How to explain car insurance to teen drivers

Heather Larson

Your teen has just turned 16 and wants to start driving. However, before he gets behind the wheel, you need to tell him about car insurance and how it works.

Insurance agents will meet with teen clients to go over the ins and outs of car insurance. However, if you’re like most parents, the responsibility for explaining car insurance to your teen falls on you. But where should you begin?

Basic coverage

Start with a conversation describing the different types of car insurance, says Angela Preciado, USAA’s director of auto product management. Tell your teen driver that liability protects him if he is at fault in an accident, comprehensive takes care of damage to the car he’s driving, and collision pays for repairs or a replacement vehicle if he’s involved in a wreck. 

If your teen’s eyes haven’t glazed over yet, ask him to get quotes from three car insurance companies, suggests Tully Lehman, a spokesman for the nonprofit Insurance Information Network of California. He doesn’t have to actually buy the insurance; he can simply find out how much it costs, how your driving record affects your premium and what sort of discounts (such a one for getting good grades) are available. This activity makes the insurance-buying process realistic for the teen.

Teen driving programs

Many insurance companies offer some type of teen driver education. Several, including Allstate, offer the DVD-based teenSMART program, says Jim Klapthor, a spokesman for Allstate. In this crash-reduction program, teens simulate real-life driving situations on their computers. Circumstances that arise include drivers behaving unpredictably, cars traveling in the teen’s blind spot or pedestrians who aren’t looking where they are going. 

At Allstate, the program costs $90; successful completion secures a premium discount of $100. Check with your own insurance company to see whether it offers teenSMART or a similar program.

At American Family Insurance, the Teen Safe Driver Program coaches teens who already are driving. The insurer says the program has reduced teens’ risky driving behavior by more than 70 percent. If you’re an American Family customer, the program is free.

Components of this program include in-car technology that captures behind-the-wheel behavior such as sudden stops. Cameras inside and outside the car send video and audio clips to a teen’s parents and to a driving coach. The coach then evaluates the audio and video and offers tips for improvement.

Last words

Let your teen driver know how important it is to follow the rules of the road and to keep a current proof-of-insurance card in the glovebox along with the car registration, Preciado says.

“Make sure your teenager knows who to call if he has a claim and has that information with him at all times, whether it is on the insurance card or somewhere else,” she says.

Lehman advises parents to strongly emphasize to their teens how important it is to drive safely. Car crashes are the leading cause of death for U.S. teens, and teen drivers commonly text and engage in other driving distractions. “Fortunately, teen motor vehicle crashes are preventable, and proven strategies can improve the safety of young drivers on the road,” the U.S. Centers for Disease Control and Prevention says. 

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