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Insuring a young driver on your automobile insurance can be very expensive if you don’t know a few of the tricks.

For those of you just finding out, this may cost you upwards of $150 – $200 per month even with standard big name carriers.

There are a few things you can do to minimize the cost of adding a young driver to your policy.

The number one mistake you can make is buying your young driver a new or nearly new car.

Not only is this going to cost you more in insurance than it will in a car payment, but the chances of this new vehicle going unblemished are low with a young driver behind the wheel.

The best way to keep your insurance cost down would be to purchase a safe, older, high-mileage vehicle and carry liability-only insurance.

Think about this… with an older vehicle that costs only $3,000, you can afford to carry liability-only auto insurance. This allows you to save on the insurance premiums you otherwise would be paying.

For example, it is very realistic for you to save over $100/mo by having your young driver on a vehicle with liability-only coverage. After two years, you have nearly saved enough in insurance premiums to replace the car should it be completely totaled.

Additionally, if your child is a good student and enrolled in high school or college, they will likely receive a good student discount on their auto insurance. This can be huge and usually only requires a copy of their report card!

Also, if your young driver has taken a defensive driving course, the certificate of completion will likely give them a defensive driver discount on their coverage as well

The one mistake you must not make is failing to carry sufficient liability limits on your automobile insurance. Remember you can and will be held liable for what your child does behind the wheel of your car. You may encounter a situation where you child was not the one at fault but you are still held responsible for the actions of the other passenger in your vehicle.

Ask your insurance provider what he/she recommends for liability limits. The state minimums are not sufficient!

In Tennessee, for example, the minimum coverage for property damage (damage you cause to other vehicles) is $25,000. It wouldn’t take much to have a multi-car accident on the interstate and surpass this limit.

Increasing your liability limits usually only costs a few extra dollars per month.

You may also want to ask your insurance agent about an umbrella policy. An umbrella is an excess liability policy that kicks in in the event that you exhaust your liability limits on your home or auto coverage. I believe my umbrella policy costs me about $25 per month.

Take a few moments to review your coverage with your insurance agent or carrier. It may save you some money and play an even bigger role if you have a serious liability issue down the road.