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A parent's guide to insurance for teen drivers


How much does your insurance go up when you add a teenage driver?

Adding a teenage driver to your policy raises your rates. But you can control how much they climb.Teens are expensive, but rarely are they more expensive than when they start to drive. On average, your insurance rate will increase 130 percent after you add a teen to your policy, costing an extra $2,000 yearly.

There is a reason teenagers cost more to insure. New drivers are among the most dangerous on the road, and have a higher rate of accidents and file more claims compared to the average driver.

How to add teenage driver to your policy

Fortunately, there are steps you can take to ensure your teen has sufficient coverage and that you are paying the least you have to for it. CarInsurance.com Consumer Analyst Penny Gusner says these are the key guidelines for adding your new driver to your policy:

  • The best time to begin the insurance process is before your teen driver gets a learner’s permit. Find out from your insurer what the cost will be to add your teen once licensed.
  • Adding a teen driver to your policy will almost always be significantly cheaper than the teen having coverage through his or her own policy.
  • Typically, your policy will automatically cover your teen at no cost while driving with a learner’s permit, but check with your insurance company to be certain.
  • Once your teen is licensed, you need to contact your insurance company and let it know that your child needs coverage, and have the teen added to your policy
  • If possible, add your teen driver as the primary driver for the cheapest car listed on your policy, which will  save money
  • Compare car insurance rates from at least three companies, as the rates insurers charge for adding a teen can vary by a huge amount. That means your current insurer may not have the lowest price once your teen is on your policy.
  • Be sure to ask for discounts to mitigate the cost, for example those for students who earn good grades, students who live away from home, drivers who complete a defensive driving course and discounts for low-mileage and multiple cars.

Below we’ll explain in more detail what every parent needs to know about the cheapest ways to insure a teenager.

Decide how much coverage you need

Gusner recommends getting full coverage for your teen, as well as for most drivers. This means you’d buy a policy with the following limits:

  • $100,000 in liability to pay for injuries to others; up to $300,000 per accident
  • $100,000 to pay for damage to other vehicles and property
  • Comprehensive coverage to pay for flooding, theft, fire, animal strikes
  • Collision to pay for damage to the vehicle you own

Myles Holley, P&C advanced sales specialist with Barnum Benefit Advisors, agrees. While it may be tempting to remove comprehensive and collision from older vehicles to save some money, you could be shaving valuable coverage, he says. These optional coverages come with a deductible you pay before your insurance kicks in and pay out up to the actual cash value of the car. “Comprehensive, in particular, is very cheap to keep on a vehicle, can provide valuable fringe benefits such as glass replacement and towing/roadside assistance, and can affect the profile of the vehicle by preventing it being covered for liability only (which can increase the insurance cost),” says Holley.

As always, when adding a teen driver to your policy, understand that if your child is in an accident, it is the parents’ assets that are at risk in the event of a liability claim (savings, investments, certain retirement accounts, home equity, and future income are all at risk).  “Ask your agent about an Umbrella policy,” says Holley. “While you have to maintain certain liability limits to qualify for this policy, and it carries additional out-of-pocket cost, the amount of benefit you would receive in the event you use this policy would far outweigh any additional premium cost; always insure against that crazy ‘what-if’ scenario and hope it never happens.”

What’s the best car for teen drivers?

One of the most difficult aspects of adding a teen driver can be choosing the best car for your teen. You want the car to be safe, which typically means 2014 models and newer, as these come with safety features such as electronic stability control.

Sports cars or any vehicle with a powerful engine is a no-no when it comes to teen drivers. "A car with a bigger, faster engine costs more money to insure and more money to repair," says June Walbert, a Certified Financial Planner for USAA. "In addition, just having a car with a powerful engine can be a temptation, if you have that kind of power available, perhaps you'll use it," she warns. Walbert recommends four-door sedans and crossover vehicles.

In terms of the cheapest models to insure, Holley offers this advice. “Economic models from such manufacturers as Kia, Honda, Ford and Toyota are always a good bet, but similar vehicles from Subaru, Mini, and the like tend to be favorably rated due to their safety features. As always, higher end vehicles from BMW, Mercedes Benz, Infiniti, etc. will come with a higher insurance cost, but even certain models from Mazda and Chevrolet can be rated as “Sport” vehicles and have a similar insurance cost.”

Compare rates to get the cheapest car insurance for your teen driver

To get the best rate, shop your coverage. Each insurance provider has different rates for each policy profile, and adding a teen driver changes that profile. That means your existing carrier may not have the lowest price for you anymore.

