Congratulations on the addition to your family. Having a new baby is a time to cherish; however, that doesn’t mean it will translate into a discount on your car insurance policy.
Car insurance companies calculate your rates based on various rating factors, including your gender, age, years of driving experience, driving record, occupation, marital status and geographical location.
So, if you’re married, that should bring you a reduction in rates or discount, even if having a baby does not.
- Having a child does not lower car insurance rates. Insurance companies do not typically adjust premiums simply because a policyholder has become a parent.
- While having a child doesn’t directly affect rates, related life changes, like buying a safer vehicle, can lead to lower premiums.
- Shop around with other insurance companies to see if you can reduce your rates.
Does having a baby lower car insurance rates?
Having a baby in itself does not directly lower car insurance premiums. However, lifestyle changes associated with becoming a parent can indirectly affect your car insurance rates.
If your driving record improves due to safe driving because you have a baby, that will help lower your car insurance rates. Also, if you’ve traded in a sports car for a small midsize SUV or minivan. In that case, that should help you receive more affordable car insurance premiums since family cars are cheaper to insure.
Insurers might view new parents as more responsible and cautious, which could favorably impact your insurance profile over time. While the direct impact of having a baby on car insurance rates is minimal, the associated changes in your lifestyle and vehicle choice can lead to lower premiums.
Indirect effects of having a baby on car insurance rates
While there aren’t direct effects of having a baby on your premiums, there are some indirect ways that having a baby car affects how much you pay for car insurance.
”Some indirect effects of having a baby on car insurance rates might include potentially lower premiums due to reduced driving frequency and a shift to safer, family-oriented vehicles, which insurers may consider less risky,” says James Brau, Joel C. Peterson professor of finance at Brigham Young University. “Some companies offer driving trackers which could reduce premiums if the driver is safer with the new child on board.”
Shift to a safer and family-friendly vehicle
With the arrival of a child, parents often upgrade to safer, more reliable vehicles, which may have better safety ratings and features. Insurance companies generally offer lower rates for cars that are considered safer and less prone to costly claims.
Switching to a more expensive vehicle to insure could save you thousands of dollars a year. For example, a Subaru Forester 2.5I Wilderness costs $1,353 to insure per year vs. $3,503 for the Tesla Model S Long Range.
Decreased mileage
If having a baby leads to a parent staying at home or working remotely, overall driving mileage may decrease. Many insurers offer low-mileage discounts to drivers who log fewer annual miles than a typical threshold.
Parents also can opt for pay-as-you-drive car insurance policies – usage-based car insurance based on when, how much and how well you drive.
Change in driving behavior
New parents might adopt safer driving habits to protect their child, leading to fewer speeding tickets and accidents. A clean driving record over time can result in lower insurance costs.
For example, a driver with a speeding ticket on their record will pay 36% higher rates than a driver with a clean record; a driver with a distracted driving ticket will pay 31% more; and a driver with an at-fault accident will pay 58% more.
Plus, new parents can sign up for telematics, a program that monitors their driving. Those who drive safely can earn safe driving discounts.
How major life events impact car insurance rates
Major life events can significantly impact car insurance rates, often reflecting changes in a driver’s risk profile, vehicle needs and financial responsibilities. Here’s how some key life events might influence your car insurance premiums:
- Getting married: Marriage often leads to lower car insurance rates. Insurers view married couples as more stable and less risky compared to single drivers.
- Changing jobs: If a new job involves a shorter commute, your premiums could decrease due to reduced mileage. Conversely, if your new job involves more driving, your rates might increase.
- Moving: Relocating to a new area can affect your rates based on factors like crime rates, weather and the frequency of accidents. Moving from an urban to a rural area might lower your rates, while moving to a city could increase them.
- Retirement: Retiring means less time commuting and fewer miles driven overall. Many insurance companies offer discounts for retirees to reflect the reduced risk of accidents. Further, your rates will start to go down around age 70.
- Having a baby: As discussed earlier, while having a baby doesn’t directly affect insurance rates, lifestyle changes such as safer driving habits, choosing a safer vehicle and driving fewer miles can lower premiums.
- Adding a teen driver: Adding a teenager to your policy will lead to a significant rate increase due to the high risk associated with young, inexperienced drivers. However, discounts may be available if the teen maintains good grades or completes a driver’s education course.
What should I do if I need to adjust my coverage after having a baby?
If you need to adjust your car insurance coverage after having a baby, start by evaluating your existing policy to ensure it adequately covers your new family dynamics.
You may want to increase your liability coverage because having more dependents can mean greater financial risks in the event of an accident. Also consider adding collision and comprehensive coverages to your policy if you don’t already carry them – and personal injury protection (PIP) or MedPay coverage.
Ask for any discounts that could apply now that your family has grown. Many insurance companies offer lower rates to parents, assuming that the responsibilities of parenthood could lead to more cautious driving.
Additionally, consider bundling your auto insurance with other policies like homeowners or renters insurance, which can lead to further discounts. Make these adjustments by directly contacting your insurance agent and ensuring your policy is updated to reflect the changes.
What type of discounts can new parents typically qualify for?
New parents might qualify for several types of discounts on their car insurance, depending on the insurer.
- Good/safe driver discount: If your driving record remains clean, you could qualify for a good driver discount. Some insurers may view the transition to parenthood as a phase that encourages more cautious driving behavior.
- Low mileage discount: If one parent decides to stay home with the baby or you find yourself driving less often, you might qualify for a low mileage discount.
- Safety features discount: If you’ve upgraded to a new vehicle equipped with advanced safety features, this could qualify you for a discount.
- Multi-policy discount: Bundling your auto insurance with other insurance policies, such as homeowners or renters, can also lead to significant savings. This is often referred to as bundle discount.
- Multi-car discount: If you’ve bought another vehicle to accommodate your growing family, insuring more than one vehicle with the same company can often lead to a multi-car discount.
How can new parents use telematics programs to lower car insurance costs?
Telematics programs can be valuable for new parents looking to lower their car insurance costs. These programs involve using a device or mobile app the insurance company provides to monitor driving habits.
“New parents can use telematics programs to lower car insurance costs by recording and reporting safe driving habits through monitored driving data to their insurance carriers,” Brau says. “Some insurers may reward safer driving with discounts on premiums. You can shop around for insurance companies that offer such programs.”
Many insurance companies offer initial discounts just for signing up for their telematics program. Unlike traditional insurance models that base premiums on generalized risk assessments, telematics allows for more personalized rates. By accurately reflecting individual driving patterns, parents may benefit from premiums that are more tailored to how they actually use their vehicles.
The bottom line
Having a baby doesn’t reduce your car insurance rates, but it can lead to changes that might influence your premiums. If you find yourself driving less—perhaps due to parental leave—some insurers offer discounts for reduced mileage.
It’s always a good idea to review your policy and explore potential discounts with your insurance provider.
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CarInsurance.com commissioned Quadrant Information Services to pull full coverage rates for 40-year-old drivers who commute 12 miles to work each day, with policy limits of 100/300/10 ($100,000 for injury liability for one person, $300,000 for all injuries, and $100,000 for property damage in an accident) and a $500 deductible on collision and comprehensive coverage.
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