Insider Tips to Cut Auto Insurance Rates for You and Your Teen

Unless you live in a walkable city, you probably have significant auto expenses to manage, including a car payment or lease fuel maintenance and insurance. I think many people overlook the cost of them vehicle because it’s just such a necessity or part of their everyday life. And while you might not be able to reduce your lease payment or your annual mileage overnight, you may be able to significantly cut your auto insurance rate. Many people are surprised when I tell them that they may not be getting the lowest price on car insurance. You can’t just assume that the company you’re dealing with is, is giving you the absolute lowest price as consumers. We have to be proactive. If you don’t understand all the potential discounts you don’t ask for them and you don’t shop around, I’m going to guarantee that you are probably leaving insurance money on the table.

And I don’t know about you, but there are loads of other things that I would rather spend money on than car insurance. But I will say that the trick to lowering your insurance rates safely isn’t to cut your actual coverage to the bare bones that could leave you financially vulnerable. Fortunately, there are some smart ways to pay less without sacrificing the quality of your auto coverage. And that’s what we’re going to talk about today. If you want to learn critical tips to cut the cost of auto insurance for you and your family, even if you’ve got super expensive teen drivers, you’re going to love today’s show. My name is Laura Adams and I’m an award-winning finance author, educator and spokesperson. Who’s been writing and hosting money girl every week since 2008 for today’s show. I interview Leslie [inaudible]. She’s an insurance expert and managing editor with auto insurance.org.

We’re going to talk about tips for families and individuals to save money on auto insurance. Unfortunately, as I mentioned, if you do have a teen driver, the cost of adding them to your policy may be shockingly high. So definitely don’t miss our conversation. If you’ve got older drivers or maybe some pre-teens that we’ll be driving in a few years, Leslie spent several years with a top insurance carrier working directly with customers for more than a decade. She’s been an insurance writer with articles and data studies featured in major publications, including reader’s digest Fox business and the Washington post on the money girl podcast today. Leslie and I discuss many often overlooked car insurance discounts and strategies to reduce your auto premium without sacrificing excellent coverage. Here’s some of the topics we cover. We talk about data from a 2021 auto insurance.org study called the best states for cheap teen auto insurance. We cover the most and the least expensive states to have a teen driver. It’s really interesting. We talk about the types of cars that you might want to consider for teens that will actually save money on auto coverage. We talk about whether teens should purchase auto insurance on their own, or be on a parent’s policy, how to avoid common and costly auto insurance mistakes, and many more tips for cutting the cost of car insurance and maintaining excellent coverage. So here’s my interview with Leslie. Leslie, thank you so much for joining me on the podcast.

Thanks for having me. You are what I would call an insurance expert and you’ve done tons of studies. And I think that gives you a lot of really interesting insight into what’s going on with insurance rates, how people can save money. Just the complicated world of insurance can be a little bit overwhelming to people who don’t really know much about the industry. So I’m hoping that you can shed a little light on some, maybe some common questions that people have. And I thought we’d start by talking about your teen auto insurance study. Tell me a little bit about that and maybe some of the interesting findings.

We wanted to take a look at how, um, the states ranked for teen auto insurance, um, and just kind of where you can expect to pay a lot more and where you can expect to see more reasonable rates. Uh, you know, it really, wasn’t a big surprise to me the results just because I’ve spent a lot of time looking at auto insurance rates by state. Um, and in general, so as a general rule, you’re going to find that, you know, in a state where you’re in auto insurance rates are lower to begin with your teen auto insurance rates are also going to be more reasonable, but overall teen drivers are unfortunately one of the most expensive groups to ensure.

Yeah. I often hear from parents who say, oh my gosh, you know, my, my 15 year old just got their license and started driving and I’m looking at insurance rates and they’re freaking out because they are so high. And they’re wondering, you know, is there anything that I can do? You know? And unfortunately the reality is just, you have to wait until the teen gets a little bit older. You know, their rates should come down over time, but Leslie, what are some of the reasons why it is so darn expensive to ensure young drivers?