When shopping for coverage, have a specific vehicle in mind, do some research and have a year and VIN available to get the most accurate rate. “A year, make, and model can get you a ball-park figure, but that VIN provides the details necessary to finalize the insurance rate,” says Holley.

Also, keep in mind, any accidents or violations within five years impact these rates, so be truthful when shopping around to avoid any “teaser rates.” Gusner recommends comparing rates from at least three insurers.

“Insurance providers must pay to run Motor Vehicle Reports, and some do not do so until they have collected that first month’s premium to bind the coverage, which can result in premium increases after the fact,” says Holley. “If possible, start the new policy a few weeks out for these reports to be run, and do not cancel your old policy until you have confirmed the new policy has been finalized.”

How much does it cost to add a 16-year-old to insurance?

Adding a 16-year-old male on your policy will result in an average increase of 160 percent or roughly $2,292, according to CarInsurance.com’s rate analysis. A new female driver is a bit less expensive, bumping up your premium 125 percent, or an extra $1,782.

You’ll see below how much it costs to add a 16-year-old driver to your policy in your state, on average, for full coverage:

StateAverage rateAverage rate with teenPercent Increase
Alaska$1,246$3,600189
Alabama$1,304$3,504169
Arkansas$1,556$4,021158%
Arizona$1,399$4,463219%
California$1,783$5,660217%
Colorado$1,675$4,082144%
Connecticut$1,980$5,167161%
DC$1,887$5,261179%
Delaware$1,838$4,503145%
Florida$2,250$5,496144%
Georgia$1,815$5,343194%
Hawaii$1,255$1,2923%
Iowa$1,073$2,570140%
Idaho$1,019$2,812176%
Illinois$1,176$3,635209%
Indiana$1,057$2,538140%
Kansas$1,412$3,300134%
Kentucky$1,611$3,903142%
Louisiana$2,228$7,007214%
Massachusetts$1,616$3,964145%
Maryland$1,541$4,280178%
Maine$884$1,977124%
Michigan$2,368$6,217163%
Minnesota$1,339$3,392153%
Missouri$1,288$2,978131%
Mississippi$1,504$3,671144%
Montana$1,589$3,230103%
North Carolina$1,170$2,608123%
North Dakota$1,123$2,688139%
Nebraska$1,287$3,449168%
New Hampshire$1,156$3,406195%
New Jersey$1,419$4,590223%
New Mexico$1,498$3,991166%
Nevada$1,578$4,785203%
New York$1,214$3,347176%
Ohio$959$1,931101%
Oklahoma$1,469$3,446135%
Oregon$1,325$3,456161%
Pennsylvania$1,438$3,142118%
Rhode Island$2,011$5,829190%
South Carolina$1,353$4,230213%
South Dakota$1,250$2,776122%
Tennessee$1,339$3,487160%
Texas$1,644$4,387167%
Utah$1,212$3,243168%
Virginia$993$2,974199%
Vermont$1,166$2,978155%
Washington$1,307$3,323154%
Wisconsin$1,147$3,011163%
West Virginia$1,467$3,766157%
Wyoming$1,577$3,830143%

See our detailed rate analysis be age for teen drivers, which shows pricing for adding a teen to a policy compared to the teen having his or her own, and broken down by state:

Should a teen get his own policy or go on a parent’s policy?

Putting a teen on his own policy is almost always more expensive than adding him to your existing family car insurance policy, says Gusner. Having said that, sometimes families decide a separate policy is the best way to go. Here is what to keep in mind:

You’re still liable for your child’s accidents if under age 18: When you sign for your teen’s license, most states assign you the responsibility for your child as a driver. For example, in Kentucky, the application for drivers under age 18 must be signed by a parent or guardian who agrees he/she is jointly liable with the applicant for any damages.

You’ll still have to sign the policy: Depending on your state’s laws, those between ages 18 and 21, cannot sign binding contracts. That means to buy a car and a car insurance policy, which is a binding contract, your teen will likely need a parent to sign with him on the paperwork.

When a separate teen policy makes sense: Getting your teen his own policy is typically only a good idea if he has already racked up tickets or has been in accidents and is raising the rates on your family policy. Then, it may be time to get him an older car with just liability on his own policy.

 

How to save on teen car insurance

There is no way to avoid a rate increase once your teen hits your policy but there are ways to limit the pain.

