January 16, 2015 by and

Many of the financial aspects of parenting can be scary. Diapers, day care, tuition, sports, clubs, lessons, field trips… the list of expenses involved in raising a child from crib to college can be daunting. Recent estimates have middle-income parents spending $245,000 from birth to graduation on babies born last year. And that’s before college expenses begin.

Since my oldest is a son, I’ve heard years of horror stories about how one day adding him to our auto insurance policy will cause our rates to skyrocket. “Whatever you once spent on daycare, will now go to pay car insurance,” I was once told. The factors that insurance companies consider: age, gender, marital and/or student status—all work against new 16-year-old male drivers.

Well, frankly? It’s all true. But be assured, there are many, many things that you, as the parent of a pre-teen driver, can be doing right now to significantly reduce the sticker shock the day your oldest gets his license. I can’t stress enough how important it is to plan for this. Otherwise, you will be like the families who walk out of their insurance agent’s office absolutely stunned with an annual auto insurance bill that just vaulted well over $2,000. That’s not a one-time payment, friends. That’s every single year until their son turns 25 or otherwise leaves their policy.

Here are a few things that you can do that will not only help you reduce your insurance costs, but also, hopefully, hand the keys to the safest, most responsible driver you can.

  1. Contact your car insurance agent when your oldest is approaching time to get a driving permit (usually at age 15 in Nebraska). Find out what kind of discounts your insurer offers for safe teen drivers. Most major insurers have a number of incentives to give new drivers a great start.
  2. Monitor your child’s grades. Boys with good grades can have their rates cut as much as 25%, simply for showing that their last report card was solid, generally a B-average. The reduction isn’t as high for girls.
  3. Look into teen driving courses. The National Safety Council of Nebraska offers an excellent training program with requirements both in the classroom and behind the wheel. Classes are offered all over Omaha, all during the year. There is a one-time fee. You can learn more at www.safenebraska.org. Earning that certificate can slice another 20 percent off your child’s insurance.
  4. Meet your insurer’s teen driver requirements. Most major insurers have their own teen driver programs, and once completed, those can shave yet another 15 percent off your rates. In our case, the program reinforced what our son was learning in his driving training, plus instilled defensive 
  5. awareness skills I don’t think he would have picked up as quickly elsewhere.
  6. Consider combining policies. Insurers give credit to those customers who have multiple lines of insurance with them. Not just multiple vehicles, but other lines as well, like home insurance. If the current drivers in the home have good driving histories, that will also bode well for new drivers coming onto the policy.
  7. Choose your child’s vehicle carefully. There’s a huge, huge difference between insuring a new sports car with your teenager as the principle driver and insuring an older, less flashy vehicle for him to drive. Check with your agent before you buy something new. I promise you will be glad you did. We did, and it changed our buying decision.

By doing all of these things, we were able to reduce our insurance costs significantly. Rather than paying thousands extra each year, we pay about $100 more per month to insure our son as a driver. As I’ve stressed to him, it really is up to him now to maintain that “safe driver” status. While he might not appreciate it much now, he will when he is one day making those payments.

Finally, something else to consider. I insisted on a pre-license conversation between my son and our wise insurance agent. It cost nothing but time, but might have had more impact than anything else we did. Jim talked to my son, in a very positive way, about his responsibility as a driver, not only for his own safety, but for everyone else on the road. The great take-away from that meeting was this: “Son, this is the first time in your life that the State of Nebraska can come after you. If you are careless, reckless, or irresponsible, mom and dad will not be able to swoop in and fix it. It will be you, on your own, talking to the police or sheriff. Make sure you understand that.”

That was many months ago, and so far so good. I hope some of these suggestions will help you find great success in creating a safe and affordable teen driver. Let’s keep looking out for each other.

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