How Much Is Car Insurance for Teens?

Why Is Car Insurance for Teens So Expensive?

Teenage drivers have less experience, which makes them at high risk for auto accidents and traffic violations. New drivers with limited driving experience are statistically more likely to cause accidents at a far higher rate than older drivers.

According to the Centers for Disease Control and Prevention (CDC), motor vehicle crashes are a leading cause of death for children and teens. Additionally, the Insurance Institute for Highway Safety (IIHS) reports that teen drivers are involved in four times as many auto accidents than when compared to drivers older than 20.

Insurance companies consider several factors when setting rates for drivers. Age is just one consideration, and teens are subject to other factors as well, including:

• Marital status.
• Gender.
• Education.
• Credit score.
• Type of vehicle.
• ZIP code.

Teens tend to be single without a college degree and haven’t established a credit history. All of these factors lead to higher auto insurance rates for young adults. Even gender can influence how much a teen driver pays for insurance.

Males pay slightly more than females for auto insurance policies. While the difference between insurance rates by gender is minimal for adults, it’s much higher for teenage boys than for female teen drivers.

Average Cost of Car Insurance for Teens

The average cost of a car insurance policy for two parents and a 16-year-old driver is $5,367 per year or $447 per month, according to information from Forbes Advisor. These rates reflect the average car insurance bill for teen drivers with full coverage. Insurance rates on minimum coverage may be less.

On average, car insurance for teens costs significantly more than for any other age group, including seniors. Of course, many factors go into calculating the average cost of car insurance for teen drivers besides their ages. The average cost of car insurance for teen drivers is also the highest when they purchase their own policy, about $8,108 for a 16-year-old female and $9,422 for a 16-year-old male, according to Forbes Advisor.

In most cases, it’s better to put a teen driver on a parent’s policy. Since those younger than 18 can’t legally own any property in most states, simply getting a car to drive will require an adult to co-sign the purchase. Putting teens on their insurance policy is typically more straightforward and affordable with the parents already involved than getting their own policy.

While you can add a teen driver to your policy, you typically can’t insure a vehicle not in your name. Teen drivers who want to purchase an auto insurance policy must own a car in their name. Most states also require an insurance policy before driving a new car.

However, it’s important to note that you’ll likely notice your car insurance premium increase by adding a 16- or 17-year-old to your current policy. The rate difference may be minimal if you have a lengthy history with the insurance company or qualify for available discounts.

Best Car Insurance Providers for Teen Drivers

The cost of a teen driver policy largely depends on which insurance company you choose. Most car insurance companies measure the contributing factors differently, so the average costs for a policy can vary quite a bit. While teens will still be more costly to cover with any insurer, the differences can impact your overall costs.

Here are a few of the top car insurance companies to consider with a teen driver (16-year-old) on a policy with two parents, according to Forbes Advisor:

• Travelers: Average annual cost of $5,065.
• USAA: Average annual cost of $4,103.
• Geico: Average annual cost of $4,471.
• State Farm: Average annual cost of $5,034.
• Progressive: Average annual cost of $5,088.
• Erie: Average annual cost of $4,059.
• Nationwide: Average annual cost of $4,502.

Of course, the actual rate you receive will depend on your age, driving record, level of insurance coverage, and whether or not you qualify for any discounts. Comparing a few car insurance companies to find the best rates for your teenage driver may be a good idea.

How to Save on Car Insurance for Teens

Given the high cost of car insurance for teens, it’s best to do whatever you can to decrease the costs as much as possible. Teens can get discounts on insurance policies in several ways.

You can reduce your teen’s auto insurance rates with the following tips:

• Maintain good grades: Many insurance companies offer good student discounts, at an average of 7%, for students with good grades. This requirement usually means maintaining a B average overall. Some car insurance companies also extend good grade discounts to college students.
• Complete a defensive driving course: Taking a defensive driving course alone could lead to 10% discounts on car insurance costs. Defensive driving can significantly reduce the risk of an accident. Additional driver’s education distinct from a defensive driving course could also earn a discount.
• Ask for an Away Student Discount: Discounts are often available for college students who attend school away from home. That alone could warrant a discount between 5% and 10%.
• Drive a cheap and safe car: The more expensive a vehicle is, the more costly it’ll be to replace and insure. Cars with high safety ratings and numerous driver assistance safety features will be more affordable to insure since these features can help lessen the occurrence of an accident. These vehicles are among the best for teens.
• Be a good driver: Teen drivers don’t have any driving history, but keeping a clean record can lead to future discounts. Most car insurance companies offer a safe driver discount to someone free of accidents or traffic tickets.
• Compare quotes: One of the essential strategies for decreasing auto insurance costs is to compare quotes. Get quotes from various insurers before signing off on any policy, ensuring you get a great deal. You can request insurance quotes online or work with an insurance agent to find more available insurance products.
• Review quotes each year: As your teenagers earn more driving experience, the auto insurance policy rates they receive should decrease. Continue comparing and reviewing quotes with each renewal year. The cheapest provider for your 16-year-old may no longer be the cheapest option for your 17-year-old driver.

