You’re probably wondering about the teenage car insurance average cost if you have a child approaching driving age. You likely already know that adolescent auto insurance can be costly thanks to the high risk of accidents for this age group. Review the average cost of auto insurance premiums for teens and explore strategies to save if you’ll soon have a new driver at home.
Calculating the Average Teen Insurance Cost
WalletHub says that teens pay about $225 to $300 a month for auto insurance when added to a parent’s policy and up to $450 a month for a solo policy.
Industry estimates indicate that families will pay about 150-percent more for auto insurance after adding a teen driver to the policy. For example, if your current policy costs $1000 a year, you will likely pay up to $2500 per year with a new motorist in the mix. Your driving history, credit score, and geographic location all influence just how much your rate will increase.
InCharge Debt Solutions estimates that families who insure two cars will pay 58-percent more for insurance with a teen driver. For families with three cars, the average increase rises to 62 percent.
Despite this dramatic increase, most families find that adding a teen to their policy actually makes the most financial sense as long as they share the family car. Many families cannot afford to increase coverage to include another new vehicle and another new driver.
Factors in Teenage Auto Insurance Costs
As mentioned above, the risk associated with insuring teen drivers is one of the biggest factors impacting cost. The National Highway and Traffic Safety Administration (NHTSA) reports that driver error causes about 66 percent of accidents in this age group, due to teenagers’ lack of experience.
According to NerdWaller, gender also plays a role in crash risk, which in turn influences insurance rates. Nerd Wallet cites research from the Insurance Institute for Highway Safety (IIHS); the agency notes that males ages 16 to 19 have a fatal accident rate nearly triple that of other adults. This demographic group causes about 66 percent of these types of accidents, a significant decrease from 75 percent in 1975. As a result, WalletHub reports that the average teen boy pays about 15-percent more for auto insurance than the average teen girl does.
Auto insurance premiums are higher for teens ages 16 and 17 than they are for 18-and-19-year-olds. According to the Centers for Disease Control and Prevention, the former age group has a 200-percent higher accident rate than the latter, accounting for the elevated cost.
The prevalence of accidents goes down as drivers approach age 25. At that point, your one-time teen will have several years of behind-the-wheel experience and should be able to qualify for an affordable policy independently.
Drawbacks to Sharing an Auto Policy with Your Teen
According to CarInsurance.com, some parents shy away from adding teens to their auto insurance policies, fearing they could lose their home or other assets to an accident caused by a new driver. In this case, a separate policy for your teen can preserve your peace of mind (although it will cost about twice as much as a joint policy with an experienced driver).
Teens are also up to 400-percent more likely to have an auto insurance claim compared to more experienced drivers. If this occurs, you will likely pay higher premiums for up to five years.
WalletHub notes the importance of checking your state laws about adding teen drivers to your policy. Some states require everyone in your household with a driver’s license to appear on your auto insurance policy. Some insurance companies do allow you to exclude a teen with a driver’s license if you provide proof that he or she has a separate policy. In some states, you even have to include teens who have a permit on your policy (currently West Virginia, Virginia, Pennsylvania, Ohio, North Carolina, New York, Maryland, Indiana, and Illinois).
If your teen does have a car, a parent or guardian’s name may have to appear on the title. You may also have to sign off on a separate auto insurance policy for your child since he or she cannot sign a contract before turning 18.
Strategies to Save Money on Teenage Car Insurance
Before committing to an auto insurance policy for your teen, shop around to get the best possible rate. While it may seem like a hassle, obtaining three to five quotes from different insurance companies can potentially save you hundreds or thousands of dollars a year.
Many parents make the mistake of just adding their new driver to their own policy without checking other rates. Because every company has different pricing parameters, you could get dramatically different rates from one insurer to the next.
When reviewing quotes for your teen, make sure you take advantage of all applicable discounts. The Zebra notes that many auto insurance companies offer good-student discounts of up to 15 percent. If you decide to add your teen to your policy, you can likely qualify for a multi-driver discount. You can also get discounts your teen wouldn’t be eligible for alone, like a discount for bundling home and auto insurance.
Choosing a safe, low-horsepower car for your adolescent can result in lower insurance rates. Usually, minivans have the lowest insurance rates, though you can also save money with a sedate sedan or small SUV. If you’re planning on helping your child buy a car to use, check how much the make and model will cost to insure before you sign on the dotted line.
Because teens have such a high risk of accidents in their early years behind the wheel, think about finding a policy with accident forgiveness. This type of arrangement keeps your premium rates from rising if someone on your insurance gets in a crash. Make sure this type of policy will cover your young driver, however (some don’t).
Don’t pay for comprehensive or collision coverage on vehicles that don’t require this type of insurance. You only need these policy if you lease or finance your car or if it’s worth more than $4000.
With these tips, you can make sure your teen has the necessary auto insurance policies in your state without breaking the bank.
Sources:
https://www.thezebra.com/auto-insurance/driver/age/cheap-car-insurance-teens/
https://www.carinsurance.com/Articles/adding-teen-driver-cost.aspx
https://www.incharge.org/military-money/military-life/adding-a-teen-to-your-auto/
https://www.nerdwallet.com/blog/insurance/getting-cheapest-car-insurance-teenagers/
https://www.caranddriver.com/research/a31267569/cars-for-teens/
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