Starting to drive is an exciting moment for teens, but for their parents, it can be stressful and it will certainly be expensive. The good news is that you can check quotes from different insurance companies and minimize the damage to your wallet. Let us guide you through buying car insurance for young drivers to help you save money.
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• Insurance for College Students
Before your teen starts driving, you should know:
- All drivers in a household need to be added to a car insurance policy. There is no easy or cheap way to get around car insurance for a new driver. Either you need to add your teen to your policy, or the teen needs his own policy.
- Sharing a joint policy with a teen is cheaper than paying for separate policies. Additionally, there is no benefit to a teen getting his own policy. This doesn't mean, however, that you should simply add your teen to your current policy and be done with it. Adding a new driver means your company generates your rates all over again, and a different company may give you a better deal. Shop around by getting quotes from several companies.
Do I have to add my teen once he has a learner’s permit?
The process for getting car insurance for a 16-year-old will typically start when the teen gets a learner's permit. Once teens get a learner's permit (aka provisional license or instruction permit in some states), some companies allow you to add them to your policy at no additional charge until they get their licenses or turn 18. They allow this because state permit-holder laws require a licensed driver age 21 or older in the passenger seat, making the young driver less of a risk. Other auto insurance providers require that teens be added when they are in the permit stage, so check with your provider.
Do I have to add my teen to my policy if he doesn’t own a car?
Yes. It doesn’t matter that he doesn’t have his own car; he has access to yours. If you don’t add him to your policy and he is in an accident, your policy may not cover him. Some car insurance companies explicitly note in their policies that unless you notify them of additional drivers or risks, those individuals will not be covered. If they do cover the accident, the insurer may require you to pay back premiums from the time the teen was licensed.
If your teen is getting a license but isn’t going to drive your cars -- ever -- then in some states, some insurers will let you exclude the teen from your policy. If you do exclude a teen, or anyone, from your policy, there will be no car insurance coverage extended if they are in an accident. Many insurance companies want you to tell them about household residents who are over a certain age (usually 15) whether that person is licensed or not.
Do I have to tell my insurance company about my teen if he isn’t licensed?
Yes, you usually do. When you renew your policy, you are usually asked for information on everyone in your household. If your child hasn’t received a permit or license yet, the teen usually can be listed as unlicensed on your policy. When a young driver is noted as unlicensed, he also should be unrated by the car insurance company, meaning the teen wouldn't affect your rates.
Who should insure a teen if the parents are divorced?
In general, the custodial parent’s policy is primary for the newly licensed driver. However, if the child will drive when staying at the second home, both parents typically need to list the teen as a driver. Car insurance companies deal with this situation differently, so check with your company and ask what your new rates will be. This way you’ll know what to shoot for if you decide to shop around for a better deal.
How can a teen get his own policy?
A teen driver can get a car insurance policy of his own, but if he’s under 18, a parent or guardian signature is required on the policy since insurance is a legal contract. Even if you are willing to sign on the policy with a young driver, keep in mind that it’s cheaper if the teen is added to your policy instead.
How much does car insurance for new drivers cost?
Our analysis of the cost of adding a teen driver showed an average increase of 160% when a married couple added a teenage boy to their car insurance policy. This number can only be used to give you a very general sense of how much your rates will increase. Every situation is different, and rates depend on your insurance provider, coverage options, ZIP code, vehicles, driving records, how much you drive and many more factors.
Why is car insurance for young drivers so expensive?
Teens are inexperienced behind the wheel and immature by nature. That's a bad combination. A brand-new driver is 12 times more likely to have an accident than someone with a year of experience, says the National Institutes of Health. A 16-year-old who’s had one accident is 50 percent more likely to have another, says the National Highway Transportation Safety Administration. In addition, maturity levels change quickly. Teens who get their licenses at age 18 have fewer fatal accidents than those who are licensed at age 16. Many insurers no longer lump all young drivers together but instead rate age groups separately.
At what age do young drivers' rates go down?
The age of 25 is typically when insurance companies begin to offer the same rates they do to all other adults. Some carriers will lower rates for women when they turn 21 and men when they turn 24. Once you’re no longer priced as a “young driver,” your insurance provider will rate you based on your driving record rather than those for young drivers in general. In addition to rating drivers based on age, insurers can also levy a surcharge for inexperience, usually for those who have been licensed less than a year. To get a better sense of how insurance rates change by age, see average insurance rates by age.
Good student discount
Encourage your kid to do well in school because student car insurance discounts can help bring down your rates. Each insurer has its own guidelines, but typically the discount can be 10 percent to 15 percent. Each insurer always has its own rule for what constitutes a “good student” – either a 3.0 grade point average or above, placement on dean’s list or honor roll, or ranking in the top 20 percent of the class.
Safe driver discount
Look into discounts for new drivers who take a safe-driver course, sometimes sponsored by the insurance company. This may mean attending an actual classroom driver’s education class, watching a driving video, or passing a written driving safety test. Your company may also offer discounts if the teen drives with devices that monitor driver behavior.
Given the cost of car insurance for your teen, you may want him driving a car this is cheap to buy and cheap to insure. Check out our list of the 20 best used cars for teens.
The least expensive cars to buy aren’t always the least expensive to insure. Some cars cost more to repair after an accident, and some have a record of more injury claims than others do. And the least expensive car to insure may not be the safest. Electronic equipment such as stability control and antilock brakes can help novice drivers avoid accidents, and there can be a discount for having them. The lowest car insurance rates are often given to drivers with minivans and small SUVs.
When a teen moves out to go to college, you’ve got another car insurance decision to make, based on whether the teen owns a car, how far he moves, if he’s going to drive a family car while in town, etc. Read our guide to car insurance for college students to get guidance for your unique case.