The dreaded phone call…
Whenever I get a call from a client telling me that their 16 year old, or in a lot of cases now 19 or 20 year old, is ready to their license they always ask, how much will my North Carolina auto insurance go up? I first ask them if they’re driving or sitting down because I don’t want them to get into an accident or fall over because it can be a shock.
Do they make it up or do they know what they’re doing?
Before we dive into the numbers of how much it’ll cost it’s important to know what factors come into play.
Will your child have their own car or will they share with mom or dad?
Does the car your child drives have collision and other than collision/comprehensive coverage? (A lot of people call this full coverage.)
How will the car be used? Will they drive it to school everyday or just use it on the weekends?
Do you have medical payments on the policy? (You should by the way.)
Does the car they are driving have multiple airbags and/or an alarm?
These are just a few of the many factors that go into how much it will cost to add your teenager to your policy.
(FYI, in North Carolina insurance companies will charge the same rate for a 16 year old that is getting their license as they will for a 40 year old that just moved here from another country and has been driving for over 20 years!)
How long do I have to pay this?
A North Carolina auto policy will charge what they call an “Inexperienced Driver Surcharge” for three years. This means that you will pay extra to have your teenager on your auto policy until they pass the three-year mark.
You will pay the most for the first year they have their license, a little less for the second year they have their license, a little less for the third year they have their license, and then no extra once they complete their third year.
(FYI, if they have any insurance points on their driving record report or claim record report you will be paying more.)
Now this next part will depend upon the insurance company that you are with. Most insurance companies that we work with will give your teenager their next year of driving experience during the policy period.
However, there are some companies that won’t until your policy renews. This sounds confusing so let’s talk about how it works with Company A and Company B.
You have a North Carolina auto policy that goes from January 1, 2015 to January 1, 2016. You call your insurance on January 2, 2015 to add your teenager to the policy because they turned 16 years old that day.
Company A…
This insurance company will let your insurance agent give them driving experience during the policy period. This means that on January 2, 2016 your insurance will go down because your teenager now has completed one year of driving. (This puts a huge smile on your face.)
Company B…
This insurance company won’t let your insurance agent give them driving experience during the policy period. This means that you have to wait until January 1, 2017 for them to get one year of driving experience.
This means you paid an extra 364 days for your teenager as having zero years of driving experience. (This puts a huge scowl on your face. However, sometimes you are only able to get insurance from a company like this because of other factors.)
You will want to ask your insurance agent if your insurance company is like Company A or Company B.
If you have someone like Company B, then you need to call an independent insurance agent like us.
Just tell me how much it costs!
(Since we know that there are a lot of different factors that go into these are estimates and you will need to check with your insurance agent or insurance company for specifics.)
Scenario 1…
Occasional driver: This means your teenager shares a car with you. What this also means is that you need to have more drivers than cars on your policy. If you have three cars and three drivers, and your child still shares a car with mom or dad, then they are considered a Principal driver.
Liability only: Your auto policy will not pay for any damage that you cause to your car.
Monthly cost: Approximately $75-$125
Scenario 2…
Principal driver: This means that you bought a car for your teenager that they drive. (Check with your insurance company to see who’s name can be on the title.)
Liability only: Your auto policy will not pay for any damage that you cause to your car.
Monthly cost: Approximately $100-$175
Scenario 3…
Occasional driver: This means your teenager shares a car with you. What this also means is that you need to have more drivers than cars on your policy. If you have three cars and three drivers, and your child still shares a car with mom or dad, then they are now a Principal driver.
Physical damage: (Also referred to as full coverage). This means that your auto policy will pay for damage that you cause to your car.
Monthly cost: Approximately $125-$200
Scenario 4…
Principal driver: This means that you bought a car for your teenager that they drive. (Check with your insurance company to see who’s name can be on the title.)
Physical damage: (Also referred to as full coverage). This means that your auto policy will pay for damage that you cause to your car.
Monthly cost: Approximately $150-$250
What kind of car should I buy?
You want to buy a car that will be safe and reliable for your teenager. A lot of our clients will buy a new car for themselves when their teenager is 10 or 11 years old. The thought is that once they turn 16 they can give them that car and then go out to buy a new one for themselves.
A minivan, small pick-up truck, or a mid-size car is three good options for the type of car to buy for your teenager. The small pick-up truck is my favorite option because you can have only one other passenger in there at a time and that cuts down on distractions.
There are two resources that I would suggest looking at when you are shopping for a car: US News & World Report and Consumer Reports.
What else should I think about when I add my teenager?
Here are some nuggets of wisdom to think about when you add your teenager to the policy:
Waiting to add your teenager to your North Carolina auto policy is a two-edged sword. On the one hand the older they are, the more mature they are, and the better decisions they’ll make. On the other hand they may be in college and you are already paying out the wazoo for them. The decision is up to you and you’ll have to decide if you would rather get it over with sooner rather than later.
Try to space out having multiple children with less than three years of driving on your policy. I know that this may be a conversation 16 years too late, but if you have only one driver at a time with less than three years of driving experience the better.
If your teenager has an iPhone download the Time to Drive app developed by the UNC Highway Safety Research Center and Sky Highways. This will help to track your teenager’s driving habits to let you know how they are doing. (Sometimes you may want to put this on your spouse’s phone too.)
Have them pay for a partial amount for adding them to your North Carolina auto policy. This can be in different forms from getting a part-time job, to doing chores around the house, based on their academic performance, to doing volunteer work with a local non-profit.
Make sure that you are working with an independent insurance agent like us, to make sure that you are being advised properly.
Wrap-up
I won’t try to sugarcoat it, it’s going to cost a lot to add your teenager to your North Carolina auto policy and it should because statistics show that inexperienced drivers are more likely to get into an accident than those of us who have been driving for many years.
Make sure that you are with an independent insurance agent who can review your options so that you can have the coverage you need, the experience you deserve, and all at a fair price.
If you’d like more information about switching your insurance to us, you can click around our website, call us at 919-463-5300, or email me at josh@lipstoneinsurance.com.
