Teen Driver: And You Thought Gas Was Expensive

When California’s graduated driver’s license law took effect in 1998, teenagers groaned but parents welcomed the change.

By dispensing driving privileges in phases, as young drivers gain experience behind the wheel, the new law is meant to reduce teen accident rates. And if accident rates decline, or so parents hope, that will eventually reduce those breathtaking increases in the family auto insurance premiums when teens take to the road.

Preliminary statistics from the California Highway Patrol show that injury and fatal accidents caused by teenage drivers have indeed declined. The CHP found a 5% drop in the number of accidents caused by 16- and 17-year-old drivers during the first quarter of 1999 from the same period a year earlier, says Anne Da Vigo, a department spokeswoman in Sacramento. But she cautions that it’s too soon to tell whether the decline will hold up.

Already, the Automobile Club of Southern California, a co-sponsor of the graduated driver license bill with the California State Automobile Assn., offers a 20% discount on auto insurance premiums to eligible teenage drivers who have begun driving under the new law.

But it would be premature, insurers and government officials say, to phase in across-the-board reductions in policies covering teenage drivers.

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In the meantime, parents can get the best deal on car insurance by shopping around and determining which policies are best for themselves and their new drivers, insurance experts advise.

If you’re like most parents, you want to economize on the premiums. Just don’t overdo it, warns Tim Hart, chief of the legislative bureau for the California Department of Insurance.

“There is a temptation to go as cheaply as possible,” Hart says. Although the state liability minimums are $15,000 per person, $30,000 per accident and $5,000 for property damage, more typical coverage, he says, is $100,000 per person, $300,000 per accident and $5,000, $10,000, $15,000 or even more for property damage.

Instead of scrimping on coverage, you might consider boosting the deductible, Hart says. If you can handle a $500 or $1,000 deductible, you will get a lower premium.

For instance, some insurers don’t charge families for adding teenage drivers while they are on a learner’s permit, but others do. Although the first option sounds like a better deal, it isn’t always.

“Look at the total outlay,” says Ric Hill, a spokesman for 21st Century Insurance Co. in Woodland Hills. The overall family premium might be higher, he says.

Is it better for parents to add their new driver to their policy or set him or her up on a separate one?

“In general, it’s less expensive to add them on the parents’ policy than put them on their own,” Hill says. If they are on your policy, they get the advantage of any special breaks you already receive, such as the multi-vehicle discount or your own good-driver discount. If a teenager is insured separately, he or she will be rated as a new customer, and the statistics about teen driving accidents will not work to the teen’s advantage.

Taking advantage of the family plan makes sense to Chris Irwin, 20, of Pasadena, a student at Cal State Northridge.

“I get on my parents’ plan and borrow their good driving records,” says Irwin, who works part time for an Internet company to pay his share of the premium, which is about $1,200 a year.

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Before adding a young driver to a policy, parents should know the basics about plan types, insurance executives say. A so-called family policy matches drivers to the vehicle that each primarily drives. But it doesn’t necessarily mean each person can drive only that car. Ask to be sure how the coverage works.

A named-driver policy matches drivers within a household to a specific vehicle. Policies differ on the question of permitting use by others, Hart of the state Department of Insurance says. Typically, he notes, a parent who has a named-driver policy will be able to drive the teenager’s car, but the teen won’t be able to drive the parent’s car.

Another way to reduce premiums is to list your teen as an occasional driver--but only if that’s true, Hill and Hart warn. While you may never get caught if you fudge on this one, Hill points out that policies have a clause giving the insurer the right to void the contract in the event of misrepresentation or fraud. Coverage could be denied for an accident if there is misrepresentation, Hart says.

When a student goes off to college, it’s also a good idea to be honest and inform the insurer that the vehicle will be garaged away from home. Depending on the area where it is to be kept, the premium may actually decrease, Hill says. On a two-car plan, however, you may lose the multi-car discount once your young driver parks the car elsewhere.

If a student goes off to college at least 100 miles from home and will not be using your car, alert your insurer to this change. Your premium will be reducedbecause your teenager is not driving. Likewise, alert your insurer if your young driver takes a car to college and then returns home on summer or holiday breaks. You may get your premium lowered during the break.

Always ask about price breaks, such as the multi-vehicle discount and the good-student discount (generally given for a B average or better).

“Some insurers offer a discount if the kids have other academic honors besides good grades,” Hart says. The point, he adds, is to “ask for every conceivable discount.’

And if you are a truly optimistic parent, you might even ask: How long must my teen driver remain accident-free before he or she earns the good-driver discount?

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Even with all these discounts, premiums can still be hefty, in some cases forcing young drivers to forgo having a car.

Anthony Dene, 21, of Panorama City, another Cal State Northridge student, has no car right now. He says it is partly because of high insurance costs.

To soften the financial blow for their parents, some young drivers pay all or part of their premiums.

“My parents pay most of it,” says Ken Peterka, 19, a classmate of Dene from North Hills. But he works part time as a chef in between college classes and contributes $50 a month toward the premium.

Charles Mortensen, 21, another CSUN student, does his share by trying to maintain a B average to qualify for the good-student discount. He says he’s fortunate that his parents are willing to pay his premium while he attends college.

One day, he and his classmates well know, Mom and Dad won’t be carrying the financial load, and it will be up to them to maintain good records on the road to keep their premiums at a minimum.

* Consumers who have auto insurance questions can visit the California Department of Insurance Web site, https://www.insurance.ca.gov. The department operates a telephone hotline at (213) 897-8921 within the Los Angeles area, (800) 927-4357 elsewhere. The hotline is staffed from 8 a.m. to 5 p.m. weekdays; recorded messages are available at other times.

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Good Carma is a guide to automotive-related health and consumer issues. Kathleen Doheny can be reached at kdoheny@compuserve.com.