The best car insurance for young adults means buying enough coverage to prevent financial hardships should an accident occur while still paying the most affordable rate.
In general, car insurance for young drivers involves two different groups – parents adding a teen driver to their car insurance policy and teens or drivers in their early 20’s seeking their own car insurance.
Here we’ll provide tips for both groups on how to keep first-time driver car insurance costs as low as possible while still getting the coverage you need.
Here are answers to the most common questions we get about young drivers:
Advice for parents of teen drivers
Do I have to add my teen once he has a learner’s permit?
Regarding car insurance for teens, it depends on where you call home. “Some states require those with a learner’s permit to be insured while others don’t.
It is best to check with your auto insurance company to see if it is required in your state,” advises Tony Arevalo, with Carsurance.
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 license 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?
“If your teen is old enough to drive and has obtained a driver’s license, the answer is yes, you need to add your teen to your policy,” says Arevalo.
“It is very important that you add your teen to your policy to ensure that you’re covered in case he or she gets into an accident while driving your vehicle.”
Even if you do not allow your teen to drive your vehicles, car insurance for teens is important because the chance of a joyride, while you are on vacation or out to dinner, is always there.
If you fail to add your teen to your car insurance policy and he or she is in an accident, regardless of whether you gave your permission to use the car or not, your insurer may deny the claim.
That means you’re on the hook for claim costs. Many insurers explicitly note in their policies that unless you notify them of additional drivers or risks, those individuals will not be covered.
Even in the event that they do cover the claim, most car insurance companies will require you to pay back premiums from the time the teen was licensed.
If your teen has a license but is never (and I mean never) going to drive your vehicles, it is possible to have the teen driver specifically excluded from your policy.
While excluding the teen may lower your premium, if Junior decides to take the vehicle out one night, there will be no coverage whatsoever, putting you at risk.
Many car 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?
In most cases, the answer is no. “If your teen isn’t licensed, you have no obligation to inform your insurer since he or she won’t be driving anyway,” says Arevalo.
“However, if you would like to be fully protected, it is best to have your teen listed as a non-driver on your policy.”
When you renew your policy, you may be asked for information about 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 or she should also be unrated by the car insurance company, meaning the teen wouldn’t affect your rates.
Can my car insurance company find out about my teen driver if I don’t tell them?
Yes, auto insurance companies get reports on ‘undisclosed additional drivers in a household’ and ‘youthful drivers,’” says Penny Gusner, CarInsurance.com consumer analyst.
“So if your insurer sees a 15-year-old, or older teen, on the report, the insurers are likely to ask if that teen is driving yet. If the teen is licensed and driving, the insurance company will want to add him or her immediately.
The company may ask when the teen was licensed to charge you retroactively for the time that the teen was a licensed driver and should have been on the policy.”
Who should insure the teen driver if the parents are divorced?
“In general, the parent who has primary custody of the teen should add the child to their policy,” says Arevalo. “In the instance of joint custody, the parent who has the teen the majority of the school year should add the child to his or her policy.
It is important that both parents discuss this matter as soon as the teen obtains a license to make sure the child doesn’t go around driving uninsured.”
If the child will drive when staying at the second home, both parents typically need to list the teen as a driver on their auto insurance.
Can a teen get their own policy?
Car insurance for teens is critical. But a teen getting their own separate policy is almost always a bad (and expensive) idea.
A teen can technically have their own insurance policy, but if the teen driver is under age 18, the parents will have to co-sign since an insurance policy is a legal contract. This means that all of the risk comes back to you anyway.
Adding a teen to your own policy is almost always cheaper than putting a teen on his or her own policy. Even if your young driver is over the age of 18, it is typically cheaper to keep the teen on your policy as long as he or she is living at home and driving your cars.
Read our age-specific guides for teen drivers to see how rates differ depending on whether the teen is on his own policy or the parents:
How much does adding a teen driver to an insurance policy cost?
You can expect a significant premium increase when adding a teen driver. Our rate analysis showed an average increase of 160% when a married couple added a teenage boy to their car insurance policy.
