If you have ever looked into car insurance for teenagers, you were likely shocked by the price you received on your quote. Teenagers are risky for car insurance companies to cover, so they have higher rates than most other demographics. When balancing the budget for a family, the high costs of insuring a teenager can really put a strain on the wallet. Keep reading to find out how to add a teen, student, or new driver to your insurance policy. You’ll also learn which auto insurance companies might be the best fit for your household and read about ways to keep insurance costs down as much as possible.
- Why Teens and Students Need Car Insurance
- Why Is Teen Car Insurance So Expensive
- How to Save on Car Insurance for Teens and Students
- Should Teens Get Their Own Car Insurance Policy
- How to Add a Teen to Your Car Insurance
When you have a newly-licensed driver in your household, it might be hard to understand why you need to get more car insurance, especially considering how much it costs. But it’s not just up to the insurance companies, it’s also the law. Teens and students need car insurance because everyone who drives needs car insurance. The amount and type of auto insurance coverage that you need depends largely on the state you live in and the minimums set by that state’s laws. The good news is that the laws that apply to you also apply to your teen, so you won’t be required to increase your coverage limits. However, you may want to check prices on extra liability coverage, which will give you better protection if your inexperienced teen driver causes a major accident.
Auto insurance is mandatory so that you’re covered if you’re hit by someone else, and if you hit someone, they’re covered. Insurance will reimburse you (or the other driver) for medical and injury costs, property damage (to the vehicles involved as well as other property damaged as the result of a crash), and other financial losses related to a crash. A full coverage car insurance policy also covers you from losses related to theft, vandalism, and other incidents like floods and fires. If you’re adding a vehicle to your policy for your teen to drive, that vehicle needs at a minimum all the protection required by your state. If your teen isn’t getting a vehicle of his or her own, but will be driving a vehicle owned by another member of your household and already covered by insurance, you’ll still need to add your teen to your policy. That is because insurance covers the driver as well as the vehicle, and the premiums change according to the risk posed by that driver.
From the perspective of your insurance company, every moment your vehicle is out on the road, it’s exposed to additional risk, and having a teen driver behind the wheel instead of an experienced adult makes the situation even more risky. If your newly-licensed teen driver was behind the wheel of your car during an incident and your insurance company was not aware that your teen would be driving, the consequences will be serious. You aren’t going to be covered for that incident, which means you’ll need to pay out of pocket or could be sued for any property damage or medical costs related to that incident. Furthermore, your auto insurance company could drop your coverage, which will make it more difficult and expensive for you to get car insurance from another company.
In short, it’s important to get car insurance for your teen or student driver as soon as it’s required by your insurance company. In most cases, that would be when your teen receives his or her driver’s license, though you should check with your insurance company to make sure you don’t need coverage for a teen driver with a learner’s permit. If your teen driver will not be permitted to drive any of the vehicles owned by your household, for whatever reason, you should discuss this situation with your insurance agent.
Car insurance is all about managing risk (you can learn more about how car insurance works here). Your insurance company customizes your insurance policy and the amount you pay by figuring out the likelihood that you’ll cause an accident or that your car will be damaged in some other way. When your car is being driven by an inexperienced teen, it’s more at risk of being involved in a crash than when it’s being driven by a driver in any other demographic group. When you see how much your rates are going to increase from adding a teen driver to your auto insurance policy, it might seem like you or your teen is being picked on or unfairly targeted, but that’s not the case.
Statistically speaking, teen drivers are the most dangerous out there, and until your teen demonstrates that he or she is responsible behind the wheel, your insurance company is going to charge you a lot of extra money to manage that considerable extra risk.
According to the Centers for Disease Control and Prevention (CDC), motor vehicle crashes are the leading cause of death for teens in the United States. In 2016, six teens between the ages of 16 and 19 died in a car crash every day. Furthermore, data from the CDC shows that drivers between the ages of 15 and 24 are responsible for 30 percent of the total costs of injuries from motor vehicle accidents for male drivers and 28 percent of the costs among female drivers, even though this age group is just 14 percent of the overall population. According to the California Department of Motor Vehicles, drivers between 16 and 19 have the highest average rates of crashes and traffic violations.
