Your teen is ready for a driver’s license. It’s an emotional time for both of you.

Your student is happy about the independence symbolized by a driver’s license and you’re terrified of the responsibility that comes with driving a vehicle.

You’re also nervous about the increase in insurance premiums and the potential liability you face as the parent.

Here are 5 Frequently Asked Questions (FAQs) parents of new drivers often have about insurance and action steps to help you make the best decision for your situation.

1. Should I add my child on to my existing policy or get a separate insurance policy for her?
   Each insurance company is very different so there’s no clear answer to this. One issue is how many vehicles you have and whether the teen would be considered a potential driver for each of those vehicles. While there are benefits to covering multiple vehicles under one policy, sometimes it’s actually cheaper for the teen to have a separate policy that only covers the single vehicle she’s going to be using. Action Step: In addition to talking with your insurance agent, fully think through the likely scenarios in your own family situation and whether your licensed drivers frequently – or even occasionally – drive each other’s cars.
2. What type of coverage and how much coverage should I get for my teen driver? While it’s tempting and logical to look for low-priced options on big household expenses like insurance, making a strictly price-centered decision can be a mistake. Especially when that low price is because the policy doesn’t provide the level of coverage you end up needing. You may turn to the internet to do your price shopping; but be sure you read the incredibly tiny print on the policy you’re quoted. Collision coverage is the most expensive coverage for a teen driver but it’s really not the most important coverage. The most important coverage for them is typically liability coverage. It’s often not the damage that’s the big problem in an accident but the long term implications of the accident. Action Step: Meet with your current agent and get a quote on various combinations of coverage and then be sure you’re comparing policies with the same terms. Otherwise you’re comparing apples to watermelons.
3. Is it possible to teach a teen the concepts of risk, responsibility, and the impact of their actions on the cost of insurance? Absolutely! Insurance costs are a reflection of risk and there are many things that reflect on whether a person is a good risk or a not-so-good risk. Judgment and behaviors are two of those things. Student performance in school is a reflection of many things and one of them is their judgment and dedication to their responsibility of being a good student. This is a big reason insurance company’s offer “Good Student” discounts. Action Step: Take your student’s most recent grade report to your meeting with your insurance agent. And if the student isn’t at the 3.0 minimum required for a discount, that’s a great incentive to discuss with your teen how to improve their grades. And when the grades go up to 3.0 you can share the good news – and a copy of the grade report – with your agent who can take action to apply the newly earned discount.
4. Should I take my child off my policy since she’s going away to school and won’t be driving her car while she’s there? A licensed teen who is away at school still needs to be insured. While she may not have access to her vehicle while she’s gone, she is likely to be a passenger in a car and could even drive a friend’s car while she’s away from home. And there’s always the issue of what happens when she’s home. She’s going to want to drive and you’re likely to need her to drive. You don’t want to run the risk of forgetting to add her to a policy you took her off of. And you don’t want something to happen while she’s gone and not have her protected. But discounts are often available if teens don’t have access to your or their vehicle because they’re not physically present in your home. Your action step is to let your insurance agent know when your teen will be leaving home and discussing how to best protect her while minimizing your expense.
5. From an insurance standpoint, what should I consider when shopping for a car for my teen driver? We all promised our parents that we would gladly do the shopping and generally help out with the chores (that involved driving) once we got our licenses. But as parents we remember that we weren’t always very reliable. We’d stop somewhere on the way home from the store while everyone else was waiting for the meal that couldn’t be made without the missing ingredients we were sent to get. So it’s certainly tempting to buy your teen driver her own car. Some things to consider when weighing your options here are the balance between reliability and affordability. You don’t want your teen to end up stranded; but at the same time you don’t want to take on additional debt. And then there’s safety to consider. Cars that are newer have the most modern safety features. If you’re looking for a used car, consider something that’s 6 to 10 years old and be sure to check for safety features like air bags. Action Step: Look at your budget to identify a price range and do some research through a reliable source like Consumer Reports. And consider paying a mechanic to inspect any car you’re seriously considering buying.

Having a new driver in the family is an exciting and scary time. An important part of preparing for this new phase of life is choosing the right level of auto insurance coverage to protect your teen, yourself, and those who could be exposed to injury or loss in an accident.