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 20s 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.
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Keep reading for answers to the most common questions about young drivers.
Tips for parents of teen drivers
Do I have to add my teen once they have a learner’s permit?
When it comes to 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,” says 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 21 or older in the passenger seat, making the young driver less risky.
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,” Arevalo says. “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 essential — 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 note in their policies that those individuals will not be covered unless you notify them of additional drivers or risks.
Even if they cover the claim, most car insurance companies will require you to pay back premiums when the teen got licensed. Most car insurance companies want you to tell them about household residents 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 yet received a permit or license, the teen can usually 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?
Auto insurance companies get reports on undisclosed additional drivers in a household and youthful drivers. 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 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 drives 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?
A teen can technically have their own insurance policy, but if the teen driver is younger than 18, the parents must co-sign since an insurance policy is a legal contract.
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 older than 18, keeping the teen on your policy is typically cheaper as long as he or she lives at home and drives your car.
Read our age-specific guides for teen drivers:
FAQs: Young drivers and teen drivers
At what age do young drivers’ rates go down?
CarInsurance.com’s analysis of average car insurance rates by age shows 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.
What kind of discounts can young drivers and teens receive?
You may be eligible for deals that can lower your rates. Here are a few discounts for young drivers:
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 GPA 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, but discounts aren’t available in all states. Many insurers will discount 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 is often the cheapest option, it’s not always the safest. A new vehicle 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 which 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 carry homeowners, life or other policies with the same insurer, you should get a bundling discount.
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.
The key to getting reasonable 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.
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 ensure you can get a driving report to see what you need to work on as you get more miles of driving under your belt.
Final thoughts: Car insurance for young drivers
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.