Obtaining a driver license is an important event for teens and their parents, and one that also necessitates updating your auto insurance.
The State of Michigan has a Graduated Driver Licensing (GDL) program designed to teach teens to drive through a gradual program of educational courses, behind-the-wheel driving experience, and testing. An excellent guide providing an overview of the program and helpful information for teen drivers and their parents may be found here.
In Michigan, most insurance companies automatically extend coverage from a parent’s policy for teen permit holders and only require teenage drivers be formally insured when they have obtained their Level 2 license. At that point you’ll need to inform your agent of your new driver – providing their full name, date of birth, drivers’ license number, and which vehicle the teen will be operating.
Teenage drivers are costly to insure – reflecting that, as a group, they tend to have more accidents than older, more experienced drivers. In fact, teen drivers have crash rates 3 times those of drivers 20 and older per mile driven (source: Insurance Institute for Highway Safety).
In most circumstance teenage drivers will enjoy the lowest rates being added to their parents’ auto policy. This will extend savings, such as multi-car and multi-policy discounts, to the teen driver. It’s important to note if your teen will have a separate car for their use in order to be eligible to be included on the parents policy the vehicle will need to be titled or co-titled in the name of a parent.
Here are some additional ways you can save on auto insurance costs for teenage drivers:
- Determine whether you need comprehensive and collision coverage: If the teen will be driving an older car that isn’t leased or financed you may consider carrying just liability (PLPD) coverage insuring the driver without covering any damages to the vehicle.
- Check options for increasing your deductibles: If you will need to carry full coverage on your teenagers car check your deductible options – be sure to weigh any savings against your potential out-of-pocket expenses in the event of a claim.
- Check for additional discounts: Savings are available for teenage drivers with good grades and those who are away at school without a vehicle for their regular use.
- Stress safe driving: Tickets and accidents are a significant indicator to insurance companies of the likelihood of future claims. Emphasize to teenage drivers the importance of maintaining a good driving record and provide guidelines to help make that a reality (click here for a brochure providing valuable information on common causes of teenage driver crashes).
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