Tom's BlogEvery month, I have the pleasure of speaking to parents of teen drivers about their car insurance at our StreetSafe Teen Driving events. I give them the dirty truth that their insurance agents are afraid to share. Why? I don’t know but at every event, I am asked why they weren’t told some of the secrets I tell them.
Insurance for teen drivers can be complicated and in fact, many insurance companies don’t want to insure teen drivers. The truth is they present a huge liability due to the high cost of insurance claims inexperienced drivers cause. Some companies will cancel you if your teen causes an accident and others will charge outrageous rates for teen drivers.
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This why you should be insured with an independent insurance agent that knows the marketplace and what companies have the most favorable options at the lowest cost for teen drivers. That is the first way to save on your car insurance for your teen driver. The second way to is to…
Increase Your Deductibles On Your Teen’s Car
There are two good reasons why this makes sense. First, the savings. By increasing your deductibles on comprehensive and collision for your teen’s car, you can reduce your premium by up to a few hundred dollars. We recommend at least a $500 deductible for comprehensive. This is for damage other than collision such as hitting a deer, cracked windshield or theft. We also recommend increasing your collision deductible to $1,000.
The second big reason for increasing your deductibles is it is not a good idea to report small claims to your insurance company especially, if the agent is an employee of the company. I’ll get into this topic in a minute. Auto insurance companies know that if your teen has a minor accident like say, they back into a light pole in a parking lot, they are more likely to have more accidents and more expensive accidents. Statistics prove this.
Since the insurance companies know this, they are more likely to cancel your car insurance coverage forcing you to find insurance elsewhere. And to make it worse, once you’re cancelled by one insurance company, it’s difficult to find another company with competitive rates. It’s like having a big “X” on your chest. No one wants to insure drivers who were cancelled by another company.
So, since you don’t want to turn in small claims, you may as well increase the deductible and enjoy the savings.
Now back to the part about insurance agents who are employees of an insurance company. These agents are required to report to their employer of every inquiry regarding claims. Even if you simply call to get their advice, they have to report regardless of whether or not they pay anything. Then this is reported to C.L.U.E. where all insurance claims are reported. This is kinda like a credit bureau for claims. Anytime you shop for insurance, a C.L.U.E. report is pulled to determine whether you will be accepted or not and this information also will determine if any insurance points to be charged.
How do you know if your insurance agent is an employee? The easiest way to know this is by the number of insurance companies they offer insurance from. If it is only one company, they are most likely an employee of that company. Another way is to watch TV. They advertise heavily and you already know who I am talking about.
What’s the best way to make sure your car insurance is with an agent that works for you? Find an independent insurance agent that represents several companies. They can shop your car insurance coverage for you with multiple companies giving you the lowest rates plus an agent that looks out for your best interests!
For a free rate comparison for your family’s car insurance and any other insurance needs, call my office at 866-869-3335 today.
Tom Wiecek, Paramount Insurance Agency
