What you should know about insuring teen drivers Kids and Money: Policy breaks for new teen drivers

KIDS AND MONEY

Should I put my newly licensed teen driver on my auto insurance policy, or should he have his own? Does it pay to shop around or should I stick with my agent? Are there meaningful discounts for teen drivers? Will premiums for young drivers ever get lower?

If you have a teen driver who just reached legal driving age and is itching to get behind the wheel, welcome to the club. Except in this club, the financial implications of membership can be staggering if there are mistakes behind the wheel.

First off, to no one's surprise, teen drivers are generally costlier to insure due to their driving inexperience and likelihood of getting in a crash. The silver lining: Premiums will likely start going down with every year of safe driving until age 25.

Of course, geography also plays a role in coverage, with rates generally higher in urban settings versus rural areas. WalletHub, a financial services website, has analyzed the teen driving environment in all 50 states, based on a collection of 23 key metrics ranging from car repairs, the number of young driver accidents and fatalities, and the presence of impaired driving laws.

New York, Oregon, New Jersey, Indiana, and Connecticut were the best states for teen drivers, according to the WalletHub survey released in late August. The worst? Montana, Missouri, Mississippi, Wyoming, and Alabama.

If you have a teen about to get behind the wheel, review your coverage with your agent and find out how much it would cost to add your young driver to your policy. Don't be wedded to the same policy - shop around and get quotes as you would for any big ticket item. However, you might be forgoing the benefits of bundling your auto coverage with homeowners if you switch companies. Still compare the premiums for bundling with the competition.

Does a teen need his or her own policy? Generally no, because it costs less to add them to your policy than to have their own, according to a Consumer Reports analysis. Consumer Report says the cheapest car insurance rates for new drivers are offered by Travelers, USAA, and Geico among others.

Auto insurance experts say parents of teen drivers should never skimp on liability insurance, which pays for damage or injury to others. Depending on the value of your home and other assets, the Insurance Information Institute suggests asking your agent about an umbrella liability policy.

Insurers typically offer discounts for students who have good grades, and enrolling in a drivers education class might save some money as well. Systems that track how a car is being driven can lead to discounts, though that would entail being comfortable with privacy issues.

If your teen will have his or her own car rather than yours, choose something safe and affordable. Remember, rust buckets may not have enough safety features.

Ant the ultimate premium saving strategy? If your teen isn't gangbusters about getting licensed, no need to rush to get insurance. Look at the money you'll save.

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