Insurers' Take On Teen Driving: Costly Lessons For Parents

Auto insurance for teens is expensive, with rates almost doubling when a teen is added to a parent's policy. The average cost of adding a teen to a parent's car insurance is $278 a month, with the average cost of car insurance for a teen driver being $532 a month for their own policy. The cost of insuring a teen driver varies depending on factors such as age, gender, driving history, and the type of vehicle they drive. Female teens are charged less for car insurance as they have lower crash rates than their male peers. The cheapest car insurance for teens is available through companies such as Travelers, Geico, and USAA.

Adding a teen to a parent's policy

Adding a teen driver to a parent's insurance policy is almost always more cost-effective than taking out a separate policy for the teen. While it will still increase the cost of the policy, it is a more affordable option.

When to add a teen to a parent's policy

There is no standard rule on when to add a teen to a parent's insurance policy. It depends on state laws and insurer-specific rules. Some insurance companies require teens to be added to a parent's policy when they get their permit, while others will wait until they have a full license. It is important to contact your insurance company to find out when you need to add a teen driver.

Cost of adding a teen to a parent's policy

Adding a teen driver to a parent's policy can increase the cost of the policy by 50% to 150%. The exact cost will depend on various factors, including the teen's age, gender, driving history, and the type of vehicle they are driving. On average, it costs $3,594 per year to add a teenager to a parent's policy.

Ways to save on the cost of adding a teen to a parent's policy

There are several ways to save money on the cost of adding a teen driver to a parent's policy:

• Good student discounts: Many insurance companies offer discounts for teens who maintain a certain grade point average, typically a GPA of 3.0 or higher.
• Safe driver discounts: Teens who complete an approved driving education course or display good driving behaviour through a telematics program may be eligible for discounts.
• Student-away discounts: If the teen driver is away at college and not using the car, some insurance companies will offer a discount.
• Multi-vehicle discounts: Adding another car to the policy may make the teen driver eligible for a multi-vehicle discount.
• Choosing the right car: Insuring a safe car with more safety features can help lower insurance costs.
• Comparison shopping: Comparing rates from different insurance companies can help parents find the most affordable option for adding a teen driver to their policy.

Teen driver discounts

Adding a teen driver to your insurance policy can be expensive, but there are several ways to save money. Here are some teen driver discounts to consider:

Good Student Discount

Full-time students who maintain good grades are often eligible for discounts on car insurance. For instance, Allstate offers a good student discount to unmarried drivers under 25 years of age with at least a B- average. State Farm offers up to 25% savings for students with good grades, up to age 25 or their last year of school. The required grade is usually a "B" average (3.0-grade point average) or higher, and the student must typically be under 25 years old. This discount can average 16% and may last until the student turns 25.

Safe Driving Discounts

Many insurance companies offer discounts for safe driving habits. These may include taking a driver's education course, a defensive driving course, or enrolling in a safe driving program. For example, Geico, State Farm, Allstate, and Travelers offer premium discounts upon completion of required driver safety training courses. Progressive also has a Snapshot® program that rewards good drivers based on their driving behaviour.

Distant Student Discount

If your teen driver moves away to college and leaves their car behind, they may be eligible for a lower rate or a distant student discount. This discount is usually applicable if the student is a certain distance away from home, typically 100 miles or more.

Multi-Vehicle Family Plans

If your teen has their own car, you may be able to get a better rate by adding their car to your existing policy and taking advantage of multi-vehicle discounts.

Usage-Based Insurance

Usage-based insurance (UBI) programs use telematics devices or apps to monitor driving habits. If your teen is a safe driver, this can lead to significant savings. Some companies offer discounts for safe driving patterns, while others may increase rates if poor driving habits are detected.

Choosing the Right Car

The make and model of your vehicle can impact insurance rates. Older, used vehicles with high safety ratings may get you better insurance rates. Insurance companies may offer discounts for newer cars, vehicles with anti-theft devices, airbags, and anti-lock brakes.

Increasing Your Deductible

You can also lower your premium by increasing your deductible. However, this means you will have higher out-of-pocket expenses if an accident occurs.

Insurance for teens with their own policy

Teens are typically unable to buy their own car insurance policy until they are 18 or 19 years old. Those who are 16 or 17 years old are usually not allowed to purchase their own car insurance because they are too young to legally enter into a binding contract. However, there are some exceptions. For example, a 17-year-old can get their own insurance policy if a guardian or parent co-signs, or if they are an emancipated minor.

The cost of a separate car insurance policy for teen drivers can be expensive because they have a greater tendency to drive distracted, speed, tailgate, and not wear a seatbelt. The average cost of teen car insurance, however, will vary based on the exact age of the driver, their ZIP code, driving history, and vehicle type. The average annual rate for 17-year-olds getting their own policies is $5,524 for a full-coverage policy.

