If, like so many other Michigan-area parents, you are spending the summer watching your child go through drivers’ education classes, you are likely thinking two things:
1. How did my child grow up so fast?
2. How much will this increase my automobile insurance policy?
While the only answers we have to #1 are boring clichés, we can absolutely provide insight into your insurance questions. Let’s take a look at what you need to know about automobile insurance for your teen:
If your teen holds a Level 1 License, they may be covered under the insurance of the adult driver riding with them. Check in with your insurance company to see if your policy covers a driver with a learners’ permit.
Under Michigan by-laws, your child is required to show proof of insurance in order to get their Level 2 License. It will be up to you to decide if you add your child to your family policy or secure a separate policy. Often a separate policy will be more expensive.
It is important to note that according to Michigan insurance law, or the Essential Insurance Act, you must be the owner or have the vehicle registered in your name in order to insure it. To include your child’s vehicle on your personal auto policy may not be in your best interest. Talk to our auto insurance experts before making this decision. They will talk you through the pros and cons.
As auto insurance is one of the few areas where it’s legal to discriminate based on age and gender, nationally, parents adding a teen driver saw an average 80 percent increase in their insurance policy rates. In Michigan, that increase tended to be slightly lower at an average of 57 percent. When looking at boys versus girls, let’s just say it pays to have a daughter. (Source: insuranceQuotes/Quadrant Information Services study, May 2015)
Cost-saving Measures
While it is a certainty that your premiums will rise when you add a teen driver to your policy, there are a few discounts you’ll want to investigate with your insurance broker, such as:
Good Grades Discount: If your teen has a B average or higher, s/he may qualify for a discount, and it could just be up to 20% off your premium.
Distant or Temporary Driver Discount: If there are circumstances where your child will have limited access to the car, such as going away to school, talk with your insurance provider about what type of policy makes sense. Don’t pay for them to be on your policy full-time if they will be hundreds of miles away from the car.
Deductible Increase: This can be a risky move, but if you increase your deductible, which is the amount you pay out of pocket in the event of a claim, your premium will decrease. This might just help offset some of the increase from adding a teen driver.
Track Your Driving: A number of the larger insurance carriers have instituted programs using what the industry calls “telematics.” Essentially, an electronic device is placed somewhere in your car and remotely provides information on your driving behavior, such as how fast you’re driving, how hard you hit the brakes and the time of day you’re on the road, back to your insurance provider. If you showcase good driving behaviors, you may qualify for a discount.
We highly recommend that you NEVER purposely avoid listing your teen as a named driver to save a few bucks. This could be considered insurance fraud and your insurance agency has the right to cancel your entire policy altogether. It’s never worth the risk.
While we can’t promise you peace-of-mind when your child asks for the car keys, we can promise that we have you covered for any mishap should something happen. Let’s talk and make sure you have the policy that meets your changing needs.
About E&Y Agency
E&Y Insurance Agents are dedicated to giving our clients insurance products that provide quality protection and value pricing. Our goal is to establish a successful partnership with our clients, our staff members, and our insurance companies. Our success is measured by our clients choosing us because they believe in our ability to meet or exceed their expectations of price, service, and expertise.
Whether you live in Troy Michigan or the surrounding areas, we want to work with you! Find us, contact or call us now at (248) 671-6860 to talk about your insurance needs!
