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A rate-cut crash course

Keeping teen drivers on their toes, and not on the gas pedal, is key to lower insurance rates

Judy Hevrdejs, Tribune Newspapers

3:34 PM EDT, November 4, 2010

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So you've been cruising along with affordable car insurance for years thanks to a clean driving record. Then, like an annoying fender bender during slow-moving traffic — bam — your premium skyrockets.

The reason? Could be you've added a teenager with a freshly minted driver's license to your policy.

How much your annual premium will increase depends on a variety of factors: whether your teen has good grades, is male or female, or graduates from an accredited drivers education course, for example.

But a one-car family might expect their annual premium to jump 44 percent when they add a teen to their policy, according to number crunchers at Insurance.com.

You can ease the sticker shock, say experts, with a bit of planning and discipline, for you and your child.

Want the good-grade credit?

"Are you a parent that encourages them to study? You need to start before they're even driving," said Robert O. Weagley, professor and head of the University of Missouri's Personal Financial Planning department. "And start instilling discipline in them early."

Want them to be safe drivers? Then don't text/eat/chat on a cell phone/tailgate while driving. "Don't get mad at them when they do it," said Weagley, a father of three, the youngest a college student. "Just go look in the mirror."

"Be good role models for teens, because they learn by example," said Loretta Worters, of the New York-based Insurance Information Institute. "If you drive recklessly or you're eating french fries, your teen driver is going to imitate you."

And expect them to have minor fender benders.

"The chances of the kids having a small fender bender is pretty great," said Weagley, "and to the extent that you can pay it out of pocket or paying it out of your emergency fund as opposed to turning it in, then that's all the better."

Although laws vary by state and discounts vary by insurance company, here are some things to consider when trying to save money on your auto-insurance premiums:

From the experts

"Your rates are going to go up if they have an accident. … If they've already had a drivers education course, have them go back in and get a refresher course. Companies may view it as you're getting them to learn how to drive better."

Also: "Raise your deductible. Going from a $250 to $500 or $1,000 deductible can save you 10 percent to 20 percent on your premium."

— Loretta Worters, Insurance Information Institute

"Anytime you have anything that you think is positive that's in your favor, make sure that (your agents) know it."

Also: "What's it worth on the market if you total the car? At a certain point, (say) the car is worth $3,000, $4,000, why do I need any insurance on that car? Because if it is in a bad wreck, it's going to take $5,000 or $6,000, $7,000, and all they're going to give me is $4,000. So why do I want to buy insurance on $4,000?"

— Robert O. Weagley, professor and head of the University of Missouri's Personal Financial Planning department.

Be sure to …

See whether your insurance company has a "safe driver" program and whether your state has a graduated driver's license program, which gradually phases in driving privileges for new teen drivers.

Find out whether you are eligible for lower premiums when your teen heads to college without the car.

Compare prices and talk with your agent about a multivehicle discount, lowering your deductible and increasing liability insurance.

Talk to your teen about risky behavior and insurance costs, which will go up after one speeding ticket. Add an accident, and premiums could increase astronomically.

What might help

A safe, easy-to-drive and basic car that offers protection in event of a crash. Sports cars can turbocharge your premium, because they can encourage risky driving.

Good grades, usually at least a B average.

Graduation from an accredited drivers education program.

Putting your teen on your own policy. It generally costs more for teens to get separate policies.

Technology. Some insurers offer discounts for tracking devices that let parents monitor kids' driving and set limits on speed or distance.

Web resources

State insurance departments. Find yours at naic.org (National Association of Insurance Commissioners); click on "States & Jurisdictions" link.

Centers for Disease Control and Prevention (cdc.gov). Click on "T" in the index and then on "Teen drivers."

aaaexchange.com (has a link to teen

driving.aaa.com, which offers state-specific info).

Auto info site edmunds.com.