  • Good student discount: Most insurers offer a good-student discount to teens that have at least a "B" average. Requirements can vary so contact your insurer for details, but typically this discount is up to 20 percent.
  • Defensive driving course: Teaching a teen how to deal with dangerous situations safely will hopefully result in fewer accidents and insurers will usually reward this type of training with a discount. Check with your insurer to see if they offer this discount and a listing of approved courses. The discount will vary but expect around 10 percent.
  • Safety features save money: Putting your teen in a car loaded with safety features will usually result in a discount, as long as it's not a sports car. Features that may result in a discount include anti-theft devices, anti-lock brakes (ABS), adaptive cruise control, lane departure warning and collision preparation systems. Ask your insurer what safety features will garner a discount.
  • Headed to college, or “student away” discount: "If your teen is old enough to head off to college, not taking a car with them and will be living more than 100 miles from home you should get a break on your auto insurance," says Walbert. That's because the teen isn't a regular operator of the vehicle, but still can drive it when he or she comes home on break. Notify your insurer when they head off to school and ask for a price adjustment.
  • Eventually, getting a good-driver discount: A clean driving record can result in a lower rate. "If your teen manages to stay ticket free and accident free for three years, he or she may qualify for a good driver discount which can run up to 25 percent," says Gusner.

    Apps for monitoring teen drivers, the first year is the most dangerous

    There is light at the end of the tunnel, each year that your teen stays accident and ticket free should result in a slightly lower rate than the year before and some insurers offer monitoring apps to help you keep tabs on your teen and lower your premium.

    The first year is always the most dangerous with teen drivers and experience is better than age when it comes to accident statistics.

    According to a 2014 study done by the AAA Foundation for Traffic Safety, the first months of licensure are the most dangerous, despite the age of the new driver. Crash rates for 16 year olds dropped 26 percent over the first six months of driving and after they had a year of experience under their belt, crash rates were down 45 percent.

    The study also found that experience is more important than age. Drivers who were licensed when they were 17 and had a year of experience out on the road had crash rates that were almost 35 lower than 18 year olds who were just starting to drive.

    A great way to keep your teen safe and possibly save a bit of money is to monitor them. Several insurance companies offer monitoring devices that keep an eye on your teen's driving behavior. This may mean sending you a notification if your teen does something he or she is not supposed to do; providing the teen with verbal feedback; or blocking all text and email messages.

    Here are a few options available to parents of new drivers. Call your insurer to see if they offer a teen driver program.

    Safeco RightTrack: This program monitors your teens driving though the use of a phone app or a plug in device and if your teens keeps it safe out on the road you could be looking at some major savings. This is how it works:

    • Enroll: Sign up for RightTrack when you purchase your Safeco auto policy.
    • Connect: Download the app or plug the device into the OBD-II port of your car.
    • Drive: Your teen will drive with the program for 90 days. You can check their progress and performance online and at the end of the review period you send the device back.
    • Save: The discount will be calculated and automatically applied to your auto policy. In most cases the discount will fall between 5% and 30%.

    State Farm Steer Clear: This app requires your teen to complete 5 training modules that consist of lessons, videos, driving scenarios, and quizzes. They also must record (with the app) at least five hours of driving over 10 hours. Parents can monitor their progress and driving via the app and once training is complete they can apply for a discount.

    American Family Teen Safe Driver Program: This app uses TrueMotion technology to monitor for distracted driving and other risky behaviors behind the wheel. The app scores each trip your teen drives and highlights areas that need improvement. The app allows parents to monitor the results as well as their teens driving scores. After 3,000 miles or a year in the program you will receive a 10 percent discount on your policy.

    MOTOsafety

    This standalone product (it's not associated with an insurance company) plugs into your car underneath the dash and tracks your driver in real time. It will also generate alerts if they are speeding, accelerating quickly or hitting the brakes too hard

    Groove

    If distracted driving is a major concern (and it often is with teens) this device can help. It plugs in underneath the steering wheel and connects with your mobile phone to prevent all incoming text, calls and notifications. The messages are released once your teen stops driving.

     


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    2 Responses to "A parent's guide to insurance for teen drivers"
    1. Ridley Fitzgerald

      Thanks for the tips for car insurance for teens. My son is just getting ready to drive, so I definitely want him insured. I'll be sure to check for a "good student" discount, or anything like that!

        Reply»  
    2. Precious Leyva

      Wow, I had no idea that we could get a cheaper rate on our car insurance if my daughter maintains good grades. She is getting her license next month and I want to be prepared for our auto insurance rates to potentially go up. But since she has fairly good grades, then maybe our rate won't go up to much. Thanks for the tip!http://stangerinsurance.com/auto/

        Reply»  
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