How Teens Can Help Lower Their Insurance Costs

Whether a new teen driver has their own auto insurance policy or gets added to their parents’ coverage, insurance for teenage drivers tends to be expensive because, statistically, a young driver is more likely to be involved in a car accident. Even if they have a clean driving record, insurance companies will view a teen’s limited driving history as a factor that puts them at a higher risk of filing a claim. 

But you’re not helpless when it comes to curbing the cost of your car insurance. Here are actions you can take to reduce car insurance costs – some apply to all drivers and others are designed specifically for students like you. 

1. Boost your grades

Good grades are important for your future. They can also help you save money right now. Many insurance companies have special teen car insurance discounts for high school and college students. If you're under the age of 25 and in school, you could qualify for the discount by maintaining a "B" or equivalent grade point average (GPA) – how’s that as an incentive for strong academic performance?

The insurance company may ask for a copy of your transcript or report card. You can ask your insurance provider (or talk to your parents if you're on their policy) to find out what documentation you need to get lower premiums. 

2. Ask about ‘away from home’ discounts

If you're a college student who lives on campus but keeps your car at home, you may be eligible for an "away from home" discount. Some insurance companies offer this discount because students away from home tend to drive less, which lowers the risk of accidents. 

You can still use your car during breaks or weekends, but you'll pay a lower rate and your policy remains active. This is beneficial because it helps you build a record of continuous insurance coverage and shows that you can maintain a clean driving record over time, which is a plus when you start getting insurance quotes for your own policy. 

3. Take a safe driving course

Insurance carriers want to know that the people they cover know how to drive safely. As a teen driver, you can't point to a long driving history free of claims, but you can take a safe driving course. Designed for young drivers, these courses supplement the driver's education you need to get your license. They teach you how to recognize potential risks, deal with inclement weather, handle sudden emergencies and master defensive driving skills.

By completing a safe driving course, you may earn a discount on your car insurance, and you can learn how to become a better driver and avoid accidents. What’s more, you may be eligible for a discount on your insurance premium.

4. Sign up for a usage-based insurance (UBI) program

One of the easiest potential ways to save on car insurance is to enroll in a UBI or telematics program. These programs use plug-in devices or mobile apps to track your driving behavior and habits. By driving safely — always putting your phone away before you get behind the wheel, obeying speed limits, and limiting nighttime driving — you could qualify for lower auto insurance rates.

Plus, these programs usually provide regular updates on your driving and tips for improving your skills, feedback that can help you become a better driver over time. 

5. If possible, stay on a parent's policy 

In general, it's cheaper staying on a parent's policy than purchasing your own insurance coverage. Unlike health insurance, there's no upper age limit for car insurance, so you don't need a separate policy, as long as the car you drive is registered in one of your parents’ names. 

Even if you're currently living in a college dorm room, you can still be on a parent's policy if their home is also your permanent residence.

If you’re on a parent’s insurance policy, they may want to see if they can get additional insurance discounts by bundling their car and homeowners policies with the same carrier.

6. Increase your deductible

While a low deductible can be appealing, the trade-off is paying a higher premium because your insurer starts covering the cost of repairs sooner. If you have a part-time or summer job and have built up your savings, you may benefit from increasing your deductible.

Raising your deductible means you’d pay more out of pocket if an accident happens, but it can also help lower your auto insurance premiums, potentially making your coverage more affordable over time.

7. Choose a modest car

When you apply for a car insurance policy, the insurance company uses several factors to calculate your premiums. While your age and location play a role, your car's make, model and year are important, too. 

While you can be a safe driver in any kind of car, vehicles that are relatively inexpensive, have cheaper parts and are easier to repair will be less costly to insure than other vehicles. While older cars are generally cheaper to buy and insure than newer ones, you’ll want to weigh those costs against the safety features that are more readily available on newer-model vehicles. Keep in mind, though, that certain safety features may actually earn you a modest discount on your car insurance.