Teen Driving Safety: How to Explain Insurance to Your Teen

October 16, 2019

No matter what age your children are, understanding auto insurance is crucial for success in their financial futures. It’s especially important for teenagers to have a firm grasp on how car insurance works as they grow into their independence. Car insurance is a great place to start when it comes to explaining these concepts to your children. Most teenagers are eager to drive and, to do so, they need to get insured. This is an ideal time to walk them through what car insurance is, how they get it, and some terms they should understand in case they get in an accident.

Car insurance explained

Your teenager likely has a basic understanding of car insurance already. They know you need it to drive, and that it covers you in case of an accident. There are many ways to teach your kids about car insurance, but our suggestion is to try and relate it to one of their hobbies.

For example, when explaining car insurance for teenagers, you may want to talk about their high school sports team or their savings account, if they have one.

Start by describing insurance as a rainy-day fund. You put away money in case something goes wrong, but rather than monitoring that money yourself, you give it to an insurance company in exchange for coverage if something happens.

It’s like being part of a team. A car insurance company will take some of that money customers have paid in order to help someone who has gotten into an accident.

Getting covered

Once they have a deeper understanding of how the process works, it can be helpful to set expectations. Whether you plan to purchase teen car insurance for your kid or if they will need to purchase a policy themselves, it is a good practice to let your child know your plans.

For example, if you’re already covering their insurance and have added your teenager to your own policy, you may want to let them know when they will be expected to purchase their own insurance.

Insurance terms made Easy

Once you’ve covered basic expectations, it’s useful to go over some of the insurance terms they may hear or read. We know insurance jargon isn’t the easiest to explain, so here are some quick simplified definitions.

1. Premium – A premium is essentially what an insurance payment is called. This is the price you will pay for coverage.
   
2. Collision – In insurance, collision typically means contact between property, other vehicles, other animals or people, and your car. Usually, collision coverage protects you and your vehicle in some way regardless of fault. This isn’t always the case though, so it’s important to read the details in your policy.
   
3. Liability – When you have liability coverage, it means you have coverage in case your vehicle damages another person’s property. If you have liability insurance and hit someone’s car, your insurance will help handle the cost to make it right.
   
4. Claim – If you get into an accident, you’ll probably need to report it to get help with the cost of repairs to your vehicle, other property, or medical bills. To get assistance, you send a formal request to your insurance for coverage. This is known as a claim.
   
5. Adjuster – Say someone accidentally backs into your car and scuffs your bumper. You’re not sure how much it’s going to cost to fix. An adjuster will look at pictures or visit your vehicle to check out the damage and assess how much money you need to fix it.

We know there’s a lot to think about when it comes to purchasing affordable car insurance for teens and educating them on what they need to know and expect. We hope this helps you take on the challenge so your teen can enjoy the road ahead.