Play Dough
Car Insurance

Few things strike terror in the hearts of parents more than the phrase "I passed!" as their child races away from the driver's test area at their local Department of Motor Vehicles.

From heavy petting in the back seat to drunk driving to totalling your new Acura, the messes that your son or daughter can now perpetrate are endless. And no one knows this better than your insurance company.

Of all the things that can make your auto insurance expensive, adding a teenage driver is surely at the top of the list. Luckily, there are a few ways to keep your costs slightly less than "outrageous" as well as teach your teen some lessons in finance too.

To begin with, have your kids take a driver's education class. Not only will they learn how to drive (which means you don't have to teach them), but most insurance companies offer a discount to drivers who have completed such classes. As long as they're studying, make them study a bit harder. Honor roll students generally get breaks in insurance premiums too.

Recently one of our favorite Family Fool message board posters, RecoveringFool, told us how she is handling insurance for her newly minted driver daughter:

My oldest got her license yesterday so this is a topic on
my mind and I thought I would try to start a discussion.
Here's how we're handling the car/insurance issue. She has
the oldest car to drive (this is not her car nor will we ever give
her a car -- this has been made clear to all the kids), a 91
Subaru wagon with 130,000 miles. We are paying all costs
of her driving, except gas and oil changes. She has to have
$500 (our insurance deductible) in the bank at all times. Here's
my thinking -- I NEED her to be able to drive because of her
activities, job and needs of her younger siblings. The $500 was
to encourage savings and for her to have a stake in her driving.

What a great idea!

Then DrBear offered this advice:

Have your daughter DO the oil changes and other light routine
maintenance on the car. It will save her a few bucks and provides
an invaluable education.

And JenS said:

You're smart to be teaching your daughter early that there's a
lot more to owning/operating a car than filling the gas tank. I
agree that other basic tasks ought to be part of the education,
such as learning to check/change the oil and other fluids, and
knowing how to change a tire.

And RecoveringFool replied:

She already knows how to check the oil (a necessity with a
car that age). I will be going over the finer points of tire changing
(my father required a demonstration of such skills for me to get
my license). As for oil changing, we'll see. I can do it but I may
opt to point out the coupons as opposed to teaching the skill. It's
a competitive market here so it can be as low as $8.95. She seems
to still be able to save money on anything so there may be a
lesson there, too. Although not financial, it did occur to me to point
out to my daughter that even if she knows how to change a tire
there are situations that she should just wait for help -- say, on the
interstate with the flat on the traffic side of the car.

It's clear that being able to drive offers a wealth of opportunities to teach your child about responsibility and weighing the value of a dollar. Is it more advantageous to shop around for the best deal or for your child to learn to do it herself? How about both! Girls can learn to get dirty and the guys can learn to shop. What they pick after they learn both options will obviously be their choice, but learning how to make the best choice is a valuable and Foolish lesson all by itself.

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