Typically, in states that allow insurers to use gender as a factor when pricing policies, young male drivers cost more to insure than young female drivers.
But, adding your daughter to your policy will still jack up your rates quite a bit. Parents can expect to pay, on average, 125% more a year when adding a teen daughter to their coverage.
|Gender||Parent Average Rate||Parent Rate After Adding Teen||$ Increase||% Increase|
|Adding age 16 female driver||$1,430||$3,212||$1,782||125%|
|Adding age 16 male driver||$1,430||$3,722||$2,292||160%|
Advice on Teen Drivers and Drivers in their 20s: Coverage Levels, How to Save?
At what ages do young drivers’ rates go down?
CarInsurance.com’s analysis of average car insurance rates by ages how that, for teen drivers, rates should drop a bit every year that the teen driver stays ticket and accident-free.
At age 20, expect premiums to decline more rapidly. Generally, once a driver hits 25 rates will drop dramatically, and fall in line with other adults.
What is the best auto insurance coverage level for young drivers age 16 to 24?
In many cases, it depends on the type of car they are driving. All drivers need to be protected by liability coverage, but if they are in a clunker you may want to drop collision and comprehensive.
Here is a quick overview of coverages all teens should carry.
Liability:Almost every state in the country requires all drivers out on the road to carry liability insurance . This protects you in the event your teen injuries another person or their property with their car. Liability comes in two flavors:
Bodily injury:This covers the medical bills (of the other driver) and the cost of any lawsuits (up to your coverage limits) that stem from an accident your teen causes. This coverage is extremely important as medical bills can quickly spiral out of control.
Property damage:This covers the damage your teen (and their car) does to another person’s property. This can include mailboxes, garage doors and even landscaping.
Most states have minimum requirements for liability but in almost all cases, this number is too low. “We recommend liability limits of 100/300/50 as a minimum for all drivers, including teens and young adults, but ideally you should buy 100/300/100 if you can afford it,” says Gusner.
Remember, while carrying low limits may save some money in the short-term, if you’re a parent and your teen is an accident and the damages exceed your liability limits, you will have to pay the balance. This can put your home and retirement assets at risk if the accident is serious.
If you’re on your own as a driver in your 20s, you’re also at risk of having to fork over money out-of-pocket to cover the costs for accidents you cause that exceeds your insurance payout.
Collision: This coverage pays to repair your vehicle if it is damaged in an accident. If your teen is in a car that you would repair after an accident you should be carrying this coverage. If it is an old clunker you would junk after an accident, drop this insurance.
Comprehensive: This insurance will cover the cost to repair your car if it is damaged by something other than a crash. Animal encounters, vandalism, fire and weather damage are all examples. Again, if the car would be repaired you should carry this coverage but drop it if your teen is in a clunker.
Umbrella:If you have a significant amount of assets you may want to put an umbrella policy in place which will kick in to cover liability claims once your car insurance hits its coverage limits. These policies are sold in $1 million increments and are very affordable.
How to keep your premium affordable: Shop your coverage?
Adding a young driver to your policy or obtaining your first policy as a novice driver is always going to be expensive but there a few things you can do to ease the financial pain.
This is an excellent time to shop your coverage. Your current insurer will rerun your rates with the new driver so why not expand the search.
Get quotes from at least five different insurers and always make sure you are comparing apples to apples when it comes to deductibles and coverage levels.
Cheap car insurance for new drivers under 21
To see an example of how much you can save, here are average rates by company for a 20-year-old buying full coverage with a $500 deductible.
You’ll see how much rates differ between the highest and lowest offered from up to six insurers. That’s the amount you can save by comparing car insurance companies.
We found that the national average savings by comparing rates for this scenario, age 20 with full coverage, to be up to $2,625.
Geico and State Farm offered the cheapest car insurance for new drivers under 21 in the most states among those we surveyed.
You can also use our average car insurance rate tool for ages 16 and older, to see what you can expect to pay for three different coverall levels, and how much you can save by comparison shopping.
Enter your state to see how rates compare where you live.
Discounts for young drivers and parents of teen drivers
You may be eligible for discounts that can lower your rates.