Data from the National Highway Traffic Safety Administration (NHTSA) breaks it down a bit further. In 2016, speeding was a factor in 32 percent of teen crash fatalities with male drivers, and 22 percent with female drivers. For drivers 25-34, speeding was a factor in 26 percent of fatal crashes with males, and 15 with females. As drivers age, the figures continues to drop, with speed as a contributing factor in only 7% of crashes involving male drivers over 75 years of age.
When a teenage driver has a teenage passenger, the driver is about two and a half times as likely to drive irresponsibly, and driving with multiple passengers increases that risk even more, to about three times. Seat belt use is also the lowest among teen drivers, according to NHTSA data, which increases the likelihood of a crash becoming fatal. All in all, teen drivers are about twice as likely to be involved in a fatal crash as adult drivers. All of these factors contribute to the likelihood of your teen being involved in a fatal crash, and it’s why auto insurance for teens is so expensive.
If your teen practices good driving habits, avoids tickets or moving violations, and doesn’t get into any accidents, your insurance costs will go down over time, but still, it takes years to establish a good driving record and a reputation for being a responsible driver.
When it’s time to buy auto insurance for your teen driver, you’ll almost certainly qualify for discounts, but you’ll have to do your research and ask your insurance agent for help if necessary. We’ll go over the common discounts for teens and take a look at the discounts offered by each of the car insurance companies we’ve ranked.
Good student discounts are probably the most commonly advertised for this age group. You may be able to save between 5 and 25 percent for maintaining good grades, usually defined as a B average or better. You should also look into discounts for approved driver training or defensive driving courses, which may come with a discount of 5 percent or more.
If your teen is a member of the military, your household should qualify for USAA membership, and with it, the most affordable insurance rates in the industry. However, most other insurance companies offer military discounts, which you should ask about if you qualify.
Over time, if your teen maintains a clean record, he or she may be eligible for a good driver discount, but this typically takes at least three years and could be more, depending on the insurance company.
If your teen is getting his or her own vehicle, you should be eligible for a multi-vehicle discount. Other discounts include those for low mileage, if your teen drives his or her own vehicle less than 10,000 miles per year. You may also qualify for a family plan discount, sometimes offered to parents with unmarried children 21 years old or younger in the household.
Some insurance companies offer tracking or monitoring programs, but there are tradeoffs involved. The programs work by tracking driving with a device installed in the vehicle or a smartphone app, and if the insurance company likes what they see, it may qualify for a discount, generally between 5 and 45 percent. On the flip side, you’re handing lots of personal data over to the insurance company to do with as they please (where you go, how often, and so on), and the company is not actually obligated to provide a discount in exchange for participation. In fact, they can even raise rates if they think the data shows risky behavior.
Now let’s break it down by company. Some companies may offer specific details about the amounts of certain discounts, while others may not.
USAA Car Insurance Discounts for Teens
If you qualify for USAA membership, your teen may be eligible for discounts for being a good student or a member of the military, or for completing an approved defensive driving course or extra driver training. A safe driver discount for maintaining a good driving record is available, as is a discount if he or she drives a new vehicle. Other discounts apply if your teenager drives a low number of miles each year, or if the vehicle is stored while he or she is away at college. Furthermore, you may receive discounts for staying with USAA for multiple years, or for having multiple insurance policies with the company.
Geico Car Insurance Discounts for Teens
Teens may qualify for unspecified discounts for driver education or defensive driving courses. The good student discount saves 15 percent. The good driver discount for being accident-free for five years saves 26 percent. If your teen or student is a member of the military, Geico extends a discount up to 15 percent. The multi-car discount will save the household up to 25 percent, and Geico also offers a multi-policy discount but the amount you’ll save depends on the policies.
