With a newly licensed teen driver your first step is to call your insurance company and add the coverage he or she needs. This is absolutely essential, to protect your teen (and any passengers) as well as your car.

“Failing to advise your insurer of any new primary or occasional drivers may become problematic if you need to file a claim,” explains Michelle Luneau, Manager of Strategic Underwriting Initiatives for TD Insurance. “Not only could it slow down the claims process, it could result in a denial of loss altogether.”

Here are some steps you can take to help keep down the cost of adding your teen driver to your insurance.

How premiums are determined

“A teen driver is not treated differently than any other driver,” explains Ms. Luneau. “The same criteria are used to set insurance premiums for teens as for other drivers.” Criteria that are driver-related include age, gender, marital status, past convictions, past claims, license type and number of years driving. Other criteria are car-related, including:

  • The theft history of a make and model
  • The cost of a car part to repair it after a collision
  • A vehicle’s safety features that help prevent physical damage

“New drivers will find the most competitive premiums when they elect to drive vehicles that require less insurance,” Ms. Luneau advises. “For example, it can be more cost-effective for a new driver to operate an older vehicle that no longer requires leasing or financing and therefore does not require many of the coverages that the lender requires.”

Primary or occasional driver?

Your teen’s rate will also depend on whether he or she is a primary or an occasional driver. “A primary driver is the one who drives the car the most,” Michelle Luneau explains. “It has nothing to do with ownership, age or experience.”

As a primary driver, your teen’s insurance will cost more. “A teen having his own car is always more costly than sharing a family car,” says Ms. Luneau.

Speak to your insurance company if your teen will be the occasional driver for more than one car. “Each insurance company has their own way of handling a single driver driving more than one vehicle,” clarifies Ms. Luneau. “Contact them for the best advice.”

Expert tip: Occasional drivers don’t have to live with you. If your teen lives primarily with the other parent (for example, if you’re divorced or separated) or if your teen is living away from home to attend college or university, you can still insure your teen as an occasional driver for your vehicle.

Check for discounts

Depending on your insurer, your teen may be eligible for certain savings. For example, a rate reduction might be offered if your teen has completed an eligible driver-training course or is a full-time students and lives away from home.

In addition, if you benefit from group sponsor rates, your teen might also get that discount. Similarly, if you are a member of an employer group, your discount may be extended to your teen even if they own their own vehicle.

For more ideas on how to save, see sidebar.

Keep premiums reasonable

“New drivers will benefit by understanding the impact good driving habits have on their insurance premiums,” advises Michelle Luneau. Here are three things to tell your teen about the cost of insurance:

  1. Tickets, insurance claims and licensing changes may increase the premiums you pay.
  2. If you should have an at-fault accident, it will take some time — usually years — to restore your driving record.
  3. Reducing your mileage and driving safely to avoid accidents may help decrease the premiums you pay over time.

Finally, remember that there is no one-size-fits-all strategy for getting the right coverage and best rate for your teen driver. Speak to your insurance company for advice that fits your family’s situation.

Special thanks to Neil Warren, Associate Product Manager, TD Insurance; and Caroline Meilleur, Manager, Rating and Classification, TD Insurance.