Teens, Car Insurance, and Two Questions

I’ve talked with two clients in the past week. Both are parents of teens who are about to start driving. One client has a teen son that’s about to get their learner’s permit while the other has a son who’s about to get their license. Both had two questions related to their car insurance.

The two questions I’m most frequently asked when it comes to teens who are about to get their permit or license is when they should add their teen driver to their car insurance policy and does it make a difference to the insurance rate if their child takes a parent led driver’s training course or an instructor in a driving school?

When to add a teen driver is dependent on the car insurance company and how they approach this. Companies usually falls into one of two approaches:

  • Some want the teen driver listed on the policy when they receive their learner’s permit.
  • Other companies wait to add the driver when they obtain their driver’s license.

In the first case, listing a teen driver with a permit does not impact the insurance rate, it simply is an acknowledgement there is another “driver” within the household. In this case, the teen with a learner’s permit is listed but not rated.  The rate changes only when the teen driver receives their driver’s license whether it’s when they turn 16 or at a later age.

For car insurance companies in the second group, since they do not require a permitted driver be listed, we only add them to the policy when they receive their driver’s license.  The rate is adjusted at that time to account for the new driver and the risk they represent.

In both cases, there is no set time between when a driver receives their permit or is awarded their driver’s license.  Teen drivers are only rated when they become licensed, not when they turn 16 or some other age.  That is up to the parent and the teen, not the insurance company.

Regarding my client’s second question, does the type of driver’s training class make a difference to their future rate?  The answer is, no. No insurance company I work with makes a distinction between a parent led or instructor led course.  In both cases, the student driver is awarded a certificate upon completion of the course and that’s worth a discount on the car insurance rate.  The only question is which class option is best for the emotional and relational health of both the parent and the teen!

Do you have a question or experience you’d like to share?  Share them with me on my Facebook, Google +, and LinkedIn pages!  I’d love to hear from you!

Thanks!

Ed Wise

Wise Insurance Group

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