Reuters Money

Teenagers eagerly await the day they can drive, but new rules of the road are forcing parents to make some tough financial decisions — including postponing their child’s driver’s license, a new survey finds.

The average household in the U.S. is paying almost $3,100 a year to allow their teen to drive, with an average of $800 going towards insurance, according to a poll by Nationwide Mutual Insurance Company. “Many families of teens are realizing that, as a result of the economic downturn, adjustments and sacrifices are necessary to help allow their teens to drive,” says Larry Thursby, vice president of auto product and pricing at Nationwide.

Of all the parental concerns associated with the costs of teen driving, auto insurance tops the list with 66 percent of parents listing it as the No.1 worry.

A little less than half (41 percent) of parents are paying all of the costs associated with teen driving, which is forcing them to make financial cutbacks in other areas such as entertainment (40 percent), eating out (38 percent) or vacations (35 percent) to allow their children to hit the road. And one in seven families say they will delay letting their teenager get behind the wheel due to the financial cost.

The survey also noted that the economic downturn has forced one-third of teens to seek employment to pay for their driving expenses.

To reduce the cost of insuring a teenage driver, experts suggest the following:

Add the teen driver to an existing policy. This allows the teen to potentially pick up discounts that the parent has already earned, essentially allowing them to piggy-back on their parents’ good driving record. Michael Barry, vice president of media relations at Insurance Information Institute, says this will not only help you save money now, but will help the teen later on. “This is probably one of the first steps you should take to save some money,” Barry says. “The key is having (the teen) build a track record. What the auto insurer is looking for down the road is has this person built a responsible record of driving.”

Encourage good grades. Most insurance companies offer discounts for students who maintain good grades. “The auto insurance industry is driven by predictive modeling and past performance. Insurers have come to the conclusion that a responsible student is also going to be a responsible driver,” says Barry. At Nationwide, any student who keeps a 3.0 grade point average, or better, receives an average discount of 15 percent, while Allstate offers up to a 20 percent discount for good grades. At State Farm, students who maintain at least a B average qualify for as much as a 25 percent discount.

Insist on some form of drivers’ education. This one is a no-brainer because not only will it reduce insurance costs, it should make your teen a safer driver. Talk to your insurance provider before signing-up for a course to make sure that it has the proper certification they are looking for.

Increase deductibles. Higher deductibles can greatly decrease your premiums, but they do come at a cost. If parents are willing to only use their insurance for big-ticket repairs, this is an option worth considering. ”It’s really about each customer and the risk they’re willing to take. But deductibles are one of the things that are under the driver’s control that have a huge influence on the cost of insurance,” Thursby says. It’s a judgment call that families have to make, but the savings are substantial the more you raise your deductible. “Step back and say at what level of loss are we going to file a claim and let’s work back from that number to see what our deductible should be,” Barry advises.

Do your homework. One of the biggest mistakes parents make in getting insurance coverage for their teen is not doing enough research. “There’s no lack of resources out there to get a quick handle on it. In most states, the marketplace is very competitive. There are companies that are vying for your business,”  Barry says. In addition to looking online, Thursby recommends taking the 15 extra minutes to speak to an insurance expert who may be privy to information that can not be found online. “Besides finding discounts, it’s making sure that you have the appropriate coverage. There are features that may not be apparent if you’re just sitting down at a computer screen or talking over an 800 number to get through a quote quickly,” he said.

Teen drivers have to remember to buckle-up, keep their eyes on the road and make sure their piggy bank is full because the freedom of driving now comes with a hefty price tag: one their parents may not be willing to pay for.