Good student discount: Most insurance companies will offer a discount to students who keep their grades up. While guidelines vary, most require a 3.0 grade point or above. You should see a discount of 10% to 15%
Defensive driving course: A defensive driving course helps drivers of all ages learn how to handle dangerous driving situations safely.
Many insurers will offer a discount to those who take and pass a defensive driving course. The discount will vary but expect around 10%. Check with your insurer for a list of approved courses.
Safety discount: The car you drive will impact the rates. While an old clunker will often be the cheapest option, it’s not always the safest. A new vehicle that is loaded with safety features should result in a discount.
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. Check with your insurer to see what safety features will lower your premium.
Bundle with home insurance:For parents of young drivers who are homeowners, ask about a bundle discount. “If you are carrying homeowners, life or other policies with the same insurer, you should be getting a bundling discount. Discounts vary but you should expect around 25%,” says Gusner.
Student away discount:If a young driver is a student living 100 miles from home and doesn’t take a family vehicle to school, parents can get a car insurance discount.
Most insurers will lower your rate if your teen doesn’t have regular access to a car. You should leave them on your policy so they can still drive when home on breaks.
Expert tips on how to get the best car insurance for new drivers under 25
What advice do you have for novice drivers ages 20-24?
Some individuals choose to get their driver’s license at a later age. Maybe you live in a big city and didn’t need a car. Or, you and your family couldn’t afford for you to get your license when you were a teen, but have the need and ability to do so now.
Or, you may have been driving since you were a teen, but you’re now ready to get your own policy as a driver in your 20s, and still have relatively little driving experience.
The good news is you will pay less at age 20-24 than you would at ages 16-19. However, your rates will still be comparatively high for a few years until you log some time on the road and build up your driving experience.
Your rates will begin to decrease when you hit the age of 25, as insurers find drivers over age 25 to be less risky, says Gusner.
The key to getting good rates at this age is to shop around and to keep a clean driving record.If you can keep a clean record for three to five years at least, you can earn a good driver discount with almost all car insurance companies.
This is pretty good at 10% to 25% with most insurers but others claiming they offer up to a 45% discount.
Another tip, don’t go for a first car with all the bells and whistles as those will cost more to insure, if you carry comprehensive and collision – a must on a new car, as they cost more to repair.
Another way to save is to let the insurance company monitor your driving.This allows them to give discounts to you for good driving behavior.
You can also check with the insurer to make sure you can get a report of how you’re driving so you can see what you need to work on as you get more miles of driving under your belt.
For example, American Family has KnowYourDrive which monitors your driving and with the app you get a score five to 10 minutes after your drive that tells you from 0-100 how safely your drove.
If you show good behaviors they offer you up to a 40% discount.
There is also DriveWise with Allstate, it measures your driving skills but instead of offering a discount, you can earn Allstate reward points that are redeemable for gift cards, travel, merchandise, etc.
What is the first-time driver insurance cost for those in their 20s?
For drivers in their 20s, rates for a policy separate from their parents are steep, but not as much as when in their teens.
It is impossible to nail down an exact figure as every situation is different. Insurers take into account your coverage options, ZIP code, type of vehicle, driving record, as well as other factors.
That means your exact rate will vary depending on your specific factors, but the table below shows the average annual rate you can expect to pay, based on CarInsurance.com’s data analysis.
Best car insurance companies for teens and young drivers
The best car insurance company for young drivers isn’t just about cost, but let’s face it, the cost is a big factor. When we researched insurance rates for drivers under 20, we found that the company with the best rates varied by the teen’s age and gender.
For example, for a 16-year-old female driver being added to a parents policy, we found the cheapest rates at Progressive, United Financial, Farmer’s and Geico.
But for a 16-year-old male, United Financial fell off the lowest rate list and was replaced by Nationwide. Shopping around for quotes for your specific situation is critical to getting the best rate.
In addition to cost, it is important to check things like discounts offered, website and app capabilities, J.D. Powers Satisfaction ratings, AM Best Financial Strength ratings and customer reviews. Finding the best value means finding the company that gives you the best coverage and service for the rate.