Car Insurance for Provisional Drivers

By Jessica Bosari
After 13 years in personal and commercial insurance, Jessica Bosari now writes about personal finance, car insurance, risk management and related topics. Since 2008, she has been simplifying complex ideas through engaging articles for her readers.

Car Insurance for Provisional Drivers

As a parent, the idea of letting a teen drive without supervision makes me cringe. If I had my way, my kids would drive only with provisional licenses (permits) until they reached legal adulthood at 18, when I no longer had a say in the matter. I feel this way because I’ve spent many years working in car insurance. I’ve seen too many accidents where a car full of teens went off the road in a terrifying wreck. In my experience, six months is just not enough to learn to drive. As such, I’m a big fan of graduated licensing laws that create restrictions for new drivers.

Restricting Teen Driving

According to the Insurance Institute for Highway Safety (IIHS), certain rules make the roads much safer for new drivers. These include:

  • Waiting until age 16 to allow a permit
  • At least 70 hours supervised driving required before becoming eligible for a license
  • Waiting until age 17 to allow a full license
  • Restricted driving rules for new drivers, such as no nighttime driving and no teen passengers

Personally, I’d like to see rules that allow parents to begin training their young driver much earlier. I don’t believe 70 hours behind the wheel can teach you how to drive defensively. You need a few near misses before you realize that every other car on the road is a threat. You need to anticipate what can go wrong, and 70 hours just isn’t enough time to gain a deep familiarity with what happens (and what might happen) on the road. But existing provisional licensing laws are a strong step in the right direction, and they do save lives. The IIHS reports a 30 percent reduction in teen driving fatalities when comparing states with the strongest (ie most restrictive) laws to those with the weakest (most permissive).

Letting Your Teen Drive

Most parents simply follow the state’s rules and allow their teen to get a provisional license. It’s certainly easier than fighting your teen on the issue. In most states, teens can get a permit at age 16 ½, but I much prefer California’s law that lets them start learning at 15 ½. At age 17, most states let teens take the driver’s test for a full-fledged license. But going along with this might not be in your best interest – or that of your teen.

Check Rates Before You Give Permission

Check your state’s laws to find out if provisional drivers must be added to your car insurance policy before you sign the permission slip for your teen’s provisional license. If provisional drivers must be added, get a quote on how much it will cost to put the child on the policy before you allow them to get a permit. All too often, parents find out only after the fact that it will cost thousands more in car insurance, an increase they weren’t expecting and sometimes can’t afford. It should be noted that in most instances you do not have to add a permitted driver to your policy.

But once you have a family member with a new full driver’s license in the house, you are required to add them to your policy by law. Your teen’s inexperience will add big money to your car insurance premium. So you may not want to give permission for your permitted driver to take the driving test the moment they become eligible. Saying “no” to you teen will be painful, but less painful than eating Ramen every night for the foreseeable future. And although I’m a big fan of leaving things this way until kids turn 18, you’re not me. If you do decide to let your teen get a license, just remember that you’ll need to add them to your policy.

Adding a Newly-Licensed Teen to Your Car Insurance Policy

The cheapest way to insure your teen driver is to add him to your existing policy. Let him borrow your car instead of getting his own and you’ll save thousands in car insurance premiums as a family. If you do allow your teen a car, it’s cheaper to add that car to your policy and get the multi-vehicle discount than to insure it separately. But, if you make your teen responsible for his own insurance premiums, you’ll realize several benefits:

  • A teen who has to pay his own insurance premiums is more likely to drive safely to avoid an increase in rates.
  • Your teen will learn the responsibility that comes with working to pay his own bills.
  • In most states, the law restricts the hours and situations in which your teen can drive, so you don’t necessarily need to worry about having less control just because your teen has his own car.
  • Your teen will learn that “driving is not a right, it’s a privilege” (and an expensive one).
  • You reduce the risk that an injured party will go after your assets for letting an irresponsible teen driver use your car if he causes an accident.

This approach still has pitfalls, however. For example, you can’t really ‘force’ your teen to buy his own insurance. If he says “no,” the law requires you to add him to your policy. The only other options, which I think most of us would never take, is to make him find another place to live. You can try to exclude the teen, but in many states it’s prohibited. Some states allow you to exclude a teen driver from your policy only if you can show financial hardship. These rules make for a strong argument against signing the permission slip your teen needs to take the driving test.

The Middle Road to Financial Protection When You Have a Teen Driver

Probably the best approach is to agree to buy your teen his own car if he agrees to carry his own insurance. It will have to be an older car that you can buy outright, because being a co-signer on the loan could put some level of responsibility back on you if there is an accident.

Once he owns a car in his own name, you’re no longer required to list him on your policy as a driver, and the law requires him to buy his own policy if he wants to drive. Even a child who isn’t the most cooperative will usually agree to this kind of a deal. He gets his freedom, and you get (some) financial protection.