Nationwide Car Insurance Discounts for Teens
The good student discount with Nationwide is offered to drivers age 16 to 24 who maintain at least a B average, though Nationwide doesn’t specify the discount. Other discounts include the safe driver discount for five years free of accidents or major moving violations, as well as a separate accident-free discount. Nationwide customers who combine home and auto insurance save an average of $710 per year. You can also talk to a Nationwide agent about discounts for the SmartRide usage-based insurance program.
State Farm Car Insurance Discounts for Teens
State Farm offers a tracking program called Drive Safe & Save, though the company doesn’t specify potential discounts. New drivers or drivers under 25 can save up to 15 percent with the Steer Clear discount after three years free of at-fault accidents or moving violations. Being accident-free for three years offers up another discount if you’ve been with State Farm that whole time, or a different discount if you’re new to State Farm. To save money right off the bat, check out the driver training discount for drivers under age 21, the good student discount of up to 25 percent for students under age 25, a multi-vehicle discount of up to 20 percent, and a bundling discount of up to 17 percent.
American Family Car Insurance Discounts for Teens
Discounts from American Family that are specifically for younger customers include a good student discount, a teen safe driver discount, and a discount for drivers under age 25 who volunteer 40 hours per year at a nonprofit organization, though you’ll have to talk to an agent to learn more about how much you’ll actually save. American Family also offers a tracking program called KnowYourDrive with discounts up to 20 percent, a low mileage discount for racking up less than 7,500 miles a year, a good driving discount (discuss with an agent for details), and discounts for multiple vehicles and bundling with another type of insurance.
Farmers Car Insurance Discounts for Teens
Farmers is a little trickier, since the discounts offered by this company vary by state. However, Farmers customers across the board will earn discounts for safe driving and combining multiple insurance policies.
Progressive Car Insurance Discounts for Teens
You’ll immediately qualify for a teen driver discount from Progressive if your teen driver is under 18 and a good student discount if your teen maintains a B average. However, Progressive notes that these discounts vary. After three years with a clean record, the safe driver discount can net average savings of 31 percent. You can also enroll your teen in the Snapshot tracking program, which provides an average discount of $130. Progressive’s multi-car discount is good for average savings of 10 percent, and the bundling discount is good for average savings of 5 percent.
Allstate Car Insurance Discounts for Teens
Allstate offers a Smart Student discount for unmarried drivers under age 25 who maintain good grades, complete Allstate’s preferred driver education program, or attend school 100 miles or more from home. Allstate also offers the usual multi-vehicle and bundling discounts, though they don’t specify potential savings.
Travelers Car Insurance Discounts for Teens
Travelers extends an 8 percent discount to students with a B average and an 8 percent discount for completing an approved driver education course. The IntelliDrive tracking program offers potential savings of up to 20 percent. If every driver in your household has been free of accidents and violations for three years, you can save up to 10 percent, and that goes up to 23 percent after five years. Adding another car to your policy for your teen can save up to 8 percent, and you can save up to 13 percent by bundling policies together.
Most college students may have passed out of the “teen” demographic, or they will soon, but car insurance is still quite expensive well into the early 20s. College is expensive enough as it is, so it makes sense to find as many ways as possible to save money. Cutting costs on auto insurance is always a good idea whenever possible. Let’s take a quick look at ways to save on car insurance while enrolled in college.
If you’re enrolled in the military, the National Guard, or perhaps even an ROTC program through your school, it’s worth checking with your insurance company to see if this experience entitles you to a military discount. The requirements for a military discount vary amongst insurance companies, but most car insurance companies offer a discount to active military members and veterans. It’s always worth asking.
Good student discounts are another way to save money on car insurance while enrolled in college. Check with your insurance company to find out about their requirements to qualify for this discount, since the definition of a “good student” can vary from company to company. However, your company’s requirements are probably the same as they were in high school, based on GPA or class rank. Discounts can be anywhere from 5 to 25 percent, and commonly fall into the 10 to 15 percent range. Insurance companies offer good student discounts because they believe a driver who is a good student is generally responsible and will take fewer risks while driving.
