How to Buy Car Insurance for a Teen
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Having a teen driver on the road increases the risk to all other drivers, but especially to the teen drivers themselves. Per mile driven, teen drivers ages 16-19 are nearly three times as likely as drivers 20 or older to be in a fatal crash.
That scary statistic from the Centers for Disease Control and Prevention helps point out why auto insurance is so expensive for a teenage driver. The risk is high, and insurance companies often charge higher car insurance rates to take on the added risk of insuring young drivers.
Teen drivers add from 50 to 100% to the cost of a family’s auto insurance coverage, according to the Insurance Information Institute. A couple paying $2,000 a year for auto insurance can see that cost double to $4,000 annually by adding a teen driver.
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Buying car insurance for a teen
Buying car insurance for a teen isn’t difficult, but some steps are worth taking the time to do because they’ll save you and your teen money.
Some of the best car insurance companies offer good student discounts for students with good grades, who pass a driver training course or have their driving monitored by a small device placed in the car.
Other discounts are also available, though the biggest way families can save is by adding their child to their insurance policy instead of having the teen buy their own policy. Insurance premiums can also drop by reducing coverage levels for teen drivers.
We’ll go over those and other ways to save money on auto insurance premiums, along with reviews of the best car insurance companies. But first, it’s important to understand how much it can cost.
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How much does it cost?
Young drivers pay about $169 more per month, on average, than their older, more experienced counterparts, according to our analysis. That adds up to $2,028 more annually.
Costs decrease as teens age, with a 16-year-old driver paying about $41 more each month than an 18-year-old driver. A 19-year-old driver pays almost half as much as a 16-year-old does.
Based on teens with a clean driving record, the analysis found these monthly insurance costs:
Age | Monthly cost |
16 | $210 |
17 | $195 |
18 | $169 |
19 | $116 |
Add to parents’ policy
A teen driver will cost more to insure either with their own policy or be added to their parent's auto insurance policy. A separate policy can cost twice as much as a joint policy, though parents may rest easier if their teenager has his or her own policy.
Sharing the family car and adding a teen to a family policy will likely be cheaper than a teen getting auto insurance on their own as a new driver and adding another vehicle to be insured.
A teen added to their parent's policy can qualify for discounts they may not get otherwise, such as a multi-policy discount for bundling.
Parents should check their state laws about adding teen drivers to their policy. Some states require everyone in a home with a driver’s license to be on the parents’ policy, partly because they’ll have access to mom and dad’s cars. If a teen has their own policy, some states allow them to be excluded from a family policy.
Most auto insurance policies cover teen drivers in their parents’ cars even if the teen isn’t on the policy themselves. Teens must have the parent’s consent to drive the vehicle for any claims to be covered.
Children under age 18 can’t sign a contract, so a parent will have to sign off on a separate auto insurance policy if the child goes that route.
For young drivers who live on their own, pay their own expenses, and drive a car they own, insurers may require them to have their own policy.
Discounts for teens
A car insurance policy is meant to be changed from time to time with discounts that you qualify for. Good drivers with no accidents and good driving habits pay less than those who don’t.
Similar discounts are available to young drivers. Ask your insurance agent or look for them in price quotes when shopping for a new policy. Here are some to ask about:
Good student
Maintain at least a B grade point average and many insurers will offer a discount of up to 25%. Good grades are seen as a sign of maturity and responsibility, which can translate into good driving habits.
Driving course
A driver training course that teaches good driving habits and basic driver’s education rules can lower rates too, sometimes by up to 10%. Check with the insurance company what type of driver training is required. Some may want a defensive driving course to be taken.
Safe driving
It’s never too early to be a safe driver. Adult drivers can earn a safe driving discount by not having accidents or points on their driving record for years. Teen drivers can speed up the process by adding telematics to their cars to monitor how they drive. Speeding too often or hitting the brakes hard and you may see your insurance rate rise while driving within the speed limit and not getting into accidents can lower rates.