The bottom line is inexperience new drivers on the road. Uh, especially teen drivers who are very young and unfortunately may not have the best judgment in the world. They just don’t have the experience. They don’t have the years of muscle memory that goes into being an experienced driver to where your reaction times are fast to where you’re always aware of the vehicles around you and it time for them to kind of develop that, that knowledge and that awareness. And so, unfortunately, statistically speaking, they are the highest risk for insurance companies.

Yeah. The insurance companies know from the data that they see day in and day out that unfortunately young drivers are riskier and it’s a leading cause of death for, for teens. So it it’s truly very risky for them. And the insurance companies are obviously trying to protect themselves, trying to increase premiums if they expect that a particular policy holder is going to get into a wreck or, you know, have a claim. The reality is they’re just trying to make sure they’ll have enough money to pay that claim if it happens. So, you know, that is the short answer in why teens are so expensive. What do you find also between like male and female? I know gender is, uh, plays a big role in auto insurance in general. What, what do you find the differences when it comes to young drivers and gender,

Uh, males as a general rule are much more expensive to insure. And that is, again, looking at those statistics, they just have a higher rate of accidents, um, a higher rate of serious accidents. And so, you know, again, that’s how the insurance companies make all of their decisions. As they’re looking at the numbers, they’re looking at the statistics and unfortunately for male drivers and male teen drivers, those statistics do not go in their favor. Yeah, that’s true. So what are some of the most expensive states to have a teen driver?

Uh, the most expensive state overall is Michigan. And that’s not at all surprising because Michigan is a very expensive state for car insurance to begin with. That’s partially due, largely due to Michigan’s no fault insurance laws. And they have recently made some changes to those laws and they haven’t really been in place long enough to get a really good picture of how that’s going to impact those rates. Um, but Michigan has continually been in and out of the number one spot for the most expensive. And then some of the other more expensive states on our list are going to be Missouri and Louisiana. Also again, states that fall in that top 10 for the most expensive car insurance overall,

It is, you know, unfortunate if you live in one of those top states like Michigan, you’re paying in some cases rates that are double what other states are paying. And it does just come down to the laws. It comes down to what types of insurance has available in the state, even competition, maybe in some cases is playing a little bit of a role or lack of competition in the state. There’s a lot going on with auto insurance. So let’s talk about the other end of your study. What about the least expensive states?

So the least expensive state that we found for teen auto insurance is Hawaii. So if you’re lucky enough to live in Hawaii to begin with, you’re also going to enjoy some cheaper car rates. And part of that is going to be due to, again, the laws Hawaii doesn’t allow certain rating factors to be used by insurance companies. So that includes age and gender, which are two of the big things that are killing you on teen insurance rates. So Hawaii came out on top for us and then, uh, kind of rounding up our top five is Virginia, North Carolina, Maine and Alaska. And again, if you look at their rates overall, you’re going to find that those are states that have, um, actually lower insurance rates in general

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So tell me a little bit about the cars. Is there something that parents should be looking at if they’re thinking about buying a car for the teen to use, or even having a family car that they’re going to allow the team to use? Any tips can provide on ways to shop for a car that might be more affordable when it comes to insurance?

Um, yeah. Number one thing you’re going to want to avoid is sports cars and, uh, fancy SUV is really, if you’re looking at a car that has a high value overall, or that is considered a really a powerful car, a car that might encourage a team to put the pedal to the metal, so to speak, uh, you want to avoid that because insurance companies don’t want teen drivers behind the wheel of these cars that cost a whole lot of money to replace, and that are considered a little bit higher risk for an accident. So what I usually suggest is to try to find that balance between the value of the vehicle and the safety features that are included in the vehicle. So, you know, a lot of parents are going to want to look at buying, you know, kind of a beater for their team because they’re not worried if it gets damaged, but some of those older cars don’t have the safety features that not only keep your teen safer, if they’re in an accident, but also that insurance companies provide discounts for.

So insurance companies have a long list of safety features for which they’re going to give you a discount, lower your rates a little bit. So I usually recommend going for a kind of late model family sedan, um, type of vehicle that if you decide not to carry full coverage on it, if you don’t want to have to pay for the comprehensive and collision, um, if you had to replace it, it wouldn’t be a terrible financial loss, but also that has enough of those safety features to where you’re going to see lower insurance rates as a result.

