If your son or daughter is heading out on the road for the first time, be sure you're not breaking the bank on insurance rates. Here are ways to keep costs in check. Your auto-insurance premiums are likely to skyrocket when your teenage son or daughter starts driving. But a few key moves can help you cut costs significantly.
1. Raise your deductibles to at least $1,000, which lowers your premiums and keeps you from filing small claims that could jeopardize a claims-free discount. Add some more money to your emergency fund so you'll have the cash to pay the deductible if anyone in your family does have an accident.
2. Drop collision and comprehensive coverage entirely on older cars that are worth little more than the deductible. You may be paying more in premiums than you could ever get back from the insurer, even if the car is totaled. Let your car's Kelley Blue Book trade-in and retail values guide you.
3. Get a safe car. Having your child drive a safe car will help you sleep easier and keep your auto-insurance rates under control, too. Check safety ratings at the Insurance Institute for Highway Safety.
4. Encourage your kids to get good grades. Most insurers offer a big discount for young drivers who maintain at least a B average in high school or college. College kids generally need to take at least 12 credits to qualify for the discount.
5. Tell your insurer if your child goes away to college. If your child goes to school more than 100 miles away and doesn't take a car, you can usually get a big break on your premiums but still have coverage when he or she comes home for vacation.
6. Ask about other discounts for teenage drivers. Some insurers offer discounts for driver-safety programs, cutting costs for kids who take a special class, watch aDVD, or read a driver safety book and take a test. Ask your insurer what your son or daughter needs to do to qualify.
7. Make the most of multipolicy discounts. You'll usually get a break on both your auto insurance and homeowners insurance if you keep the policies with the same company. You may get an additional discount if you include an umbrella policy, which provides extra liability coverage beyond your auto insurance limits and can be particularly valuable when you have a teenage driver.