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Your Finance: Cutting teen-driver costs

Passing a driver's exam is a rite of

Passing a driver's exam is a rite of passage for many teenagers, but it can be a sizable expense for parents. Credit: AP / National Safety Council / Allstate Foundation

Passing a driver's exam is a rite of passage for many teenagers, but it can be a sizable expense for parents.

Driver education courses, higher insurance premiums, increased fuel costs, the occasional fender-bender and locksmith visits can really add up, especially if children aren't sharing the costs.

According to, the national average premium increase after adding a 16- to 19-year-old driver to your car's insurance policy is 84 percent. (Premiums rise 99 percent if you have a 16-year-old and 65 percent at age 19.) It is also a lot pricier to insure a teen male than a female -- typically a 96 percent premium increase for a boy and 72 percent for a girl.

The high cost of insurance may be why so many teens these days don't get a license at 16. While plenty do still get theirs at the earliest chance, the majority do not, according to numerous surveys.

There are ways to bring down costs however, starting with insurance rates:

'Graded' discounts. Many insurers offer discounts on rates, generally between 15 percent and 35 percent, if students maintain a "B" average in school. You'll need to have your school send a letter proving the grades or send your insurer or agent a report card. Just remember to do it every year before renewal.

Driving courses help, too. Some insurers will also lower rates by 10 percent to 15 percent, in addition to the good-grades discount, if students go through the insurer's approved driver education course. Putting a teen behind the wheel of an inexpensive car can also help cut costs. Prices range from $150 to $800 for classroom and driving time.

Let them use your wheels. Your costs will be lower if your teen isn't driving his own car but yours. Peter Keenan, a financial executive in Evanston, Ill., made himself the official owner of a 1995 Jeep he bought for his son -- a car that cost just $1,500 and "had over a billion miles on it" -- and cut the monthly premium in half.

Safety comes first. Talk to your teen about driving safely. If you sense he feels invincible to injury, maybe he'll pay attention when you tell him about the costs of being pulled over by a cop. "From a financial standpoint, the parents are on the hook whether they just pay the fine or whether they contest the ticket," says Michelle C.F. Derrico, a criminal defense attorney in Roanoke, Va. Paying lawyer fees, court costs and enrollment in a driver improvement program could run to more than $500, Derrico says.

Spring for roadside assistance. Finally, here's a tip from Peter Keenan, a financial executive and father in Evanston, Ill.: Pay for a membership to a motor club to neutralize the cost of a locksmith when keys -- inevitably -- get locked in the car.

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