Yeah, that’s a good point. So the make and model plays a big role in what your, what you have to pay for auto insurance, as you mentioned, because if the car is stolen, if you’re in an accident and you’ve got serious repairs, it’s all going to depend on how expensive that car is too, to do body work on it. And sports sports cars, as you mentioned, are definitely going to be at the top of the list when it comes to pricey to ensure also, you know, what I think is interesting as a lot of the hybrid vehicles while we might love them and think that, you know, there there’s something we want to give our team. What I have found is that in some cases they can be pretty pricey simply because they are expensive to repair as well. They’ve got, you know, more electronics and, uh, just a whole different system that is, uh, fairly pricey to have any work done on.

So I like your idea about kind of balancing safety with the value. You don’t want to give your, your son or daughter a, a beater, as you mentioned, because that really may give them a disadvantage, you know, when it comes to being on the road and just not having all the up-to-date safety features. But on the other hand, if you buy them a brand new car with all the bells and whistles, it’s likely to have a much higher value. So you’re going to pay more, uh, simply because the car’s worth more. So yeah, maybe like a pretty good car kind of something I would say, big and boring versus small and fast and fun. Right? Agreed.

Yes. I’d say that I’d actually have two sons. The oldest will be 14 soon. So we’re, we’re heading into this realm, unfortunately, and I’m always joking with my husband that I just want to get them a great big station

Wagon. Yeah, absolutely. They won’t like that at all, but, um, you know, you could say, well, maybe you could pay for your own insurance now. And speaking of that, Leslie, what do you think about teens getting their own insurance versus getting added to a parent’s plan? Any tips there

As a general rule, the rule it’s going to cost a lot less to be on a parent or Guardian’s a policy. And that’s generally because they have a lot of discounts already that they’ve earned. They may have been with their insurance company for awhile and have earned a loyalty discount. They likely have multi-car discounts, possibly multi policy discounts if they’re also insuring a home with the cars. So all of that goes into the price that the teen drivers going to pay. So there are rare occasions when a teen may pay a little bit less on their own auto insurance policy. And that’s generally if the parent or the guardian that they live with may have a poor driving record, or may not have some of those discounts available. So as a general rule, don’t get your own auto insurance, but always price it out. It doesn’t cost anything to look at quotes. It doesn’t take a whole lot of time with the awesome tools that we have online to compare rates. And that way you can get an idea of what you can pay in different situations and make the best choice.

Yeah. That’s a really good recommendation. It’s just smart to shop auto insurance.org. That’s what you’re providing. So tell me a little bit about, you know, what that process is like, if somebody goes to the site to start shopping, what can they expect? Like what information do they need to have ready? And you know, how long might it take?

So it’s a price comparison tool, and it’s going to start just by putting in your zip code, then you’re going to enter a minor amount of personal information. And that’s mainly because in order to provide accurate quotes, they need to know a little bit about you, where you live and your driving experience and any tickets or accidents that you have on your record. And of course the type of vehicle that you’re driving, because that does make a major difference in your prices. So you’re going to put in that basic information, and then with the quoting tool is going to quickly provide you is a comparison of rates from some of the companies that are available in your area, so that you can take a quick look at those rates and then investigate it further with that company, if you’re interested in that rate. So you’re not going to buy the insurance directly, you’re going to get these quotes that are no obligation that aren’t going to cost you anything to get. And then from there you can go and see which one is most interesting to you.

Yeah. And the zip code is it’s important to begin there because rates are so different from one zip code to another one county to another, you know, I think it it’s really surprising to people to know that that depending on where you live, things like whether cars are stolen often in a particular zip code, you know, the, the theft rate and a lot of different things, um, go into auto insurance. And so the zip code is one of them. So that’s why in most cases, you’re, you’re starting with your zip code. It’s really important, um, that you’re getting local quotes based on where you are, where basically where you keep or garage the car, uh, super important. So let’s say you’ve got a teen that is going to use the car, maybe for something like food delivery, you know, maybe they’ve got a part-time job and they’re, or working on the weekends, doing some kind of work where they’re using the vehicle, either their own vehicle that they’re purchasing or a family vehicle, any recommendations on how that might change the insurance that you need.

