Why cheap car insurance for teen drivers isn't always enough

Commonly suggested methods to help save money on car insurance include decreasing coverage limits, eliminating optional coverage or increasing deductibles. But, this could leave your teen driver underinsured. Or you could end up paying more out of pocket if your teen is involved in an accident. Here are some important factors and risks to take into account:

1. Minimum liability limits may not be enough to cover injuries to another person or damage to their property. Almost every state requires drivers to purchase a minimum amount of auto liability coverage. However, the Insurance Information Institute (III) suggests purchasing more than the state requirement. Consider this: What if your teen driver injures someone or damages their property and the other person's costs exceed your policy's limits? You may end up having to pay the difference out of pocket, says the III. Your agent can help you choose the coverage limits that fit your needs.
2. Opting out of coverage could leave you paying out of pocket for damage to the family vehicle. Depending on the vehicle your teen is driving, certain types of coverage may be optional on the family car insurance policy. For example, collision coverage likely isn't required if the family vehicle is paid off and titled in your name. But, what if your teen strikes another vehicle or object while driving the family car? Without collision coverage, you'd likely be responsible for the costs of repairing your vehicle.
3. Increasing deductibles may mean paying more up front for a covered claim. Increasing your deductibles may lower your car insurance premium, but keep in mind that you'll pay more out of pocket if your teen is involved in an accident and you make a covered car insurance claim. For example, say your deductible is $1,000. If your teen driver were in an accident that cost $5,000, you'd pay your $1,000 deductible, and your insurance would pay the rest, up to your coverage limit.

You can effectively cut down on the cost of insuring your teenage driver without exposing yourself to the high repair costs and medical bills that could come as a result of not having enough insurance. Here are some suggestions:

1. Consider adding teen drivers to your pre-existing auto insurance policy.
   Insuring a teenage driver separately may cost you a lot more money than it would to add them to a family policy, according to the III.
2. If you're giving or buying your teen driver a car, pick a car with lots of safety features.
   Your premium depends in part on a number of factors including safety features, such as anti-theft devices, anti-lock brakes and side- and front-impact airbags, according to the III. Talk to your agent about how the car will affect your rates to help you make an informed decision.
3. Encourage good grades.
   Teenage drivers who maintain good grades may be able to take advantage of auto insurance discounts.

Saving money may be important to you, especially when it comes to car insurance. However, it's possible to find ways to help reduce the cost of car insurance for your teen driver without lowering or eliminating coverage.