Kids grow up fast, don’t they? It seems like only yesterday you were strapping your children into their car seats, and all of a sudden they’ve grown into teenagers who want to borrow the keys to your car — or get their own. Before you can let them get behind the wheel of any vehicle, there are important matters to sort out first, like car insurance.
Ahead of giving up the driver’s seat, you need to understand how insurance works for new drivers — and how much it will cost. If you already have insurance for the family car, should you just add a new teen driver to your policy? Or do they need their own?
One thing’s for sure: Insuring a new driver is going cost more money.
What You Should Know About Car Insurance for Teens
It’s likely been a while since any parents of a new teen driver learned to drive themselves. And if your own parents covered you under their policy, you probably never found out how much first-time driver insurance costs. So, here are the keys to understanding auto insurance for teenagers.
Insuring a teen will drive up your costs
Insurance companies see teen drivers as riskier to cover — and they’re not wrong. A March 2021 analysis of U.S. Department of Transportation data by the Insurance Institute for Highway Safety and the Highway Loss Data Institute shows that, per mile driven, drivers ages 16 to 19 are nearly three times more likely to have a fatal car crash than drivers age 20 and older. Parents can take some comfort in knowing that teens are much safer on the road now than they used to be, with the fatal crash rate for teen drivers having fallen more than 70% from 1975 to 2019. But there’s no getting around the fact that car insurance for teens is more expensive than it is for adults.
Male teens tend to be more expensive to cover
Roughly 2 in 3 teens killed in car accidents in 2019 were male, according to the IIHS and HLDI analysis. The report also found that male teen drivers in fatal crashes were more likely than female teen drivers to have a higher blood alcohol level. Similarly, the Governors Highway Safety Association reported that, from 2015 to 2019, 36% of all fatal accidents involving male teen drivers were speeding-related, compared with 28% of fatal crashes involving female teen drivers. Because young male drivers are more likely to engage in risky behaviors and get into an accident, insurance companies will generally charge more to cover them.
The rules vary depending on your state and insurer
State requirements differ on how and when you must insure a new teen driver. Teens with a learner’s permit may be covered under their parents’ policy in some states, and many insurance companies will insure teens with a learner’s permit on their parents’ policy at no additional charge. However, that might not be the case with your policy, so be sure to check with your insurer before letting your teen drive.
Once your teen has a driver’s license, all states will require them to be formally insured before they can get behind the wheel. Contact your insurance company before your teen driver gets a learner’s permit to make sure they’re properly insured from the start under your state’s laws.
The type of car you’re insuring will make a difference
In general, it’s more expensive to insure newer cars because their price tags are higher and they’re costlier to repair than used ones. So, if you’re planning to buy a brand-new car for your teen, be prepared for the insurance to cost more than it would for an older vehicle. Also keep in mind that a more practical car — like a minivan, sedan, or SUV — will likely be less expensive to insure than, say, a sports car, which may tempt new drivers to speed.
If you’re insuring multiple vehicles, pay attention to which driver is assigned to each car. Some insurance companies assign the most expensive car to insure to the driver who’s the most expensive to insure, according to the Insurance Information Institute. Have your teen assigned to the least valuable car, if possible, to save money.
How To Add a Teenager To Your Car Insurance Policy
If it’s your first time adding a driver to your auto insurance policy, then you may be unclear where — and when — to start. Here are some important steps to ensure your teen has the coverage they need:
- Start preparing before your teen gets a learner’s permit. Call your auto insurance provider to find out when your teen will need insurance in your state. In some places, teenagers must be insured when they get their learner’s permit, while in other areas, teen drivers only need insurance once they’re licensed. An agent will also walk you through how much it costs to add your teen to your policy.
- Shop around for the best deal. It’s possible that another insurer can do better than your current company’s offer. Before committing to any change in your policy, compare quotes from other insurance companies to make sure you’re getting the coverage you want for a reasonable price.
- Ask about auto insurance discounts and bundles. The squeaky wheel gets the grease! Sometimes you miss out on discounts if you don’t ask, so be sure to inquire about multiple vehicle and good student discounts for your teen driver.
- Consider raising your liability limits. When you first bought your auto insurance policy, you may have opted for one with a cheaper premium and lower liability limits. However, this means how much your insurer will pay in the event of a claim might be low — perhaps the bare minimum required by law. Teen drivers don’t have the experience needed to avoid an expensive accident that could expose their families to a big financial hit, so it may be worth buying more coverage.
- Sign the official paperwork. Once you’ve decided which insurer has the right policy at the best price, reach out and speak with an agent to officially add your teenager to your policy.
How Much Car Insurance for New Drivers Costs
Adding a teen driver to your existing auto insurance policy can cause your rate to increase anywhere from 50% to 100%, according to the Insurance Information Institute. However, your exact cost will depend on a number of factors, including where you live, the car that your teen is driving, how much coverage you buy, and whether you add your teen to your policy or get them their own.
While adding a teenager to your policy may sound expensive, it’s usually cheaper than getting separate insurance for them. Additionally, your premium should decrease over time as your teen driver gains more experience behind the wheel — and keeps out of trouble on the road.
