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What is cheaper to have our 18 year old buy his own insurance or to have him listed as a driver on my policy?

Car insurance for young drivers is often easier and less expensive when the newly licensed driver to be added to their parent's auto insurance policy than to start up their own policy, especially if it is a teen and they do not own their own vehicle.

You could save a lot when you are adding a young driver to your policy if you're willing to shop around. Most companies have a good rating tier for mature adults, while others have a good rating tier for mature adults with children. This forces you to shop around for the best rate when your son or daughter receives their driver's license.

Every company varies on their rules about charging insurance premiums for families with a driver with a learner's permit, therefore, you have to notified the company about the teen driver with a learner's permit. Some policies automatically extend coverage to a newly licensed driver because he or she is defined as an insured by being related to you by blood, marriage or adoption, and by being a resident of your household, but you have to notify the company to verify the coverage is automatically extended. As insurance agents, we have seen situations where parents didn't notify their insurance company, the child gets into an accident, and the company guidelines wouldn't extend coverage. Please notify your insurance company and shop around for better rates if your company's rate is too high.

The cost of adding a teenage driver varies, just like all the other factors that affect car insurance rates. Boys generally cost 10 percent to 30 percent more than girls to insure at a young age. The National Safety Council says that drivers 16 and 17 are three times more likely to be in a traffic accident than adults ages 25 to 64. This means that you have to make sure you have more than enough insurance on your young drivers. It does make it difficult to pay higher premiums at a time when your child needs the most coverage. We can't stress the need to purchase higher liability limits and higher PIP or Medical Payments coverage (especially if you don't have your family insured on a health insurance policy). If your family has a health insurance policy, you may want to only increase your Liability limits and rely on your health insurance policy for medical coverage if it provides coverage in an auto accident.

Your insurance premium will increase when you put your teenager on your auto policy, therefore you need to seek ways to save money. Shopping is important, but you can also looks for discounts. Parents receive discounts for being married, maintaining good driving records, owning multiple cars and carrying homeowners insurance with the same company. For your child, your rate can go down if your teen gets good grades or establishes a good driving record (which takes time). Most companies offer discounts to students with good grades, generally a B average or higher. Be aware that you shouldn't necessarily seek companies that offer this discount, because you will find companies that don't offer the discount but they are much cheaper than those that do. If you require your son or daughter pay for all or part of the incremental cost of adding them to the policy, they may feel a higher incentive to drive responsibly and get good grades.

We do not recommend getting an older car for your teenager just to save on auto insurance (not just because we are insurance agency, but for the right reasons). Older cars lack safety features and at the age of 16 to 21, safety features are more important than saving a few dollars on car insurance. If you have an older vehicle and the child is planning to drive it primarily, make sure you tell your insurance company so you are not charged for the teenager driving your car as their primary vehicle.

If the Liability laws in your state allow for you to be held responsible for your 18 year old son's actions then if he was in an accident and injuries or damages sustained by the other party are over the car's insurance limits, you and your personal assets (such as your house) may be put at risk if a judgment is found against you in a lawsuit.

If you do not want to have your personal assets at jeopardy, make certain to get high enough limits on the auto insurance policy to protect you. You may also want to think about getting an Umbrella policy.

With an umbrella policy you list what items you want covered (i.e. home, boat, cars, etc) and then those listed items are underwritten and a rate is given for the premium to cover up to 1 or 2 million dollars in liability.

We have partnered with Safeco to help you find the best rate for Umbrella insurance. Safeco's Personal Umbrella policies are competitively priced and offer exceptional coverage. You can receive coverage up to $2 million. Get started with a quote for Umbrella policies here. And you can start shopping around for affordable car insurance for you and your 18 year old son here.

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