Back to school means more money for parents, from school supplies for K-12 kids to books and tuition for college freshmen. But one thing that parents may not consider is that having a new driver or a young driver can cost a lot of money.
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Recent studies have shown that insurance accounts for a large portion of household income. “Buying insurance products – something you have to do once a year and usually ends in a weekend afternoon – is a great way to reduce your household expenses,” said Andrew Schrage, CEO of Moneycrashers.com.
Fortunately, there are ways parents can save on insurance even with a young driver behind the wheel for the first time.
Give Them Good Driving Habits
Good driving habits can make a big difference in keeping insurance premiums low and even deductibles. “Avoidance of accidents and car citations can pay off with lower insurance costs,” said Michael Orefice, SVP of Operations at. SmartFinancialtold GOBankingRates.com in an exclusive interview.
Orefice also recommended that your young driver not allow a friend or two in the car until they know how to drive. “Traveling with friends may be attractive after your child gets a driver’s license, but a car full of chatter and jokes can be distracting,” he said.
Include the Dangers of Distracted and Drunk Driving
When you’re a parent dealing with young or older drivers, safe driving also means having tough conversations with your child about texting and driving, drinking and driving, or driving while riding.
“Young drivers can do reckless things, such as texting, driving, drunk driving or taking drugs. “Studies on texting and driving alone have shown that they can increase the risk of accidents for young people by 23 times,” said Orefice.
These behaviors can be especially expensive for young people, as insurers can add up to 45% more premiums for offenses such as texting and driving, they told us.
“Parents can encourage good driving habits by emphasizing the cost of reckless driving. Beyond insurance coverage, license suspensions and jail time, reckless driving puts their lives and the rest of their lives at risk,” Orefice said.
Share Resources to Help Your Child Stay Safe Behind the Wheel
It’s one thing to tell your teen about the dangers of driving under the influence of drugs or alcohol. But, it is also important to give them answers if they find themselves in a situation where they are forced to make a choice.
“Reminding your child to call you or give you a ride home is always a good idea,” Orefice said. Some services even send two drivers to your location – one to pick you up and one to drive your car safely home.
Take a Safety Driving Course
Young people, along with adults, can take driving lessons to get more insurance money. Some insurance companies offer a discount of 15% or more if you take an online class. “This good driver discount can help lower your premiums that come with adding a young driver to your policy,” Orefice said.
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Let Telematics Ensure Their Safe Transactions
If you – and your teenager – are safe drivers, you can prove it to insurance companies through a technology called telematics. This device measures your speed, sudden stops, mileage and other dangerous driving factors.
“Great discounts are paid to good drivers,” Orefice said. “Complying with speeding rules, using your brakes properly and avoiding driving at night can save you a lot of money.”
Ask About Good Education Discounts
High school and college students can often get discounts of 5% to 25%, depending on the insurance. A good student discount is available to full-time students with a 3.0 GPA or “B” average, Orefice said.
He used Esurance and Allstate as an example, saying that the company offers a 10% discount to students on loan, collision, and medical fees as part of the car insurance premium. Best of all, the discount is good for up to one year after graduation.
Tell Your College Student to Leave Their Car at Home
If your college student lives in a college dorm on campus more than 100 miles from home, you can save money on insurance premiums by leaving their car at your home address.
Orefice said: “The insurance company realizes that you will have less of a car when your child is in school and they charge him less.
After sharing this popular tip, he said that the student can still drive during breaks and holidays without increasing the cost, depending on the insurance.
Don’t Be Afraid to Change Packs
If your current agent won’t offer you a contract after adding a young driver to your policy, it may be time to shop for a company that can fit your situation and still keep your (low) premiums. “Inertia is a powerful thing,” Schrage said. “Insurers know that if you keep your policy for a long time, you can’t go away.”
Schrage calls these insurance increases “reckless payments.”
Whether these increased costs come with time or because of lifestyle changes such as adding new drivers to your policy, it is likely that you will find a good deal when you shop.
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Shop Online for Supplements
Reminding us that shopping for insurance doesn’t have to take a long time, Schrage said shopping online for quotes from multiple insurance companies is a good use of your time — and can save you a lot of money.
“These online agencies come into contact with a large number of insurance brokers every week and therefore have the power to negotiate prices with insurance companies that direct buyers cannot match,” he said. He added that auto insurance premiums can save 20% to 50% in most cases.
If you’re adding a new driver to your policy, those savings can offset some of the additional costs you may face with a driver under the age of 25 in your family.
Orefice agreed: “If you’re not satisfied with the product you’re currently carrying, shopping around can help you find a plan that fits your budget and what you need to deliver.”
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