6 Tips To Save Money On Car Insurance for Teenage Drivers
Covering your teenage driver will cost more, but there are ways you can minimize the increase. Here are six tips to help you save on insurance.
1. Keep an eye out for student driver discounts
While it’s generally more expensive to insure young drivers, many insurance companies offer student discounts. For example, Allstate, Geico, and State Farm all offer a discount to younger drivers who maintain good grades, though the exact academic requirements vary by insurer. Farmers, Liberty Mutual, and Progressive also offer a discount for students who are away at school and therefore putting minimal miles on the insured vehicles.
2. Bundle different insurance policies under the same insurer
Many companies offer discount car insurance if you bundle your auto policy with another type of insurance. So, if you have homeowners insurance or life insurance, then purchasing these different policies from the same insurance company may help you save money.
3. Get rewarded for safe driving
Some insurance companies have programs that can save you money and encourage your teen to develop safe driving habits early on. For example, State Farm’s Drive Safe & Save app and Progressive’s Snapshot program use technology that collects information from your teen’s smartphone to track how safely they’re driving. State Farm’s app, in particular, monitors factors like how quickly they’re accelerating, how hard they’re braking, and how fast they’re driving.
4. Be open to switching insurance providers each year
Adding a teen to your auto insurance policy can increase your premiums significantly — but the size of the increase depends on the provider. To ensure you’re continuing to receive a competitive price, be sure to compare auto insurance providers and get different quotes that include teen drivers before your policy automatically renews each year.
5. Raise your deductible
To make your auto insurance payments more affordable, consider raising your policy’s deductible, which is the amount you would pay out of pocket before insurance starts paying for a claim. Typically, higher deductibles lower your premium.
6. Delay handing over the car keys to your teen
Just because your teen is old enough to get their license doesn’t mean that they need to start driving right away. Parents can save money by having their teens hold off on driving until they’re a couple of years older. By that point, teens may also be able to help pay for their coverage.
Teen Driver FAQ
Here are the answers to some frequently asked questions you may still have about insuring your teen driver.
Any teen regularly driving a car needs to have insurance. Even if your family car is covered under your existing auto policy, your teen’s name must be on the policy if they’re going to drive that car.
Liability coverage pays for repairs or medical bills if you’re at fault in an accident that results in property damage or bodily injury. Collision insurance covers any damage to your car caused by an accident with another vehicle or object, while comprehensive insurance pays to repair or replace your vehicle if it’s stolen or damaged in other types of incidents, like vandalism or getting hit by falling objects.
Since teens are new drivers, they’re more likely to make a mistake. Whether they accidentally rear-end another car, back into a lamppost, or sideswipe a mailbox, you’ll want to make sure you have adequate insurance to cover the cost of the damage. However, if your teen’s car is an old clunker that has depreciated considerably, it may not be worth repairing or replacing after an accident — making collision and comprehensive insurance unnecessary.
While it’s possible for teens to get insured on their own, it’s rarely cheaper than having their parents add them to an existing policy. If your auto insurance rate is low, it’s likely because you have a clean driving record and a good credit history. Your teen doesn’t have the same track record yet, but they can benefit from your credit and driving history by joining your policy. Also, don’t forget that many insurers offer multicar discounts for insuring more than one vehicle.
Here’s an easy way to figure out whether you need to add your teen to your car insurance policy:
• If your child is licensed and driving your car, then they need to be added to your policy. All drivers must have liability coverage to operate any vehicle.
• If your child is unlicensed or not actively driving, then they don’t need to be on your policy yet.
Although car insurance rates for teenage drivers are typically high, the good news is that they will decrease over time as your teen becomes a more experienced driver. For example, Progressive’s rates drop by 13%, on average, when a driver turns 19 and an additional 7% at age 21.
Minivans, sedans, and SUVs often have the best car insurance rates for teenage drivers, according to Nationwide. If you’re buying a car for your teen to drive, it can also be more cost-effective to go with a used vehicle. Generally, used cars are cheaper to insure because they cost less to repair.
“The best starter cars for new drivers are vehicles that cost less to repair and have more safety features,” says Joseph Sanzo, a property and casualty insurance specialist at Barnum Benefit Advisors in Shelton, Connecticut. “This doesn’t necessarily equate to age, but more so expense. Insurance carriers rate vehicles on their cost to repair in the case of an accident, as well as how much damage they can cause in said accident. It’s good to talk to your insurance agent to have them look at different vehicles you might be thinking of for your new driver, as each carrier views each car a little differently.”
The Bottom Line on Cheap Car Insurance for Teens
When it’s time for your teen to start driving on their own, it’s perfectly normal to feel apprehensive — about both their safety on the road and the added insurance cost. While it’s true that first-time insurance for young drivers is expensive, you can minimize the financial damage by shopping around and asking for discounts. Remember that the spike in your premiums won’t last forever, and it’s much better to pay for sufficient coverage than risk suffering a major financial blow should your teen get into a car accident without enough insurance.
