Watching a teenager get behind the wheel of a car for the first time can be both exciting and nerve-wracking. Seeing the price of teenage drivers insurance is probably the latter. But why are young drivers so expensive to insure?
In this article, we at the Home Media reviews team will examine the coverage needs of teenage drivers and what factors influence the price of an auto insurance policy. Our research team has thoroughly reviewed providers to find the best car insurance companies, so we’ll also give our recommendations for coverage.
What Is Car Insurance for Teenagers?
While you may have heard the terms “teenage drivers insurance” or “teen car insurance,” there’s technically no type of car insurance policy exclusive to teenagers. Whether a driver is a 16-year-old or a 96-year-old, they’ll need to meet a state’s minimum requirements for liability insurance. If the car is being financed, a lienholder will likely require collision insurance and comprehensive coverage as well.
What’s the Best Auto Insurance for Teenage Drivers?
Determining the most appropriate level of coverage for teenage-drivers requires a knowledge of the basic coverage levels for auto insurance. The sections below contain basic information about each of the main coverage types:
Liability Insurance for Teenage Drivers
If you’re buying coverage for a teen driver or helping a new driver purchase their own policy, it’s helpful to know the different types of insurance. Almost every state requires some form of liability car insurance, which covers damages for others when a driver is at fault. Here are the main parts of liability coverage:
- Bodily injury (BI) liability: This covers lost wages, medical bills and other expenses for someone who’s injured when you’re at fault for an accident.
- Property damage liability: This covers damage to someone else’s property — such as a vehicle — when you’re at fault for an accident.
The minimum level of liability coverage varies from state to state. For example, motorists in North Carolina are expected to carry 30/60/25 coverage, which means a policy would pay up to $30,000 per person for bodily injury, $60,000 per accident for bodily injury and $25,000 per accident for property damages.
Collision Auto Insurance for Teenagers
Collision insurance protects your vehicle in the event of a collision, no matter who’s at fault. Though collision coverage isn’t required by state law, a lender will likely require it if you’re financing a vehicle since it protects the investment.
Collision coverage will reimburse you for damage to your car and give you a payout up to the actual cash value (ACV) of the vehicle if it’s deemed a total loss. However, collision insurance doesn’t cover damage in non-moving situations.
Here are some situations that would involve filing a collision insurance claim:
- Hitting a guardrail
- Colliding with another vehicle
- Getting damage from a road hazard like a pothole
Comprehensive Car Insurance for Teen Drivers
Comprehensive insurance is another common requirement for drivers financing a vehicle. Unlike collision insurance, it’s geared more toward non-driving scenarios.
Comprehensive coverage will reimburse you for damages in the event of:
- Collision with an animal
- Damage from the environment (flood, hail, fire), tree sap)
- Damage from falling objects
- Theft or vandalism
Other Car Insurance Coverage Levels for Teens
Other types of insurance policies include:
- Gap insurance: This will pay the remainder of an auto loan if a vehicle’s ACV payout is insufficient.
- Medical payments (MedPay): This covers medical bills from the driver or other passengers.
- Uninsured/underinsured motorist (UM/UIM) coverage: This provides additional financial protection if you’re in a wreck where the driver who’s at fault is uninsured or doesn’t have enough insurance to cover damages.
How Much Is Car Insurance for Teens?
According to our full coverage rate estimates, teenage car insurance averages $5,827 per year or $486 per month. Rates are higher for teenage drivers compared to other age groups for several reasons, which we’ll explore further below.
Teenage Car Insurance Rates vs. Other Age Groups
Here’s how car insurance for teenage drivers stacks up against other age groups:
What Affects Car Insurance Costs for New Drivers?
As we mentioned above, age and driving records impact the price of insurance, but insurers weigh other factors as well. Local insurance minimums impact the price, and so do traits like the recorded gender on the driver’s license in most states.
Here’s a list of items insurance providers review while estimating premiums:
- Vehicle make and model
- Driving history
- Credit score (in most states)
- Coverage limits
- Deductible amounts
Why Are Teens More Expensive To Insure?
Teenage drivers’ insurance costs more for several reasons. Insurance providers look at factors like age and driving experience when deciding insurance premiums, and being younger with little or no behind-the-wheel experience leads to higher car insurance rates.
That’s because data shows younger, inexperienced drivers are usually more likely to be involved in serious accidents. In the United States, car crashes are the second leading cause of death among teens, according to the Centers for Disease Control and Prevention (CDC). The CDC also states that the risk for crashes is highest during the first months teens have their driver’s licenses.
A report from the Insurance Institute for Highway Safety (IIHS) said over 2,300 teens between the ages of 13 and 19 were killed in motor vehicle crashes in 2019. The IIHS showed young males accounted for about two out of three teenagers killed in car crashes. Per mile driven, teen drivers aged 16 to 19 have crash rates almost three times higher than drivers aged 20 and older, according to the IIHS.
Do Teenage Drivers Need Car Insurance?
Drivers should make sure their insurance policies provide adequate financial protection, but increasing coverage limits for teens can be a good idea since they’re more likely to be in crashes.
