6 Ways Your Teen Driver Will Affect Your Wallet
If your teen is about to start driving, you’ll want to steel more than your nerves. Brace your wallet for the financial impact. The costs of having a teenage driver may be more significant than you realize.
Your insurance will climb. You know that, but you may not be prepared for how much.Andrew Rose, CEO of Compare.com, an online comparison site for auto insurance, says to expect your car insurance to more than double after adding a teenage driver. Based on data collected by Compare.com, Rose says a family adding a kid to the policy can see premiums increase 111 percent.
“If parents splurge to get the teen a car, policy premiums, on average, increase 156 percent,” Rose says.
Accidents are really expensive. Hopefully it will never happen to your kid, but it does happen to some families, Rose says.
“Kids have more distractions than any group of teens ever have had previously,” Rose says. “They cannot put down their phones, and distractions cause even seasoned drivers to have accidents.”
And if your teen gets into a wreck, your bank account will be wrecked, too. And, sure, as long as your kid is safe, who really cares? Still, if you thought your insurance was high before the accident, you haven’t seen anything yet, according to Rose, who says that it will “skyrocket.”
Greg Chambers, who owns a sales and marketing consultancy in Omaha, Nebraska, can back Rose up. His youngest kid turned 16 last September but didn’t complete his driver’s education until December. Four months later, his son was behind the wheel of the family’s 2002 Mercedes when he was in a low-speed, head-on collision with an 89-year-old driver.
Thankfully, everyone came away from the wreck unscathed – except for Chambers’ bank account. Chambers’ insurance agent told him: “This is where all the stories you’ve heard about teen boys and insurance come true.”
And the stories don’t really have a happy ending. Chambers had been paying $70 for his son’s insurance. After the accident, it jumped to $340 a month.
“The good news is that rate may drop at some point in the future, they say,” Chambers says.
The Mercedes was totaled, and while insurance paid for it, the compensation was far less than the original cost. So when Chambers looked for a replacement, he fell in love with an old Range Rover that was more expensive than what the insurance gave him – and bought it. Chambers quips: “I’m an idiot.”
Driving school. Maybe you’ll skip this cost, and maybe you won’t. But driving schools can range from $200 to $800, averaging $300 to $450, according to the website CostHelper.com. Some of the pricing depends on where gas prices are. During the recession, according to news reports from the time, a lot of driving schools were forced to jack up prices.
Car maintenance. Eric Creditor, co-founder of TrafficSchool.com, an online traffic and defensive driving school, says that many parents aren’t prepared for maintenance and repair costs.
[See: 10 Unexpected Costs of Driving.]
“Novice drivers tend to use their brakes harder than experienced drivers. They tend to need brake pads and other braking parts replaced faster,” Creditor says, adding that young drivers often don’t check their tire pressure as often as they should, and so the tires wear down faster.
He estimates families with teenagers replace tires 50 percent sooner than they otherwise would have.
“Also, many new drivers bump or hit curbs when parking, causing wheel alignment issues or actual popped tires needing to be replaced,” Creditor says.
He also notes that many new drivers don’t think about fluid levels, like, oh, adding oil to the car – at least until it becomes a problem.
Towing and breakdown coverage. If you got your kid a new or used car, have you thought about getting him towing and breakdown coverage? You should, says Colleen Benzin, head of insurance products for Elephant Auto Insurance.
“This could be an unexpected cost,” she says, “but also one that comes with priceless peace of mind.”
Multiple children. If you have more than one kid, that’s where the costs can really become extreme. Double or triple or quadruple the cars, the towing and breakdown coverage, the driving schools, the insurance – and we haven’t even discussed gas.
Tracie Hovey, who owns a public relations firm in the District of Columbia, says that she and her husband have five kids who are all drivers.
“We have been through accidents, high insurance, speeding tickets, and so many cars are in our driveway, it looks like a constant party is being held at our house,” she says. “It’s a very expensive endeavor to say the least.”
The kids who’ve been essentially accident-free have been allowed to stay on Hovie’s insurance through college. The ones who’ve been too costly have had to pay for their own, she says.
Meanwhile, Chambers adds that you shouldn’t make the mistake of assuming that one kid will be a better and cheaper driver than another.
“My daughter is the oldest and voted [by the family] ‘most likely’ to total a car but only dents them and has avoided claims,” Chambers says. “The middle son considers himself the world’s best driver and to date has only had a speeding ticket that required a re-education class to keep it off insurance.”
That class cost approximately $200.
But the 16-year-old son, who gets the best grades of all the kids, has had the most surprising driving record so far, says Chambers: “Our youngest child is on pace to cost us enough to pay for a year of college.”
Story by Geoff Williams and originally posted on usnews.com