Student away at school
College students who don’t live at home and only drive their cars home when visiting may qualify for a student away discount. They’ll put fewer miles on their cars and thus reduce their risk of accidents.
College students may also qualify for insurance discounts by attending a school at least 100 miles from home and not bringing their car to campus.
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Other ways to save
Parents should ask their insurer about other possible discounts that may make sense when adding a teen driver to a family policy. They include:
Drive a safe, cheap car
If a new young driver lives in your home, the insurance company will assume they have access to all of your cars. You may, however, be able to only permit them to drive the cheapest car you own, and hopefully one with the most safety features.
Minivans usually have the lowest insurance rates because they’re safe cars. Your teen may cringe from driving the family minivan, it’s probably cheaper to insure them to drive it than your new Lexus.
State Farm offers a 40% savings on medical payments coverage for vehicles made in 1994 or later. It offers the same discount for 1993 and older vehicles equipped with an airbag or other passive restraint system.
Accident forgiveness
Accident forgiveness is a policy feature that keeps rates from rising if someone on your policy gets in a crash. Be sure to ask if it covers your young driver.
No comp or collision coverage
If your vehicle isn’t worth more than $4,000 or you don’t lease or finance it, then you may not need comprehensive or collision coverage. Full coverage can be a waste of money if your car isn’t worth much.
Raise your deductible
A higher deductible can lower a car insurance premium. The average deductible is $500. Increasing it to $1,000 may get you a big enough discount to buy more insurance in one key area that we detail next.
Increase liability insurance
To help you sleep at night, and to fully protect yourself from lawsuits, you may want to go beyond the minimum liability insurance requirements in your state. Buy extra liability insurance — using the money you saved by raising your deductible — in case your teen is found negligent in an accident and the accident exceeds your insurance limits.
You could be sued in court for the amounts not covered by your insurance if your teen causes an accident, such as hitting another car and injuring someone.
Shop for new auto insurance
It’s worthwhile to shop for insurance every year when your policy renews. Adding another driver is also a good time to shop for a better policy. Compare a separate policy for your child versus adding them to your family policy.
Also ask which discounts your teen qualifies for, and compare them to other insurance companies.
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Best car insurance companies for teens
Before your child gets a learner’s permit, it’s worth looking into how much it will cost to insure them. Here are some car insurance companies that can make it easier for parents with teenage drivers:
Allstate
Allstate has some of the best prices for teen drivers. It’s one of the largest insurers in the country, offering all kinds of coverage and many discounts. Allstate offers college students a 20% for having a B average, and a 20% discount for attending college at least 100 miles from home and not having a car with them.
State Farm
State Farm is well known for handling claims well, scoring high in the J.D. Power Auto Insurance Claims Satisfaction Survey. It also offers teen discounts such as up to 25% off for having good grades.
Nationwide
Nationwide has one of the best accident forgiveness programs among insurance companies, which can be a big help to young drivers.
Most companies don’t extend accident forgiveness to additional drivers or those younger than 18. Nationwide does both. This optional feature ensures a teen’s insurance rates won’t go up after the first at-fault auto accident. Without it, premiums can go up 30% or more after an accident.
Progressive
Progressive uses a name-your-price tool to help drivers of all ages get the most insurance coverage based on how much they want to spend. Good drivers can save the most at Progressive. Go three years without accidents or violations and you can earn up to 30% off the annual premium, compared to a 10-20% savings at other insurers.
Geico
Geico has many discounts for teens: good driving, good grades, and for completing an approved driver training course.
It also offers discounts to fraternity, sorority, and honor society members, among other organizations. Alumni associations, colleges, universities, and student organization discounts are also available.
Average premiums
Here are the average monthly car insurance premiums based on a 17-year-old female driver with a spotless driving record:
Insurer | Average monthly premium |
Allstate | $142 |
State Farm | $142 |
Nationwide | $178 |
Progressive | $144 |
Geico | $154 |
Your roadmap to saving!