Standalone policies for teen drivers are typically much more expensive than adding a teen to an existing car insurance policy. The average cost to add a teenager to your car insurance policy is $3,594 per year.

Ways to Save on Teen Car Insurance

• Choose an affordable car: Auto insurance is based on the driver and the vehicle they'll be driving. Certain vehicles are more expensive to insure than others. For example, convertibles, sports cars, and newer vehicles will be more expensive to insure than used, modestly priced economy cars.
• Review coverage and deductibles: Choosing higher deductibles on comprehensive and collision damage can help lower your premium. However, be sure that you're comfortable paying the deductible if your teen gets into an accident.
• Shop around for coverage: Prices vary among insurers, so you don't need to settle for what your current insurer offers. Shop around with various providers to find the best deal.
• Good student discount: Teens can save on average $283 if they maintain a GPA of 3.0 or higher and provide transcripts every six months.
• Defensive driver/safe driving discount: Young drivers who have taken a professional driving course are less likely to get into an accident or receive a citation, both of which can raise your premium.
• Driving tracking program discounts: Insurers may offer a mobile app or plug-in device that tracks your teen's driving and offers discounts for good driving habits and/or less driving overall.

Cheapest insurance for teens

Overview

Car insurance for teens is generally more expensive than it is for older, more experienced drivers. This is because teens are considered to be a greater risk, with drivers aged 16-19 having the highest rate of accidents of any age group in the US.

The cost of insuring a teen driver varies depending on the insurance company, the type of vehicle, the amount of coverage, and other factors. However, there are ways to get cheaper insurance for teens.

Cheapest Insurance Companies for Teens

According to The Zebra, USAA ($320/month) and State Farm ($394/month) offer the cheapest average car insurance for teens aged 16-19. Erie Insurance ($211/month) is also rated highly, although it is only available in 12 states. Progressive is another good option, offering the cheapest insurance for teens out of six major insurance companies analysed by Investopedia.

MarketWatch recommends Erie Insurance, Auto-Owners Insurance, USAA, and Geico as the cheapest options for teens.

Ways to Save Money on Teen Insurance

• Add your teen to your policy: It is usually much cheaper to add a teen to your existing policy than for them to have their own policy.
• Shop around: Compare quotes from different insurance providers to find the best deal.
• Choose a safe and moderately priced car: Opt for a used car with high safety ratings.
• Get discounts: Many insurance companies offer discounts for good students, safe driving, multi-vehicle policies, and more.
• Review coverage and deductibles: Choose higher deductibles to lower your premium, but make sure you can afford to pay the deductible if your teen gets into an accident.
• Enroll in a telematics program: These programs monitor your teen's driving habits and can provide discounts for safe driving.

Teen insurance rates will decrease incrementally each year of safe driving, usually until the driver turns 25.

Insurance costs by state

The cost of auto insurance for teens varies across the United States. The average cost of car insurance for teens in the US is $5,340 per year, or $445 per month. However, this figure varies by state, with insurance costs for teens ranging from $126 per month in Hawaii to $884 per month in Connecticut.

In some states, insurers are not permitted to use age or gender when determining insurance rates. These states include California, Hawaii, Massachusetts, Montana, Pennsylvania, North Carolina, and Michigan. In states where insurers can use age and gender, younger and male drivers tend to pay more for insurance. This is because younger drivers are less experienced and more prone to accidents, while male drivers have higher accident and violation rates.

Connecticut

Connecticut is one of the most expensive states for teen car insurance. The average cost of full coverage for a 16-year-old in Connecticut is $6,226 per year, or $519 per month.

Louisiana

Louisiana is another state with high insurance costs for teens. The average cost of full coverage for a 16-year-old in Louisiana is $5,989 per year, or $499 per month.

Nevada

Nevada is also among the most expensive states for teen car insurance. The average cost of full coverage for a 16-year-old in Nevada is $5,669 per year, or $472 per month.

New York

New York has high insurance costs for teens, especially for minimum coverage. The average cost of minimum coverage for a 16-year-old in New York is $433 per month.

District of Columbia

The District of Columbia has relatively high insurance costs for teens, with an average cost of full coverage for a 16-year-old of $5,192 per year, or $433 per month.

Hawaii

Hawaii has the lowest insurance costs for teens in the country. The average cost of car insurance for teens in Hawaii is $126 per month.

Other States

Other states with relatively low insurance costs for teens include North Carolina, Virginia, Indiana, and Wisconsin. In these states, the average cost of car insurance for teens ranges from $300 to $400 per month.

Frequently asked questions