Your child is approaching 16 years old and for the past several years, he or she has reminded you (daily, it seems) of this inevitability. You, on the other hand, have been trying to expunge the thought that a teenager — a teenager! — will soon be driving one of your vehicles.

Of course, there's at least one good reason for putting this thought out of your mind: the near certainty that your insurance premiums will spike upward when your son or daughter starts driving. Insurance companies can marshal an impressive array of statistics showing that the younger the driver, the greater the risk. In fact, teen drivers account for almost 13% of fatal accidents and the crash rate for 16-year-old drivers is nearly three times as high as for 19-year-olds. From an insurance company's perspective, insuring a teenager increases the risk of having to pay claims. To compensate for this higher risk, insurers charge higher premiums — sometimes 50% to 200% higher.

When it's time to insure your teen driver, here are five ideas for keeping car insurance premiums under control:

  • Add the new driver to your policy. Unless your driving record isn't stellar or all your cars are new and expensive, it's generally cheaper to add a son or daughter to an existing policy.
  • Assign the cheapest car to the teen. By linking the teen driver to your least expensive car, the insurer's risk is mitigated, which should result in lower premiums. Just make sure your son or daughter uses the assigned vehicle exclusively.
  • Require good grades. Many insurers provide discounts for students who maintain a B average or better, a policy some parents have leveraged to good effect: keep your grades up or the car stays in the garage.
  • Opt for a higher deductible. The higher the deductible, the more you pay out of pocket if there's an accident. If you have the financial wherewithal to cover the cost of fender benders, your premiums can be lowered by as much as 35% by, say, increasing your deductible from $500 to $2,000.
  • Keep adequate liability coverage. Some people try to lower premiums by decreasing liability coverage. Bad idea. Remember, teen drivers are high risk. They're more likely than adults to involve other drivers in accidents. Without sufficient liability coverage, you could end up pulling money out of retirement savings to cover another driver's hospital bills.
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