With these policies and factors in mind, you can find an insurance policy for a teen that’s as affordable as possible. Remember, even if you do take advantage of every discount for which you qualify, it’s likely that car insurance for a teen will still be significantly higher than it is for an adult driver.

Serious deductions will occur once the driver is 25 years old and only if the individual maintains a good driving record. Insurance rates will increase again around age 65, but even then, it will be at a different level of increase than it is for drivers ages 16 to 19. Always compare quotes and shop around before finalizing any teen car insurance policy.

Helping your teens understand the rules of the road can also help keep them safe while preventing increased insurance rates. The National Highway Traffic Safety Administration (NHTSA) recommends educating teenagers about the risks of drinking and driving, distracted driving, and proper seat belt use.

How to Choose the Best Insurance for Teen Drivers

You may have a lot of auto insurance companies to choose from when it comes to purchasing teen coverage. It’s important to remember that cheap car insurance is not always the best option. You also want to ensure your teenager’s safety. The cheapest car insurance you find may not offer the best coverage.

Choosing an insurance provider that offers discounts can help keep your family policy rates affordable. Some insurance providers, for example, offer accident forgiveness programs, which may be beneficial if your teenager gets into an accident during the first few years of driving. Maintaining your clean driving record can also help control insurance costs for the whole family.

How Much Insurance Does a Teenager Need?

The cheapest insurance premiums for teens are typically minimum coverage, which means they meet state requirements. However, you may need to go beyond these policies to protect your young adult drivers, especially if they’re involved in an expensive car accident.

Available insurance types include:

• Liability coverage: Liability insurance is a requirement in most states. This policy includes bodily injury and property damage insurance, which helps cover costs related to an at-fault accident.
• Full coverage: A full coverage insurance policy includes comprehensive and collision coverage. This policy typically offers the highest coverage available, which means it carries the highest premiums. Full coverage may not be necessary if your teenager is driving an older vehicle and doesn’t have an auto loan.
• Uninsured and underinsured motorist coverage: This coverage protects your teenager if your teen gets involved in an accident with another driver who doesn’t have sufficient insurance.
• Medical payments: Medical payment coverage applies to a driver and passengers if they sustain injuries in a motor vehicle accident. It does not cover anyone in other vehicles involved in the accident.
• Personal injury protection (PIP): PIP insurance is state-specific and helps cover medical expenses after an accident.

The best way to choose an insurance policy for a higher-risk teenager is to compare prices and coverage among providers. Full coverage is the most expensive policy but may have additional benefits like roadside assistance and rental car coverage that may or may not be necessary for your family.

At a minimum, your teenager should carry a policy that meets state laws. Maintaining a clean driving record is the cheapest way to control car insurance rates for teenagers. The value of the car you’re driving also matters.

If your teen buys a new vehicle, the lender may require your teenager to carry full coverage. Additionally, a full coverage policy can be beneficial if your teenager drives an expensive car. Comprehensive coverage protects your teen from non-driving-related costs, like theft or damage from natural disasters.

The answer to the “How much is car insurance for teens?” question depends on the driver and insurance provider, but you can expect a higher rate. Teenagers are inexperienced drivers who carry a much higher risk than other drivers. Fortunately, you can reduce the average cost of teen auto insurance.

Discounts and maintaining a clean driving record can help control costs. Teen drivers should also notice a decrease after earning more experience, which can then qualify them for more affordable rates.

Insurance Editor

Steve Glass is a retired insurance professional with over 34 years of experience in the Property & Casualty insurance industry.  Over the course of his career he led teams that handled Homeowners and Commercial property and casualty claims, Auto Medical claims, Auto Bodily Injury Claims, Catastrophe claims and Insurance Subrogation recovery efforts. He also has experience as an Insurance Subrogation Arbitrator.