 to the deductible is the Teen Driver is driving one of the "adult cars" but ONLY when the teen is driving, otherwise it is the normal deductible. This allows for adding the teen at a much smaller rate.
Whatever you do, get ready. Adding a teen is going to be expensive. Your agent knows that, they've probably dealt with it themselves. Instead of going around and finding the lowest quote with the smallest coverage, work with your agent first and really see what can be done to give the best coverage that will hurt your wallet the least.