There comes a time in every parents' life when fear completely overrides everything else you could reasonably feel, and you experience both pride and terror building up until it crashes over you like a wave at a beach. Horror and excitement transforms rational and logical people into depraved psychotics, and even the most loving families are capable of tearing out each other's' throats.
The time? When your teenager learns to drive and, eventually, obtains their licence.
Fortunately, most parents and offspring make it through this time in one piece and still speaking with each other. Then comes the next dilemma: to allow the child to have their own vehicle or borrow the family car? And of course, what about car insurance? Do they obtain their own policy or come in under mum and/or dad's? How expensive will it be to insure your child? How can you minimise the premiums?
If you're under 24, then statistics have shown you're more likely to be involved in an accident that results in a claimi. This, unfortunately, means that insurance premiums will, all things being equal, be higher for younger drivers to reflect this higher level of risk. Canstar have found, though, that drivers in the age groups around the early 50s and then the early 30s make more claims – could this mean that those under 24 are using the policies of their parents when making a claimi?
How does this work?
Mum or Dad, when their child begins to drive, need to inform their insurance company of this and add the child to the policy for the car(s) they choose to drive. This means that if the child has an accident, they are covered under the parents' policy. There may be an age excess (this can be up to $1650 for drivers under 21ii) however if your child is not on your policy and has an accident, the insurer may refuse to pay the claim. It's a simple matter of passing your child's details onto your insurer.This will probably increase your premiums, so you need to weigh up whether you want them on your policy or if they should have their own. As an aside, some insurers allow you to reduce your premiums by increasing the amount of excess you pay.
The other option, for the teenager to obtain their own policy, could be more beneficial. The teen can then build up their no-claim bonus. This is a discount offered by insurers when you've had a certain amount of time without making a claim. Of course, you need to know what the premiums would be anyway, and then work out if the discount is worth it. If it's a cashback system whereby you receive a certain amount back after a designated time without a claim, this could be more of a drawcard for some. It depends on how you wish to obtain your discount.
Teenagers obtaining their own insurance can be expensive as young people are seen as more of a risk, more likely to have an accident and more likely to make a claim that the insurance company will have to pay out. There are ways to reduce their premiums, though.
One way you can reduce the premiums for your teenaged driver is by using one of the tried-and-tested methods, such as enrolling them in a safe driving course. It might sound obvious, but if your teen is a proven safe driver then they will be paying less as they are less of a risk on the road. Likewise, drive safely! If you're a driver with many speeding fines then your premiums will probably be higher. Select cars that aren't high-powered or modified in any way (that is, no spoilers etc) and if you simply must have add-ons, tell your insurer about them as soon as they're applied to your vehicle and be prepared to pay more. And as stated previously, increasing your excess could reduce your premiums – just ask your insurer.
There are several kinds of insurance, and while they might seem superfluous, they'll actually help you and your teen save money in the unfortunate event of an accident. Compulsory third party is, well, compulsory, and covers for injuries or death to other people in an accident. Third party property similarly protects against claims made by people who've had property damaged in an accident, such as damage to their vehicle. Third party property, fire and theft is for claims involving property that's been damaged in a fire or taken in a theft (including your property).
Comprehensive covers for damage or loss to your car (whether by theft or accident) and other people's cars. You and your teen will need to talk about what cover will be most appropriate; there's little point covering for something that may never happen, or not selecting cover for an event that is likely in your circumstances. Both will cost you more money in the long run.
Insuring your teenaged driver is something that you and they will need to discuss. Whether they opt to go in under your cover or purchase their own, what cover they select and what excess they choose to pay are all necessary to discuss.