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Wednesday, May 02, 2007

Parents to get a Break on Teen Driver Insurance Rates

Insurers Dropping Rates After New Restrictions Have Been Implemented

Thanks to a new law regulating the privileges of teen drivers, parents with teen drivers might get some relief on their car insurance bills.

Ohio's driving-license law changed recently, limiting the nighttime hours teens are permitted to drive and the number of passengers allowed in the car.

Auto insurance rates are dropping along with the teen accident rate in states with comparable laws.

Mary Bonelli, spokeswoman for the Ohio Insurance Institute, said, "States with (licensing) laws like Ohio's are really starting to see the benefits. Insurance companies are starting to see lower losses from teen drivers, and are turning around and passing those savings on to customers."

Starting in June, Grange Insurance will reduce insurance rates for 16-year-old drivers by as much as 5 percent. Because their rates are higher, young male drivers likely will see the biggest savings.

Allstate spokeswoman Lisa Finney said the auto insurance giant lowered its rates for teen drivers last summer in advance of the law.

Joel Brown, vice president of personal insurance at State Auto, said that during the past 18 months it have lowered rates for teen drivers by 5 percent to 10 percent, and it will contemplate further reductions if the new rules for teen drivers produce results.

Other insurers, like Nationwide and State Farm, are taking a more cautious approach. They'll consider lowering premiums if the new law lowers the accident rate for teens.

According to a study by the Ohio Department of Public Safety, overall teen driver crash rates fell 23 percent in states that have teen licensing laws similar to Ohio's. By February 2007, 43 states had a three-tiered graduated licensing program, where as teens get older they earn more driving privileges.

Perhaps the part of the new law that will have the greatest will be the passenger clause. According to the Insurance Institute for Highway Safety, a national nonprofit organization, passengers in a vehicle notably increase a teen's chances of having an accident. The risk is doubled by one passenger, tripled by two passengers, and three or more passengers increase the risk sixfold.

Car insurance for teens can really put a strain on family budgets. Bonelli said that a parent adding one teen driver to a policy should expect their annual premium to nearly double.

According to the National Association of Insurance Commissioners, the average auto policy in Ohio cost $672 in 2004. Adding a teen could boost the cost of an average policy to $1,344.

Some of the factors that affect the price for teen drivers are their driving record, who else is on the auto policy, what vehicle they drive, how the vehicle will be used, and where they live. Male driver insurance rates also are higher than for females.

But there are additional ways to cut costs.

There are insurance companies who give discounts to students who earn at least a B average in school, have made the dean's list or place in the top 20 percent on the SAT or ACT.

Also potentially qualifying for lower insurance rates are teen drivers who take a safety course. Allstate will reduce rates up to 15 percent for teens who finish the company's online safety course. State Farm gives an average 15 percent discount to teens who graduate from its driver-safety program. is the source for new teen drivers and their parents to discover the smart and best way to provide for their insurance needs. Compare auto insurance rates for teens today!

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