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Tue, 22 Jan 2013 18:45:00 GMT | By Gordon Powers, MSN Money

How to trim teen car insurance costs

If your son or daughter is hitting the road for the first time, here are a few ways to keep the family’s insurance costs in check.

Gordon Powers, MSN Money

Inexperienced drivers present a major danger on the road, to themselves, their passengers and other drivers. Study after study shows that younger people in particular are far more likely to be involved in a collision than any other group of drivers.

In particular, during the first six months of being licensed, young drivers are eight times more likely to be involved in a fatal crash than more experienced drivers, according to the Traffic Injury Research Foundation.

So, it shouldn’t be all that surprising that insurance costs for teen drivers are typically much higher than average — particularly for younger men.

Premiums are a bit lower for young female drivers, since they’re perceived as being more cautious than young males and therefore a better investment. Not only do women have fewer accidents, but those incidents usually don’t involve as big a payout, according to industry statistics.

Over and above telling them to forget about driving for a few years — premiums for first-time drivers drop significantly around age 25 — there are several ways you can reduce the extra costs associated with insuring a teen driver.  

* Don't buy a separate policy. Add your teen driver to your existing policy rather than putting him or her on a separate policy, and list all younger people as occasional rather than primary drivers.

The increase in your family’s premium likely will be less than what you would pay for your teenager on a separate policy, and the family can also benefit from any multi-car discounts that are available.

* Be sure to be completely honest. Keep in mind that adding teenagers to an existing policy only works if they just drive occasionally. If they’re really the main driver, or are actually the owner of the vehicle, you’re looking for trouble by ‘fronting’ them this way.

Insurers generally have little problem identifying this sort of manoeuvre. In the event of an accident, they can refuse to pay out all or part of the claim or even cancel the policy altogether since you’ve essentially misrepresented your family’s circumstances. 

You’re also putting your own driving record and claims history at risk which could have longer-term implications for your own coverage in the future.

* Document your teen driver's good grades. Many insurance companies offer discounts to teen drivers with good grades, so if your child is getting decent marks, be sure to inquire about good-student discounts.

In some instances, the savings last even after they graduate from school, usually until age 25.

* Sign them up for driver's training. Not all provinces require new drivers to complete an official driver's training course. Nonetheless, you should consider enrolling your son or daughter. Sessions range in cost from $500 to $900, depending on the location.

Aside from helping them get a head start on road safety, this sort of certification could help trim those premiums a bit further.  

* Put them in a dull car. Naturally, your teen driver wants something decent to drive. But high-end cars are the most expensive kinds of vehicles, particularly for young drivers.

A used family sedan with a four-cylinder engine, solid crash-test scores, and low repair costs is a better choice, advises J.D. Power and Associates. You'll save money on insurance, and your child will be better protected if a collision does occur.

* Readjust your coverage. If you do opt for an older car, consider dropping collision and comprehensive coverage since it may be worth little more than the deductible. You can easily find yourself paying more in premiums on an older car than you could ever get back from the insurer, even if it were damaged by your young driver.

* Keep track of your teen’s whereabouts. Let your insurer know if your child is heading out of town for university. You may be able to get a break on your premiums but still have coverage when he or she comes home for the holidays.

* Be sure to shop around. Some insurers offer much better deals than others for teenage drivers, so it's important to compare costs. Aside from getting a quote from the insurer your family currently deals with, you may find other insurance companies that are a bit more teen friendly.

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