Yeah. So if you’re using a vehicle for any sort of business use for work use, you’re going to want to talk to your insurance company about that. Um, and depending on the insurance company, they may have a really simple solution for you, um, in the form of just an endorsement that they add onto your policy to make sure that you’re protected properly when you’re driving for work. Part of, you know, what goes into an insurance policy is, is the contract. So the insurance company is kind of asking you, how are you going to drive this car? What are you going to be doing with this car? And that’s how they calculate the risk that you represent. And so if you don’t tell them that you’re using this car, delivering pizza every night, they haven’t calculated that into their risk. So that’s important for them to know.

Um, and it’s important that you are honest with your insurance company, because unfortunately if you’re not, there are situations where a claim could be denied. Now, there are some food delivery companies that do provide a certain amount of insurance to their drivers. So if you’re working for Uber eats, for instance, or, um, you know, another one of those big companies delivering food, they do have a certain amount of coverage that’s available to their drivers, but it’s really important that you understand what the gaps are in that coverage when you’re covered by that policy. And when you’re not as a general rule, you probably don’t need a commercial insurance policy as a teen driver delivering pizza. But it is, as I said, really important that you talk to your insurance company because you don’t want to find out after an accident that you weren’t covered. That’s right. Yeah.

It’s always wise to be upfront and honest with your insurer. If anything changes with your situation or your lifestyle, always let them know, because as you mentioned, you don’t want to find out that after you’ve got some expensive repair that’s needed that. Nope. You know, we’re not going to cover it because you didn’t tell us X, Y, or Z. You definitely want to be proactive about that. Leslie, you mentioned discounts earlier. Let’s go back to that. Tell me a little bit about how families can save money on auto insurance. What’s the deal with discounts and how should families make sure that they’re getting everything that they’re entitled to.

All insurance companies have, will have a long list of discounts that they have available. And you don’t want to assume that they’re applying every discount automatically. So make sure that you’re looking at what’s available to you first of all, and go through the list of available discounts, get someone on the phone because you can’t count on them. Having every single discount listed on their website. A lot of times we find that there are far more discounts than you’ll actually see listed online. So you want to get someone on the phone, you want to talk to someone directly and say, Hey, how do I qualify for this discount? What other discounts are available to me? What do I need to provide? So for instance, for teen drivers, there are a number of discounts available to them. There are, is going to be a driver’s ed discount for taking a driving course.

Some insurance companies have their own course that they will give you a discount for taking. And often that’s going to be watching a video doing a little quiz, um, sometimes it’s slideshow. So it’s something that is really simple that your teen driver can spend a little bit of time doing, teaches them a little bit of extra safety information. And it also gets you a discount taking the time to do that sort of thing is, is really going to help you with rates. Another big one for teen drivers is going to be the good student discount. And every insurance company has slightly different rules as to how that’s applied. But as a general rule, it’s in the range of about a B average and up. And so you’re probably going to need to provide a transcript, um, in order to get that discount. But it’s, it’s a really good, um, encouragement for teen drivers to keep their grades up, to keep those, those insurance rates down.

Especially if you are asking them to pay their own insurance out of pocket, which is, you know, kind of a great incentive for them, but then as families, there’s a lot of family discounts out there as well. There are now some companies that are offering things like a shared car discount or a family legacy discount, which is where if your parents had insurance with one company, you’re going to get a discount for going with that company. So really just asking and making sure that you’re getting all of those discounts applied to your policy is the best way to get those rates down.

