4 tips on how to save money on a teen driver's car insurance

Tamara E. Holmes

If you're a parent of a teen driver, here's a sobering stat: Car crashes cause more deaths among all U.S. teens than anything else. While this grim statistic is enough to wreak havoc on any parent's peace of mind, it can make a large dent in your pocketbook, as well.

According to the Insurance Institute for Highway Safety (IIHS), young drivers are more likely to get into a crash because they lack driving experience and, in many cases, they show immaturity by speeding and engaging in other reckless behavior. As a result, insurance companies consider teen drivers risky to insure and often raise insurance premium rates accordingly. In fact, a study by Nationwide found that parents who add teen drivers to their car insurance policies see an average premium hike of $800 a year.

While your teen driver has to be insured if he or she is going to get behind the wheel, here are four things you can do to keep the costs as low as possible.

1. Give your teen a cheaper (to insure) car.

If you want to buy your teen a car, forget about getting the model of his or her dreams. Instead, get a car that boasts high safety ratings. For example, the IIHS has a list of "safe" cars that have a history of fewer insurance losses, so insurance premiums for covering these cars likely will be lower. AAA also has compiled a list of top cars for teens.

You also may look for a car that gives parents more control over teens' driving habits. For example, some Ford cars include the automaker's MyKey technology, which lets parents control certain aspects of the child's driving experience using programmable keys. A parent using MyKey might limit the audio volume in the car or ensure the child wears a seat belt whenever he's driving, says Andy Sarkisian, Ford's safety planning and strategy manager. The child would be given a key that communicates any parental restrictions to the car when it's put in the ignition. In the example above, the radio volume could be set to go only so high whenever the child is driving.

Parents should also steer their kids away from high-performance cars, trucks and SUVs, so kids won't be tempted to drive fast and recklessly, says Kim Hazelbaker, senior vice president of the Highway Loss Data Institute, a nonprofit that publishes statistics about insurance losses. If the family has several vehicles, list a teen as a primary driver on only the safest, least expensive car to insure.

2. Encourage good grades.

Insurers want to know that your teen driver is mature, so many insurance companies reward teens with discounts if they do well in school. For example, Travelers offers a good driver discount to high school students who score a B average or better.

3. Enroll your teen in a driving safety program.

Insurers want to do whatever they can to prevent your child from having an accident. Many offer driver safety programs for teens and will reward families with a discount on car insurance if the teens take part. For example, teens who complete Farmers Insurance's You're Essential to Safety (YES) program may qualify for a discount after reading stories, seeing videos and taking an online quiz about driving safety.

4. Promote safe driving practices.

The worst thing your child can do is rack up points on his or her driving record for speeding or failing to obey other traffic laws. Make sure your child understands that his or her driving practices influence the cost of insurance. A website run by AAA helps parents and teens discuss safe driving.