Auto Insurance For Your Child: What's The Cost?

Adding a child to your car insurance policy can be expensive, but it is usually cheaper than the child having their own policy. The average cost of adding a teen to a parent’s car insurance policy is $278 a month, while young drivers pay an average of $532 a month for their own car insurance. The exact cost depends on several factors, including the child's age, gender, and driving history, as well as the type of vehicle they drive and the amount of coverage the policy includes.

Adding a child to your insurance policy

When to Add Your Child to Your Insurance Policy

You should add your child to your insurance policy when they get their driver's license. However, it is recommended to notify your insurer when your child gets their learner's permit, as this will help to avoid any gaps in coverage once they obtain their license.

Legal Obligation

Adding your child to your insurance policy is typically a legal obligation. If your child lives with you and drives a vehicle registered to you or someone in your household, they must be insured. Most insurance providers require you to list all licensed drivers residing in your home on your policy. Driving without insurance is illegal in most states and can result in legal ramifications.

Benefits of Adding Your Child to Your Policy

Although adding a child to your policy will likely increase your premiums, there are several benefits:

• It is cheaper than your child taking out a standalone policy.
• It is more convenient than having them take out a separate policy.
• You may qualify for discounts, such as good student discounts or discounts for completing a driver's education program.

Costs of Adding a Child to Your Policy

There is no definitive age at which your child must get their own insurance policy. As long as they live with you and you have an insurable interest in the vehicle they drive, you can keep them on your policy. However, if your child gets married, has children, or becomes financially independent, it may be time for them to have their own policy.

Cost of a child having their own insurance policy

The cost of a child having their own auto insurance policy is significantly higher than being added to their parents' policy. On average, adding a child to a parent's insurance costs $2,718 each year, while a child's own policy would cost an average annual premium of $5,108. This represents a 47% increase in premium.

Getting a child their own insurance policy is not only more expensive but also challenging. Since minors cannot legally bind themselves to contracts, a parent or guardian would need to co-sign the policy.

While it is generally more cost-effective to add a child to a parent's policy, there are situations where a separate policy may be beneficial. For example, if a child has a bad driving record, getting their own policy can prevent their mistakes from affecting the entire family's insurance rates. Additionally, having their own policy allows teens to build their insurance history, potentially leading to lower rates in the future.

It is worth noting that the cost of insuring a child will decrease as they gain driving experience and maintain a good driving record. Parents can also take advantage of various discounts, such as good student discounts and student-away discounts, to lower insurance costs.

Discounts for young drivers

Insuring a young driver can be expensive, but there are several discounts available to help reduce the cost. Here are some ways to save on auto insurance for young drivers:

Good Student Discounts

Full-time students who maintain good grades may be eligible for a discount on their car insurance. For example, Allstate offers a good student discount to unmarried drivers under 25 years of age with at least a B- average. State Farm offers a similar discount of up to 25% for students with good grades up to the age of 25 or their last year of school. Homeschooled students may also qualify by submitting evidence of their performance on national standardized tests.

Safe Driving Courses

At-fault accidents on a young driver's record can significantly increase their insurance rates. Many insurance companies, including Geico, State Farm, Allstate, and Travelers, offer discounts to drivers who complete driver safety training courses. These courses teach young, inexperienced drivers the rules of the road and help them develop safe driving habits.

Distant Student Savings

If your child attends college away from home and leaves their car behind, they may be eligible for a lower insurance rate. Some companies offer a distant student discount, while others offer an "away-at-school" driver status that can decrease your premium. This option is usually available if your child is a certain distance away from home, typically 100 miles or more.

Usage-Based Insurance

If your teen drives a low number of miles each year, you may want to consider usage-based insurance. For example, Nationwide's SmartMiles program offers a pay-per-mile option, providing coverage with a premium that adjusts monthly based on the number of miles driven.

Type of Car

The make and model of your vehicle can significantly impact insurance rates. Conventional and used vehicles often have lower insurance costs than new, sporty models. Additionally, consider the safety features of the car, as some insurers offer discounts for vehicles with airbags, anti-lock brakes, and daytime running lights.

Telematics Programs

Telematics devices or apps monitor your teen's driving habits and can help you save on insurance. Some insurers offer discounts for customers who install these devices or apps, but be aware that rates could also increase if poor driving habits are detected. Examples of insurers offering telematics programs include Progressive, with their Snapshot program, and State Farm, with their Drive Safe & Save app.

Telematics insurance programs

There are two main types of telematics insurance programs: pay-as-you-drive and behaviour-based programs. Pay-as-you-drive programs base rates on the number of miles driven, while behaviour-based programs offer discounts for safe driving habits. Some examples of behaviour-based programs include Progressive's Snapshot, which tracks driving behaviour through an app or plug-in device, and Allstate's Drivewise, which provides feedback and discounts for safe driving.

Overall, telematics insurance programs can be a good option for safe drivers looking to save money on their insurance rates, but it is important to consider the potential drawbacks and choose a program that aligns with your driving habits and preferences.

State-specific insurance costs

The cost of auto insurance for a child varies depending on the state in which you live. Here is a breakdown of the average costs of adding a teenage driver to a parent's policy in different states:

Ohio

According to CarInsurance.com, adding a teenager to a parent's policy in Ohio will cost, on average, $4,050 for a 16-year-old, $3,740 for a 17-year-old, $3,478 for an 18-year-old, and $3,105 for a 19-year-old.

Illinois, Indiana, Maryland, New York, North Carolina, Ohio, Pennsylvania, Virginia, and West Virginia

These states allow or require insurance companies to list teens with driving permits on their parents' policies. This can impact the cost of insurance, even if the teen is not yet licensed to drive.

New York

New York has the highest average car insurance rates in the country. A full-coverage policy for a 35-year-old driver with good credit and a clean driving record costs, on average, $8,232 per year. The average cost of minimum coverage in New York is $2,490 per year.

Maine

Maine has the lowest average full-coverage car insurance rates in the country, with an average annual cost of $1,460.

Vermont

Vermont has the second-lowest full-coverage rates, with an average annual cost of $1,539, and the lowest minimum-liability rates, with an average annual cost of $366.

Wyoming

Wyoming has the second-lowest minimum-liability rates, with an average annual cost of $303.

Louisiana, Michigan, Pennsylvania, and Nevada

These states have the highest average full-coverage car insurance rates after New York.

Florida

Florida has the second-highest average minimum-liability rates, with an average annual cost of $1,605.

Other Factors Affecting Insurance Costs

In addition to state-specific rates, other factors can influence the cost of auto insurance for a child. These include the child's age, gender, driving history, type of vehicle, and amount of coverage. Insurance companies typically charge more for teen drivers because they are considered higher-risk. The cost of adding a teen driver to a parent's policy can increase the premium by 65% to 135%.

Frequently asked questions