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As you may have already discovered, insuring a teenage driver can be very expensive. Drivers under the age of 25 pose the greatest risk to insurers because of their high level of at-fault accidents. Insurance companies seek to limit their exposure by charging higher insurance rates for 16- to 24-year-olds than for any other age group.

How expensive is it?
One option for insuring a teenage driver would be to add your teenagers to your existing auto insurance policy once they get their permanent driver's license. Although this can still be an expensive prospect, your teen might be able to take advantage of certain discounts as a driver on your policy (e.g., safe-driver and multiple-car discounts for which you are eligible).

If you drive an expensive vehicle, it will be even more costly to add your teen to your policy. In this case, you might want to buy a separate, less-expensive car and insure it in your child's name, rather than add them to your own policy. For some coverages, such as collision and comprehensive, less-expensive vehicles generally pose less risk to insurance companies, because repairs tend to be less expensive than repairs to newer models. Lower risk for the insurer typically translates into lower insurance premiums for you.

What are my options?
The only way to determine your most cost-effective option is to contact your insurance company and shop around with other companies while you're at it. If you're thinking about purchasing a used car for your teen, be prepared to tell your insurer the make, model, and year of the cars you're considering. This way you can receive accurate insurance quotes. These quotes can help you decide whether to purchase separate insurance for your teens or add them to your policy; they may also help you decide which car to purchase, if you go that route. So, get quotes for your teenager as an addition to your policy, as well as for a separate policy.

Be sure your teen is ready to hit the road
If your teens struggled in their Teen Driver Education course, equip them for success by enrolling in another Driver Improvement Course. Insurance discounts may be available immediately, but more importantly, you'll provide them with the skills to be a responsible driver.

Shop around
You should shop around for other car insurance companies by getting multiple quotes. You may find that it's less expensive to insure your household drivers with another company, even by several hundred dollars. And couldn't you use that savings for the college fund?