- Get free auto quotes.
- Enjoy full coverage.
- Work with top brands.
Costs
We’ve provided examples of the average costs of auto insurance for teens, along with ways to save, but here’s a synopsis:
Auto insurance costs
On average, young drivers pay $169 more per month for auto insurance.
Ways to avoid extra costs
- Safe driver: Being a safe driver and not getting into accidents or getting speeding tickets or having other infractions on your driving record can lead to a 10-20% discount from insurers.
- Good student: Maintain a B average and save up to 25%.
- Driver training course: 10-15% savings for passing a defensive driver course.
- Student away at school: Go to college at least 100 miles from home and only drive when visiting parents for a 15-30% savings.
- Older, safe car: Save 40% on medical payments coverage for owning a 1994 or later car, or have an older car with airbags and other passive restraint systems.
- Accident forgiveness: Your first accident won’t raise your insurance rates, which can double after causing an accident.
- No comp, collision: If you don’t lease or finance your car and it’s worth $4,000 or less, you can save by dropping comprehensive and collision coverage. Nationally, the average cost for collision is $363 per year, and comprehensive costs $160 on average, according to the NAIC.
- Higher deductible: Raising your car insurance deductible from $500 to $1,000 can save you an average of 8-10%.
Pros/Cons
Pros
- Independence. One of the biggest advantages of buying auto insurance for a teen is that it allows them to drive and gain independence. That’s good for parents and teens. Your insurance costs may double, even if you add them to a family policy and only allow them to use the family car, but it will help them learn a skill that they’ll need for most of their lives.
- Plenty of discounts. If your teen maintains a B average in school, doesn’t drive while away at college, and takes a defensive driving course, they can help you save 25% on adding them to your policy. As they get older and drive without accidents or tickets, the savings should increase. Mom and dad can also save with simple coverage changes that they might want to do on their own anyway.
- Comparison shopping. There are a lot of auto insurance companies, and many offer discounts to teen drivers. Getting a teen’s business can lead to a lifetime of renewed insurance policies, so insurers can be competitive on price. Shop for the best coverage and prices, and you may find a better deal than what you have with your existing policy.
Cons
- Expensive. There’s no getting around the fact that adding a teen to an auto insurance policy is expensive. Your annual premium can easily double in cost. Everyone may be better off if they use the local bus system, and wait until they’ve graduated from college to drive regularly.
- Risk of accidents. Teen drivers are nearly three times as likely as drivers 20 or older to be in a fatal crash. That stat may be enough to turn parents and teens away from driving. Insurance companies know teens are the most dangerous drivers on the road, and charge more to cover that risk. Wait until they hit their early 20s, and that risk falls.
- Using a car at school is expensive. Without the 15-30% discount for not driving a car while away at college, students (and their parents) can face a higher cost for a student who needs a car while in college. They may need it to get around town, drive home, or commute to a part-time job. Instead, they may want to try out public transportation and riding a bike. Both are skills worth learning to save money throughout their lives, or at least until after graduation.
The bottom line
Just having a learner’s permit requires having auto insurance, so don’t think that a 16-year-old doesn’t need insurance when learning how to drive. Insurers charge high rates because of the increased risk of young drivers being more likely to get into accidents.
To help avoid such sticker shock on your insurance premium, there are many ways that families can save on auto insurance. Getting good grades and proving you’re a good driver are just some of the ways to show responsibility as a teenager, and are a big step in becoming a responsible adult.
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Writer
Aaron Crowe is a freelance journalist who specializes in personal finance writing and editing. He has worked at newspapers, where he won a Pulitzer Prize, and has written for numerous online publications. These include AOL, US News & World Report, WiseBread, Bankrate, AARP, and many websites focusing on housing, credit and insurance. He lives in California with his wife and daughter.
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