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Insuring a Teenage Driver

Teenage drivers are the highest-risk drivers on the road. So it goes without saying that auto insurance for teens doesn't come cheap. If you're wondering how to insure your teen without breaking the bank, here are some questions and answers that may help you.

Should you add your teen to your policy when he or she gets a learner's permit?

The answer to this question depends on the insurance company. A learner's permit allows your teen to operate a vehicle under certain conditions (e.g., when a licensed driver is also in the vehicle; during daylight hours only) and is typically issued for the time period (e.g., 60 days, 90 days) before your teen gets a permanent driver's license.

Some companies don't charge insurance premiums for teens with learner's permits. Others simply ask that you notify them once your teen reaches driving age. Still, there are companies that require you to add your teen to your policy as soon as he or she gets a learner's permit. So, you'll need to check with your insurance company.

If at all possible, you'll want to put off adding your teen to your policy when he or she has a learner's permit. That way, you won't have to pay additional premiums during this time period. Keep in mind, however, that if you do have to add your teen to your policy, companies usually charge a nominal or reduced premium while your teen operates under a learner's permit.

What should you do once your teen gets a driver's license?

Most insurance companies require you to add your teen to your policy once he or she gets a driver's license. If you haven't already done so, it's generally advisable to add your teen to your auto policy at this point.

What happens if you forget to add your teen to your auto insurance policy?

Depending on how your policy defines insured, your teen may be considered an insured under your policy. So if your teen has an accident, your insurer may cover the claim. However, your insurer may charge you premiums retroactively for coverage on your teen from the date that your teen became a licensed driver. In some states, a claim for collision damage may be denied if the car involved was driven by a licensed teenager you haven't told the company about.

Would it be cheaper for your teen to have an individual auto insurance policy on his or her own car?

It depends. It may be less expensive to add your teen to your own policy to take advantage of safe-driver and multiple-car discounts. However, if you drive an expensive car, it may end up being too costly to add your teen to your policy--the more expensive the car, the more costly it is to fix, resulting in higher insurance premiums. If this is the case, you may want to consider buying your teen his or her own car (an older, less expensive model) and insuring it under an individual policy in your teen's name. You can save even more on premiums by not buying physical damage (collision and other-than-collision) coverage.