Yeah. You know, you can’t do much about your age or your gender, or, you know, your credit. A lot of these things for young drivers is it’s just, you know, not under their control, but I think the key is to focus on what is in your control. As you mentioned, are you getting the good student discount? You know, you need to be making good grades. Anyway, are you asking, are you being proactive to make sure you’re getting everything that applies to you? You mentioned a great discount driver education. I mean, that is something that I would imagine every family would want their young driver to be as skilled and educated when it comes to driving as possible. And the rules vary a lot from state to state about how much education is required, but I’ve done some work with a site called aceable.com. They have some incredible driver’s education courses there, and it really pays for itself because all you do is take that course lecture, ensure know, Hey, you know, we’ve completed this, uh,

Now that won’t last forever. It may only last for a couple of years until you’ll need to, you know, reevaluate. But in a lot of cases, young drivers will qualify for that driver education and also older drivers too, in a lot of cases, I think over 50, or even over 55 quote, mature drivers can also qualify for a driver education discount. I think insurance companies are just trying to encourage people to stay on top of their skills and, you know, make sure that they’re, they’re defensive on the road that that really benefits them. So Leslie, as we wrap up, um, what tips have you used personally to shop and compare auto policies wisely? I would think as an insurance expert, you’re pretty good at this. So what tips maybe would you recommend others use?

Sure. I mean the first one is to compare as many quotes as you can. And the easiest way to do that is to use a tool like the one we have on auto insurance.org, where you just put in the information once and you get all of these numbers to look at all at once, rather than going from site to site and reentering it over and over again. So that’s the first thing you want to do is just compare as many quotes as you can and make sure that you’re, you’re considering some of the smaller local insurance companies as well. You know, there’s always the big names you’re going to see state farm Allstate. Uh, those are the big companies, Geico, but you also want to make sure you’re comparing some of them smaller companies because sometimes they do have the better rates. The second thing that I always remind people of is always make sure you’re comparing apples to apples, meaning that each quote that you receive is for the same coverage, the same deductibles, the same liability limits companies will sometimes quote you with a really high deductible or with just the very basic legal limits, just to make those numbers look a lot cheaper to begin with.

Sure. I mean the first one is to compare as many quotes as you can. And the easiest way to do that is to use a tool like the one we have on auto insurance.org, where you just put in the information once and you get all of these numbers to look at all at once, rather than going from site to site and reentering it over and over again. So that’s the first thing you want to do is just compare as many quotes as you can and make sure that you’re, you’re considering some of the smaller local insurance companies as well. You know, there’s always the big names you’re going to see state farm Allstate. Uh, those are the big companies, Geico, but you also want to make sure you’re comparing some of them smaller companies because sometimes they do have the better rates. The second thing that I always remind people of is always make sure you’re comparing apples to apples, meaning that each quote that you receive is for the same coverage, the same deductibles, the same liability limits companies will sometimes quote you with a really high deductible or with just the very basic legal limits, just to make those numbers look a lot cheaper to begin with.

Leslie, thank you so much. This is amazing information and I know it’s going to save people a lot of money. Well thank you for having me. And I’m always happy to answer questions about insurance and there’s a lot more, um, insurance education information on auto insurance.org. So we really invite people to come take a look and make sure you learn as much as you can before you put your hard-earned money into that policy.

I hope you enjoyed my conversation with Leslie and then it will help you get motivated to contact your current provider for better quotes or to use an online site like auto-insurance dot org to shop and save on coverage. And before we go, I want to invite you to get short email updates from me that are filled with tips and tools that I think you’ll enjoy. They’re all about saving more, growing your money and becoming an amazing money manager to get it. You can visit Laura D adams.com or you can text me, text the phrase, get updates with no space. So that’s get updates with no space. Text that to the number three, three, four, four, four, and you will be on my list. And another great way to stay in touch is to join my private Facebook group called dominate your dollars. Just search for it on Facebook, or you can text dollars, D O L L a R S to that same number three, three, four, four, four.

And I will send you an invitation to the group. If you have a money question or comment, I would love for you to leave your message on our voicemail line by calling (302) 364-0308, or you can send me an email using the [email protected]. I’d love to know what questions you have about saving money on your auto policy or other types of insurance. That’s all for now. I’ll talk to you next week until then here’s to living a richer life. Money girl is produced by the audio wizard, Steve Ricky Berg with editorial support from Karen Hertzberg. If you’ve been enjoying the podcast, please subscribe and rate and review the show on apple podcasts. Also don’t miss the notes for each show and the full archive of podcasts. You’ll find them in the money girls [email protected].