College students who live on campus far away from home and don’t take a car to campus are also usually eligible for a specific discount. The idea here is that if a college student isn’t able to drive the car most of the time, the car is exposed to less risk and should cost less to insure. If you are the parent of a college student who spends the school year 100 miles or more from home, check with your insurance company to see if you are entitled to a discount. That discount varies by insurance company from as little as 5 percent to as much as 35 percent.
It’s fair to wonder if teens are best off with their own insurance policy, or if they should be added to the parents’ or household policy. In general, you’ll save more money by adding teen drivers to the existing policy, or shopping for a new policy for everyone in the household, instead of setting teens up on a separate policy. As the rate comparisons above clearly demonstrate, putting a teen driver on a separate policy is likely to be much more expensive than adding that teen to a parent’s policy or a policy that covers all vehicles in the household. Furthermore, teens on their own won’t qualify for common discounts, such as multi-vehicle discounts or a discount for bundling home and auto insurance together. These discounts can go a long way toward making the cost of a teen’s auto insurance more palatable.
However, there are some potential downsides to adding your teen to your auto insurance policy. Namely, if your teen racks up tickets or causes an accident, you’re likely to see your rates go up and you’ll lose any privileges you may have enjoyed, such as a good driver discount or a discount for being claim-free. Furthermore, depending on your state’s laws, you may be liable for any out-of-pocket costs caused by your teen’s driving that exceed your policy limits. Despite the potential downsides, if your teen lives in your house, adding him or her to your policy is almost certainly the best course of action.
If your teen is approaching driving age, it’s time to figure out how to add him or her to your car insurance policy. It’s best to be prepared ahead of time. Don’t wait until the permit has been issued, because you’ll be under enough stress already.
The first step is to find out when you actually need to add your teen to your policy, and for that, you should reach out to your current insurance company. In some cases, it might be as soon as the permit is issued; in others, you might get lucky and be able to wait until the driving test is over and the license is in hand. Then, you should get a quote from your current insurance company. Use that quote to shop around and see if you’re better off switching insurance companies. While you’re shopping around, be sure to ask about any discounts that might apply to your household.
Whether you stay with your current company or switch for a better deal, ensure your teen is on the policy at the appropriate time. Then, be prepared to repeat the last few steps of this process on an annual basis or whenever your policy is up for renewal. Keep on top of discount opportunities, too. As previously mentioned, good grades earn discounts at most major insurance companies, and some may offer additional cash off if your teen completes approved driving courses.
In between renewal periods, you can help your teen develop good habits behind the wheel. This helps your child, your family, and everyone else on the road stay safe. Furthermore, even the most minor of driving offenses tend to have more severe consequences for a teen driver than for an adult, and that adds up to increased costs for you, right now and potentially for years to come.
Before you start calling around, it might be best to brace yourself for the financial hit. As you probably suspected, it costs a lot of money to add a teen driver to a household’s insurance policy. Newly licensed drivers and teenagers are the riskiest drivers out there, and you’ll pay for it.
According to insure.com, the average rate increase for adding a teen driver to a household’s insurance policy is 161 percent. In general, you should be prepared for your insurance rates to go up anywhere from 100 to 200 percent when you add your teen to your policy. The exception to this rule is if you live in Hawaii, since state laws don’t allow insurers to factor age into the rate algorithms. In some cases, you’ll even pay well over 200 percent. In New Jersey, the average rate increase is a whopping 223 percent. Parents in Arizona, California, Illinois, Louisiana, Nevada, and South Carolina all pay an average increase of over 200 percent. States with the lowest average rates include Ohio at an average of 101 percent, Montana at an average of 103 percent, Pennsylvania at an average of 118 percent, South Dakota an average of 122 percent, and North Carolina at an average of 123 percent. You can take a look here to see what to expect for your specific state.
The Best Car Insurance Companies
Though this guide to teen car insurance focuses mainly on car insurance rates, we also looked at how satisfied car insurance customers are with their auto insurance company. For more information, check out our full ranking of the best car insurance companies and learn about what real customers say about their car insurance companies.