Auto Insurance: Adding Teens, Expecting Premiums

Adding a teenager to your auto insurance policy can be expensive, but it is usually cheaper than buying them an individual policy. The exact cost depends on several factors, including the type of vehicle, the driver's age, gender, and driving history, and the amount of coverage. According to CarInsurance.com, the average cost of adding a teenager to your policy is $3,594 per year, which can increase your rate from 65% to 135%. However, there are ways to save money, such as discounts for good grades and safe driving, as well as comparison shopping for the best rates.

Discounts for good grades

Adding teenagers to your auto insurance can be expensive, but there are ways to save money on your premium. One of the best ways to do this is to take advantage of a good student discount.

A good student discount is an auto insurance policy discount available to young drivers who earn good grades in school. Teen drivers are more likely to get into car accidents and commit traffic violations, which is why insurers tend to charge more to cover them. However, insurance companies assume that young drivers who are responsible when it comes to their studies are more likely to be responsible drivers.

Most insurers require students to have a B average or better, or be in the top 20% of their class, to earn a good student discount. To qualify, you must be a full-time student and usually under 25 years old. You will need to provide proof of your grades, such as a copy of your transcript or report card.

• State Farm offers up to a 25% discount on premiums to full-time students up to age 25 who earn good grades.
• GEICO offers up to 15% off certain coverages for full-time students who maintain a B average or better.
• Allstate offers around a 20% discount, the largest good student discount of the insurers mentioned.
• Amica offers discounts to full-time students who are under 25 years old, maintain a B average or higher, and do not take a car to college.
• Auto-Owners offers up to a 20% discount on car insurance for full-time students with a B average or better.
• Progressive offers an average discount of 10% for students with a B average or better.
• Nationwide has the highest savings for good students, with an average discount of 20%.

The good student discount is a great way for teens and their parents to save money on auto insurance. It is important to note that the availability of these discounts and the amount of savings may vary by state and insurance company. Be sure to check with your specific insurance provider to confirm their criteria and the details of their good student discount.

Gender differences in insurance costs

The cost of adding two teenagers to your auto insurance will depend on several factors, including the teenagers' ages, gender, driving history, and the state in which you live. While auto insurance is generally more expensive for males, the driver's age typically plays a larger role than gender.

Historically, men have paid more for car insurance than women because insurance companies view them as a higher risk. Data from the Insurance Institute for Highway Safety (IIHS) supports this position, showing that a significantly higher number of men die in car accidents each year, accounting for 72% of crash deaths in 2021. Males were also more likely to be involved in fatal crashes where speeding and alcohol use were contributing factors. According to the Centers for Disease Control and Prevention, fatal crash rates for boys aged 16-19 are three times as high as for females of the same age.

However, some states have banned the use of gender to set car insurance premiums, and others are pushing for insurance companies to be more inclusive of transgender and non-binary drivers. In these states, the difference in insurance costs for older male and female drivers is negligible.

While the practice of setting rates based on gender raises questions of discrimination, insurance companies argue that gender is an actuarially sound criterion for establishing premiums. They contend that certain characteristics, such as gender, can predict risk for groups of similar people, even if some individuals within the group are safer drivers.

The cost difference between teenage male and female drivers is significant, with males paying substantially more. On average, an 18-year-old male driver pays around $1,000 more per year than a female driver of the same age. This difference is due to teenage males showing a higher level of crash risk than their female counterparts. As drivers mature and gain more experience, the gender gap in insurance costs narrows. By age 25, rates for both genders are typically similar, and by the time males hit their 30s, their car insurance rates are usually on par with female rates.

It is worth noting that the specific insurance company and policy can also impact the cost difference between genders. For example, a study by PolicyGenius found that while male drivers under 25 pay significantly more than female drivers of the same age, this cost gap closes as drivers age. By age 30, average annual premiums for men are only slightly higher than those for women.

In summary, while auto insurance is generally more expensive for males, particularly teenagers, this difference tends to decrease with age. This is because younger male drivers are considered higher-risk by insurance companies due to their higher crash risk. However, as drivers gain experience and demonstrate safer driving habits, the gender gap in insurance costs narrows. Additionally, some states have moved towards eliminating gender as a factor in setting insurance premiums.

The cost of an independent policy for a teen

The cost of an independent insurance policy for a teen driver is generally very high. As such, it is much cheaper for teens to be insured on their parent's auto insurance policy. However, the cost of an independent policy for a teen will vary depending on several factors, including the type of vehicle they drive, their age, gender, and driving history.

The average cost of an independent policy for a teen driver is $413 per month for an 18-year-old female, according to CarInsurance.com. For a 16-year-old, the average cost is $250 per month, according to Investopedia research. The cost of an independent policy for a teen male driver is higher than for a female, with an average overall rate of $4,172 per year for teen boys and $2,712 per year for teen girls, according to Insurance.com.

The high cost of insuring teen drivers is due to their lack of driving experience, which puts them at a greater risk of getting into accidents. Drivers aged 16 to 19 have the highest rate of accidents among any age group in the United States, and as a result, auto insurers charge more to cover them.

While it is possible for a teen to get their own insurance policy, it is often not recommended due to the high costs involved. In most cases, it is more cost-effective for parents to add their teen drivers to their existing policies.

