Insuring a Car for a Teenager

I've got a teenager who is an exemplary student, highly responsible and so forth, who's been told that he will be provided with a used car. He has scanned the Kelley Blue Book and discovered that some of the earlier BMW Z3s fall into our price range. They apparently have a good safety record, crash test results and would actually cost less to insure than some other so-called more-conservative cars I would like to consider. I just can't get rid of the nagging feeling that buying a car like that for the use of an almost 17-year-old is nuts!

Your son is actually right: The BMW Z3 is surprisingly inexpensive to insure for a sportscar. State Farm grades cars on their relative insurance costs in three categories, and the 2001 BMW Z3 earns the top rating in two categories and the second-highest score in the third.

The BMW Z3 gets an A for State Farm's damage and theft index grade, which means that its collision and comprehensive premiums are significantly lower than average for vehicles in its price range (up to 40% less). The car also gets the top liability rating index score, which means that its premiums for bodily injury and property damage liability are also significantly lower than average. The car also receives a 30% vehicle safety discount (40% is the highest possible), which is the discount for medical payments or personal injury protection coverage based on the cost of claims involving injury to the people inside the insured car.

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You can look up State Farm's vehicle insurance ratings for 2003 to 2006 model years at the company's Vehicle Ratings page. You'll need to contact an agent to get the premium ratings for older cars. You can search for a State Farm agent in your area at State Farm's Web site.

These ratings are based on State Farm's claims experience and may be different for other companies. To compare premiums from other insurers, run the numbers through an insurance quote site such as InsWeb.com or Insure.com or find an independent agent in your area at the Independent Insurance Agents & Brokers of America Web site.

You also can look up a car's crash test results at the Insurance Institute for Highway Safety Web site. It's a great idea to check out safety ratings before buying your teenager a car. Not only will you feel more comfortable knowing your son is safe, but also anything you can do to lower the insurance costs for a teenage driver can make a big difference.

Keep in mind that those collision and comprehensive premium grades for the BMW Z3 are low compared with other cars within its price range. But because the BMW costs more than an ordinary sedan, the actual premiums for that part of the coverage may be a bit higher (the liability and medical payments premiums, however, are in relation to the cost of the car).

The absolutely least expensive cars to insure are much less cool. Insure.com ranked the insurance costs for the 20 best-selling cars and small trucks for the 2005 and 2006 model years and found the Chrysler Town & Country Minivan to have the lowest insurance costs, followed by the Chevrolet Cobalt, Dodge Caravan and the Chevrolet Impala. You can see the full list at Insure.com.

For other tips on lowering your auto insurance costs, see the Smart Shopper's Guide to Auto Insurance and Tune Up Your Auto Policy. Also see my column about 5 Ways to Prune Premiums for Teen Drivers.