Finding A Safe Car For Your Teen

Buying a teen-ager's first car is a rite of passage for both teen and parent. And no matter who puts down the dough for this investment, there are some facts you need first.

Financial advisor Ray Martin gives some pointers on The Early Show.

Maritn says safety is the top priority when buying a car.

According to the National Highway Traffic Safety Administration (NHTSA), auto crashes are the leading cause of death for people age 15 to 20. Although this age group only makes up 6.8 percent of all drivers on the road, it is involved in 14 percent of all fatal crashes.

Martin advises that you look for dual airbags, anti-lock brakes and large "crumple zones."

You can buy a good, safe car that teens actually want to drive for under $7,200, he says.

Marketing research firm Teenage Research Unlimited list the following cars as desirable cars by teens:

• 1997 Honda Accord 4DR, $7,150
  
• 1997 Mitsubishi Eclipse, $5,595
  
• 1997 Pontiac Grand Am 2DR, $4,635
  
• 1997 Dodge Neon 4DR, $3,075

Fortunately for parents' wallets and concerns, those cars are safe as well as affordable, according to Martin.

The Consumer Reports compiled its own list for top recommended used cars for teens.

This list is based upon used-car buying advice, and honed down by Consumer Reports' director of Auto Test facility, David Champion, with an eye to cars that provide a good mix of value, reliability, and safety.

The top cars recommended are:

• Acura Integra
  
• Honda Accord
  
• Honda Civic
  
• Nissan Altima
  
• Toyota Corolla
  
• Infiniti G20

Martin says it is a good time for parents to buy cars. In efforts to keep car sales high, manufacturers have been offering a zero-percent deals in the past year. Americans have responded by snapping up new cars, increasing the glut of used cars on the market and lowering their prices. Particularly good deals can be found on SUVs and small cars. Deals aren't as hot on popular imports like the Honda.

Once you've cleared the financial hurdle of buying a car, the next expensive consideration is insurance. Parents are often tempted to tack their teen-agers onto their current insurance as "occasional" drivers.

When you have a second or third car and a teen driver in the family, the insurance companies know that they are usually a principal driver, using the car more than occasionally. The insurance company can withhold collision claims and reduce payments for liability in order to recoup the premium differential that should have been paid if the teen was insured as a principal.

There is no question that car insurance is expensive, particularly when insuring a teen as a principal driver. However, there are ways to save money.

Car insurance is basically a bunch of small policies tied together. You and your teen can skip the following:

• Collision and Comprehensive: If you are buying a used car and the collision and comprehensive insurance premium equals or exceeds 10 percent of the car's book value, pass on this coverage.
  
• Personal Injury Protection: You do not need this for your teen if they are covered as a dependent under your health coverage.
  
• Roadside Assistance: Skip this add-on if your teen is a member of AAA (which according to Martin, is a must).
  
• Rental reimbursement - This is unnecessary if this is a second or third car in the family.

Parents often like to keep the title in their own name, but attorneys advise registering the car in the teen-ager's name. This way, you are not liable for your child's driving record.

Next, think about increasing your auto liability insurance. Most states require a minimum of between $50,000 and $100,000. Increase this amount to $250,000 per person and $500,000 per accident. This may increase your premiums by 10 percent but, because teen-agers have a much higher risk of getting in an accident than other drivers, it's worth the cost.

Finally, consider buying an umbrella liability insurance policy that basically picks up where your auto insurance leaves off. For as little as $200 to $400 a year, you can receive up to $2 million of additional protection. Even if the car is licensed to your child, you are still his guardian and could potentially be pulled into a lawsuit. After your child turns 18 and you are no longer considered his guardian, you can drop this coverage.