If you’re a parent of a newly (or soon-to-be) licensed driver, you might be wondering where to start, and you’re not alone. We have the information you need to ensure your new driver is adequately covered while keeping costs in check. We’ve outlined two common scenarios to help you determine your next steps:
1. The new driver just got their license or permit and will be driving a parent’s car.
2. The new driver just got their license, will have their own car, and will be on an existing policy (like a parent’s policy, for instance).
Scenario 1: New Driver, Parent’s Car
When a newly licensed driver is added to a parent’s policy, the policyholder will need to contact their insurance agent and provide basic information about the new driver, such as name, date of birth, driver’s license number, and date of issue. Before calling your agent, it’s important to decide which vehicle the new driver will primarily be using.
Once the new driver is added, you’ll receive an endorsement in the mail reflecting the updated premium, depending on your payment plan. Be sure to discuss with your agent how adding a new driver may affect your payment schedule.
Scenario 2: New Driver, New Car, Same Policy
Now let’s consider a slightly different scenario: a newly licensed driver with a new car that needs to be added to an existing policy. Whether you’re purchasing the car from a dealership or through a private party, your insurance policy must be effective before or at the time of purchase. If you’re buying from a dealership, they’ll require you to have proof of insurance before you can drive off the lot.
You’ll also need to decide who will be on the vehicle registration. The most expensive option is to register the car in the new driver’s name alone, as this will require them to get their own auto policy, which typically has higher rates. To avoid this, many parents opt to co-own the vehicle with the new driver until they turn 18. This allows time for the young driver to build their own driving history, which will benefit them when it’s time for them to have their own policy.
Good Coverage Shouldn’t Break the Bank: Tips on Controlling Premium Costs with a New Driver
We understand that adding a new driver to your policy often comes with sticker shock, but there are many creative ways to reduce premium costs with a new driver. For instance, if they have completed an additional driving course, such as Defensive Driving, it can significantly impact premium costs (up to 10% savings in some states). Here are some other discounts to try for:
- Is your new driver a good student? The Good Student Discount typically available for students with a 3.0 GPA or higher.
- The Advanced Quote Discount can be applied when the policyholder renews or requests a quote ahead of the effective date. Some insurers also offer discounts for paying bi-annually instead of monthly. Talk to your agent to ensure you’re getting the best rate available.
- Many new drivers face challenges due to a lack of insurance or credit history. To help their child build a healthy credit history, and in turn help them earn better insurance rates, many parents add the new driver as an authorized user on one of their lines of credit.
- Considering a new car purchase? Preowned cars often have lower insurance rates for young drivers than new ones. Keep in mind that a newer car will generally cost more to insure than a slightly older vehicle.
- One way to manage the additional cost of insuring a new driver with a new car is to adjust your deductibles. Opting for a higher deductible on the child’s car and paying out of pocket for small dings and dents can save you money on premiums over time.
Conclusion
Adding a new driver to your policy is a huge milestone, as well as a very big step for your family. At PSA, we’re here to help you get the best coverage for your new driver at a price you’re comfortable with. When you work with an independent insurance advisor, as opposed to an agent, you get a partner who can assess your specific situation and recommend the appropriate insurance program for your family. We’re not just trying to sell you on a policy; we’re here to work with you to find the right coverage tailored to your needs.
Let us do the hard work of shopping for the right policy for your new driver. For questions or to discuss your specific auto coverage needs, connect with Charlie Jablon at cjablon@psafinancial.com. For other helpful tips on home, auto, and more, visit our Personal Insurance page, or reach out to us now.