To save money on teen auto insurance, parents can compare quotes from different insurance providers and take advantage of discounts offered for young drivers. Common discounts include lower prices for college students living away from home, good student discounts, and driver training discounts. Additionally, parents can choose affordable cars for their teens, as certain vehicles are more expensive to insure than others.

How to save on insurance for teens

Adding a teenager to your car insurance policy can be expensive, but there are several ways to lower the cost. Here are some tips to help you save on insurance for teens:

Choose an Affordable Car:

Select a modestly priced, used economy car that is older rather than a new, expensive vehicle. Convertibles, sports cars, and newer cars are typically more costly to insure. Opting for a used car can save you around 13% on insurance. Additionally, look for cars with more safety features, as these can decrease insurance costs.

Review Coverage and Deductibles:

Consider adjusting your coverage and deductibles. Choose higher deductibles for comprehensive and collision damage coverage to lower your premium. Ensure that you are comfortable with the deductible amount in case your teen gets into an accident. You may also want to lower coverage amounts for physical damage on older vehicles if it is not required by a lienholder.

Shop Around for Insurance:

Prices vary significantly among insurers, so don't settle for the first quote you receive. Compare rates and discounts offered by different insurance providers to find the best deal for your teen. Remember that each insurer has its own criteria for setting rates, so shopping around can help you find the company that best matches your needs and budget.

Encourage Good Grades:

Many insurance companies offer good student discounts. Encourage your teen to maintain at least a B average or aim for the honor roll. Good grades can lead to discounts ranging from 5% to 25% on car insurance. This strategy can also be applied when your teen becomes a college student, potentially saving you more money.

Enroll in a Driver's Education Course:

Enrolling your teen in a driver's education course can help them become a safer driver and also save you money. Insurance companies often offer discounts for teens who have completed such programs. These courses are commonly offered for free or at a low cost, so be sure to take advantage of them.

Install Telematics Devices:

Consider installing telematics devices in your teen's car. These devices track driving habits such as braking, speed, distance travelled, and time of day. Insurance companies may offer discounts for safe driving behaviours, so allowing them to monitor your teen's driving can result in lower insurance costs.

Look for Other Discounts:

In addition to good student discounts, there are various other discounts you may be eligible for. These include bundle discounts, multi-vehicle discounts, safety discounts for vehicles with anti-theft devices or airbags, defensive driving course discounts, and student-away discounts if your teen goes to college without a car. Ask your insurance provider about all the discounts they offer and how your teen can qualify for them.

Teach Safe Driving Habits:

Model and encourage safe driving behaviours in your teen. This includes obeying speed limits, using turn signals, coming to a complete stop at stop signs, and avoiding accidents and moving violations. A clean driving record can help your teen secure lower insurance rates.

The best cars for teens

When choosing a car for a teen, safety is the number one priority. According to the United States Department of Transportation, teen car crashes are the leading cause of death for 15- to 18-year-olds in the U.S. Therefore, it is important to consider vehicles that feature modern safety systems.

• Toyota Corolla (sedan or hatchback): The Toyota Corolla is a reliable and safe choice for teens. It offers advanced safety features, such as automatic emergency braking, lane-keeping assist, and adaptive cruise control. The 2017 or newer models for the sedan and 2019 or newer for the hatchback are recommended.
• Honda Civic (sedan or hatchback): The Honda Civic is a stylish and fuel-efficient compact car. It has excellent safety ratings and is often recognised as a "Best Buy" by Kelley Blue Book. The 2017 or newer models are recommended.
• Mazda 3 (sedan or hatchback): The Mazda 3 is a safe and reliable choice, offering advanced safety features and good fuel economy. It has earned top safety ratings from organisations like the Insurance Institute for Highway Safety (IIHS). Look for 2014 or newer models.
• Subaru Impreza (sedan or wagon): The Subaru Impreza is a safe and reliable vehicle, with good ratings in crash tests. It offers all-wheel drive and is recommended for 2014 or newer models.
• Honda Accord (coupe or sedan): The Honda Accord is a spacious and well-built car. It has consistently been recognised as a safe vehicle by organisations like IIHS. Recommended models are 2017 or newer for the coupe and 2015 or newer for the sedan.
• Kia Seltos: The Kia Seltos is a subcompact SUV that offers a full suite of safety features, including forward collision warning and lane-keeping assist. It also provides ample passenger and cargo space.
• Subaru Crosstrek: The Subaru Crosstrek is a versatile and safe SUV, earning a Top Safety Pick rating from IIHS. It comes standard with all-wheel drive and has impressive fuel economy. The 2024 model is recommended.
• Hyundai Kona: The Hyundai Kona is a stylish and safe subcompact SUV. It offers advanced safety features and is recognised as a Top Safety Pick+ by IIHS. The 2024 model is a good choice.
• Chevrolet Trailblazer: The Chevrolet Trailblazer is a well-priced small SUV with advanced safety features, including forward collision warning and lane-keeping assist. The 2024 model is a recommended choice.
• Nissan Sentra: The Nissan Sentra offers a balance of sportiness and practicality. It has excellent fuel economy and comes standard with a full suite of safety features, making it a safe choice for teens. The 2024 model is worth considering.

When choosing a car for teens, it is important to prioritise safety, reliability, and affordability. These vehicles offer a good combination of these factors and can help provide peace of mind for both teens and their parents.

Frequently asked questions