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Can I Save Money on Auto Insurance by Naming My Child as an Occasional Driver?

Insuring children on an auto policyThe day your kid gets their driving license is a big day. For them, it’s a day marking a huge new step toward independence that they have been looking forward to for a long time. For you, it’s likely a day that you have been dreading for quite some time.

Sure, it will be nice that you don’t have to drive them everywhere now, but worrying about your teen driver is enough to turn your hair gray. Oh, and there’s one other thing: insuring a teen driver can cause quite a jump in your premium.

Auto insurers charge more to insure a young driver for obvious reasons. They’re the least experienced drivers on the road and are statistically more likely to cause an accident or receive a traffic violation.

Choosing not to purchase auto insurance for them isn’t an option, so somehow or another, you’re going to have to find auto insurance coverage for your kid. Ideally, you should start planning for how you’re going to choose to get insurance for them long before your teen gets behind the wheel.

One of the first things to consider is whether the teen is going to have his or her own car. It doesn’t really matter if you buy a shiny new coupe for your kid or if they save up their pennies to buy an old clunker for themselves.

Either way, just having their own car is going to change the insurance situation. When you purchase car  insurance, you need to provide details of all of the cars in the household, along with the primary driver for each vehicle. Generally speaking, it’s more expensive to insure a primary driver for each vehicle. But if you have more drivers than cars in the household, you can designate one driver as an occasional driver of one of the vehicles.

When you designate a driver as an occasional driver, you won’t need to provide full coverage for them. Instead, they can drive the car without comprehensive or collision coverage, provided they only drive it from time to time. This could mean a huge amount in savings when it comes time to sign the new paperwork for adding your child to the policy.

Be careful of trying to fool the insurance company and being too liberal about the definition of occasional driver, though. If you have three cars and one teen, they’re smart enough to know that Dad isn’t the primary driver for two of those cars.

If it is absolutely necessary to buy your kid her own car, be sure to look at the potential insurance cost for each type of vehicle. Any teen driver is going to be expensive to insure, but a teen driver with a fast new sports car is going to be incredibly expensive to insure. Buying your kid a reliable, used car that isn’t going to break any land speed records is the safest and least expensive route to affordable car insurance.

Image: Freedigitalphotos.net/Vorakorn

About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.

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