Why Purchasing Enough Liability Coverage Is Important
Buying the state-required minimum of liability coverage isn’t enough to protect you from lawsuits, and sometimes it’s not enough to cover an accident, according to the Insurance Information Institute (III).
If a state only requires $50,000 in bodily injury per accident and a driver causes $70,000 worth of medical bills, they’re on the hook for the remaining balance. Depending on the value of your assets, it may be worth increasing coverage to $100,000 or more. This can help ensure a greater peace of mind when it comes to your teen’s driving habits.
You Should Also Consider Accident Forgiveness
Accident forgiveness keeps your insurance rate the same after the first at-fault accident on your policy. The “forgiveness” varies by state and insurer, and a policyholder usually has to be claim free for a number of years to be eligible or pay to add it to their policy.
Because some insurance companies include accident forgiveness for free and others offer it as an inexpensive add-on, it could save you money overall if your young driver has an at-fault car accident. This type of insurance isn’t available from every provider.
Lastly, if a car is still being financed, you’ll likely need to maintain comprehensive coverage and collision insurance until the loan is paid off — regardless of who is driving.
How To Save on Auto Insurance for Teens
Even though teen drivers typically pay more for insurance coverage, there are a few options for lowering insurance costs. You should discuss how much the policy costs with your teen. This is also an opportunity to reinforce good driving habits and compare car insurance quotes to get the best rate.
Stay on a Parent’s Policy
Adding a teen to an existing policy is typically less expensive than a young driver buying their own coverage, according to the III. Having an experienced driver as the policyholder will help them qualify for a better rate and may give you a greater choice of discounts. That said, adding a teen still means a bump in your insurance premium.
Look for Discounts
One way to offset the price hike that follows a young driver is with discounts. Insurance providers offer several ways to reduce car insurance costs based on customers’ demographics or the types of vehicles they own.
Here are some common car insurance discounts:
- Good student: Good grades could mean savings, as students who maintain at least a B average might get a discount on coverage.
- Student away: If a student is away at college and rarely drives, you might get a discount.
- Driver’s education: Some insurance providers offer discounts for taking driver training courses.
- Defensive driving course: Enrolling in a defensive driving course may qualify you for a discount.
- Safe driver: Insurance providers sometimes offer lower prices to customers who have good driving habits and remain claim free for a number of years.
- Multi-car: Having multiple vehicles on a single policy might get you a discount.
- Multi-policy: You can save by bundling different types of insurance policies (such as homeowners and auto) with one company.
- Safety features: Having features like air bags and anti-theft systems may qualify you for savings.
Choose a Higher Deductible
A deductible is the amount of money a policyholder pays up front for a claim before insurance coverage takes over. Having a low deductible means paying less money when you file a claim, but it usually comes with a higher insurance premium.
While raising your deductible can decrease your premium, keep in mind that filing a claim will be more likely if you have a teen on your policy.
Teenage Car Insurance: Conclusion
Young drivers can expect to pay significantly more for car insurance coverage. Because teen drivers lack the necessary experience on the road and are more likely to get in car accidents, insurance providers will always charge higher rates.
While overall costs may be high, there are still several ways you can reduce teenage car insurance costs, such as being aware of discount opportunities, comparing provider quotes and taking part in app-based safe driving programs.
What’s the Best Insurance for First-time Drivers?
Insuring a teenage driver can be a balancing act between price and the quality of coverage. Our insurance experts recommend getting auto insurance quotes from several companies and looking at comparisons like State Farm vs. Geico to see which providers meet your coverage needs.
Our Recommendations for Car Insurance
We’ve identified State Farm and Geico as smart choices for young drivers. You can read more about them below.
State Farm Auto Insurance: Most Popular Provider
State Farm earns our top spot for student coverage due to its discounts and A++ financial strength rating from AM Best. Students can get 25% off their policy with the good student discount, as long as they who have a GPA of at least 3.0 or rank in the top 20% of their class. State Farm also rewards customers of all ages with discounts for good driving and anti-theft devices.
In terms of cost, we give State Farm 9.0 out of 10.0 stars. The company also has solid reviews for customer service. In the J.D. Power 2022 U.S. Insurance Shopping Study℠, State Farm scored first place in overall customer satisfaction for large insurance companies.
Keep reading: State Farm review
Geico Auto Insurance: Editor’s Choice
Geico has built a reputation around keeping costs low, and the Better Business Bureau (BBB) gives it an A+ rating for customer service. According to the National Association of Insurance Commissioners (NAIC), Geico was the country’s second-largest car insurance company in 2021.
Similar to State Farm, Geico offers discounts for good driving and good grades. The Geico Mobile app also offers an easy way to view policy information or file a claim.
Keep reading: Geico insurance review
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Cost (30% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
- Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Reputation (15% of total score): Our research team considered market share, ratings from industry experts and years in business when giving this score.
- Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
- Customer Experience (15% of total score): This score is based on volume of complaints reported by the NAIC and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
*Data accurate at time of publication.