Smart Shopping Gets Junior Behind the Wheel
May 17, 2007By Francine Brevetti
BARBARA DUENAS of Hayward put her stepson Israel Villanueva on her auto insurance policy because her safe driving record meant the 18-year-old could get a cheaper rate than if he were listed under his mother's policy.
"His mother gave him a car for graduation," Duenas said, "but he gets a lower premium under my policy."
For parents buying insurance for their teenager's first car, keeping the premium down can be the deciding factor between letting the son or daughter drive at all, some agents have said.
"At a minimum, your car insurance rates jump 50 percent the minute you put your kid on your policy," said Steve Paddock, spokesman for the Financial Planning Association of the East Bay. "In some families, it's as much as 200 or 300 percent because car crashes are the leading killer of people between the ages of 15 and 20."
Still, parents and teenagers can take several measures to mitigate ballooning premiums.
Duenas was lucky. She gets her insurance from Allstate and has typically paid $598 a year. Adding her stepson hiked her rate merely another $88 because of her good driving record.
Other factors can help keep a premium
down. The teenager who maintains a grade-point average of 3.0 can lower the premium as much as $200 every six months, according to Paul Catalli of Catalli Insurance Brokers in San Mateo.
Jerry Garcia, a State Farm agent in San Leandro, has told his son he will not receive a car when he turns 16 next year unless he raises his grades.
Tully Lehman, spokesman for the Insurance Information Network of California, said teenagers want a hot car while the parents want a safe car.
Lehman tells parents to buy "a car with lower horsepower" and one that isn't a theft
TEENSIBusiness 3target.
"If it's a used car, you want it impact-resistant with front and side air bags (and) also an auto-theft device like an ignition-kill switch and an antilock brake system because the younger drivers speed and tend to overcorrect," he said. "These devices will lower your insurance premiums, but different insurers will weight them differently."
Catalli also warns against giving your child a new car, which will require full coverage -- that is, comprehensive collision and liability.
"The most efficient way to buy insurance is to buy the kid a car for under $5,000 so they need only liability insurance," Catalli said. "And if anything happens to the car, you could just walk away from it."
And chances are, something will happen to it.
"Over 50 percent of kids have accidents in the first year," Catalli added -- which is one reason premiums for teenagers are so high and another reason to buy an old heap.
However, Larry Bolton, a State Farm agent in San Leandro, objects to the attitude of finding the cheapest insurance first.
"Think first, what is the right coverage for the family?" he asks. "The parents should be teaching responsibility. The teenager should be trained to understand responsibility and the concept of good grades."
In other words, rather than focusing on cheap insurance, parents should train their new drivers to focus on the road.
Still, Kitty Bernick's 18-year-old son had straight A's when he plowed into a bicyclist. The biker needed dental work and the Bernicks' rates skyrocketed for the next three years," the Oakland mother said.
When you shop for insurance, ask if the premium will be based on the family's newest or most expensive car. If it's based on the expensive car, make sure junior never drives it, Paddock said.
Make your children pay for their insurance and insist they continue to do so as premiums rise, most insurance experts advise, to ensure they drive safely.
"Kids aren't experienced drivers and get distracted from driving," Catalli said. "The Bay Area is an especially challenging place to drive. They are looking in the mirror, or they're looking at their cell phones."
Other factors sometimes associated with youngsters play a role in rising rates, too, he said.
"I've seen an increase of kids with DUIs under the age of 21 -- one out of every 10 kids," Catalli said, based on his experience. "Because there is zero tolerance (for drinking), if the kid has one beer and the cop smells it on his breath, he gets arrested."
These are some of the social and legal factors that insurance underwriters cannot predict but will affect your premiums, not to mention your child's life.
Here are some Internet resources on insuring teenage drivers:
- Insurance Information Institute: http://www.iii.org/media/ hottopics/insurance/teendrivers
- Department of Motor Vehicles: http://www.dmv.ca.gov/teenweb
- Allstate Insurance Co.: http://www.allstate.com
- Geico: http://www.geico.com/auto/safety
Contact Francine Brevetti at [email protected] or (510) 208-6416.
(c) 2007 Oakland Tribune. Provided by ProQuest Information and Learning. All rights Reserved.
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