Kids and Wheels
by Marianne Giullian
4 Ways to Reduce the Cost of Teen Auto Insurance
The Car Purchase Project
Can Your Budget Handle a Teen Driver?
Having teenagers drive can be very expensive. Some parents pay for a car, insurance and gas while others pay for nothing. We found a middle-of-the-road solution that will help them learn responsibility but not place too much burden on them. Kids are more likely to get in an accident. We think the responsibility of a car is too much for teenagers by themselves. They will be off to college in a few years and won't need a car then. We do the following things to save money.
- We provide an older car for them to drive. It is not their car, but a family car that we give them permission to drive. By buying an older car (ours is a 1976 with 30,000 miles on it), the insurance is substantially less than a newer car. We do not pay for collision insurance, which makes it even lower. The car was inexpensive and we paid cash for it. There are no car payments or loans. We have taken the risk that if it is ever damaged seriously, we will have to replace it ourselves. Depending on how much the car is worth and how big of a city you live in, you may or may not want to drop the collision insurance. Your insurance agent should be able to help you make a wise choice on coverage.
- Our kids have to keep a B average for the good driver discount. If they do not, they either lose the privilege to drive or they have to pay the extra cost of the insurance themselves.
- We have our teenagers pay $25 per month to drive. We pay the gas and insurance. It is like paying us rent each month for use of a car. Our kids drive their siblings to school with them and run errands occasionally, so we didn't feel it was right to have them pay for gas since they would be driving for us sometimes. Since the car is ours and we use it occasionally, we felt this was a better way.
By doing these things, we have saved hundreds of dollars on car insurance and our kids also pay towards the cost, which helps them to learn responsibility and ease the burden for us financially. It is like a stepping stone in helping them learn to be independent.
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