Car insurance for teens is required by law and is essential for protecting the family’s newest driver and their vehicle. According to The Balance, teens pay the highest insurance rates out of any demographic because they are new to driving and classified by the insurance industry as young drivers. The term “young drivers” actually refers to drivers ages 16 to 24. Young drivers who maintain a clean driving record often see their insurance rates decrease for each year of driving experience they gain.
Why Is Car Insurance Expensive for Teen Drivers?
Because teen drivers are new to driving, insurance companies can’t access driving records when they calculate the cost of a policy. However, according to The Balance, they base the cost of an insurance policy on statistics related to teen drivers. These statistics show that teen drivers file more claims than drivers in other age groups and these claims are often more expensive. These higher costs make it riskier for companies to insure teen drivers; therefore, they charge teen drivers higher rates. Teens also tend not to have a credit history and usually aren’t married, two factors that drive up insurance rates.
What Is the Cheapest Way to Cover a Teen Driver?
The easiest and least expensive way to cover a teen driver is for a parent to add them to their insurance policy. As The Zebra points out, purchasing a stand-alone policy for your teen driver will cost you twice as much as adding them to your policy. Many insurance companies offer discounts for honor roll students so that you might save even more.
How to Add Your Teen Driver to Your Insurance Policy
If you’re in the process of switching insurance companies, you can add your teen to your policy when your purchase it. Whether you’re adding your teen to a new policy or a current policy, you should follow these steps, as outlined by Insurance.com:
- Contact your insurance company. It’s very likely that your insurance company will contact you if your teen is old enough to drive, but if they haven’t, you should give them a call.
- Have all of your relevant information on hand. You’ll need to have your teen driver’s license number and information about the vehicle they’ll be driving, especially if you’re adding another vehicle to the policy.
- Make sure you go over every detail. You should know the maximum and minimum coverages for your teen driver before you agree to any policy changes. Ask your insurance agent if you qualify for any available discounts because these can add up to significant savings. If your teen has their own car, you can probably take advantage of a multi-car discount.
- Don’t rush your decision. You might decide that purchasing a separate policy for your teen driver makes more sense, or it might be more affordable to change insurance companies. Whatever you choose to do, make sure your teen driver isn’t operating a vehicle before they have insurance coverage.
Average Costs of Adding a Teen Driver to Your Policy
Keep in mind that, as a parent, you’re the person taking on the most risk when you add a teen driver to your policy. According to ValuePenguin, if you add a teen driver to your policy, it will cost you, on average, an additional $1510 for a six-month policy. On average, a separate insurance policy for a teen driver costs $3589 for a six-month policy.
It should also be noted that if you have teenage sons, you can expect your insurance company to charge you higher rates than if you have teenage daughters. Families with male teen drivers pay up to $25 more a month than families with female teen drivers. As NerdWallet points out, male teen drivers are responsible for more car crashes than any other demographic. Drivers ages 16 to 19 cause almost three times the amount of fatal accidents as drivers over the age of 20, with teen boys causing two-thirds of those accidents.
Minimum vs. Maximum Coverage For Teen Drivers
While purchasing the minimum amount of liability insurance required by law will help you meet your state’s legal requirements, it isn’t recommended for teen drivers. According to The Zebra, you should purchase the maximum amount of liability for your teen driver for the following reasons:
- Insurance companies consider drivers who carry the minimum amount of coverage to be a bigger risk than drivers who carry maximum coverage. Purchasing only the minimum amount of coverage for your teen driver gives them a history of being underinsured.
- If your teen driver is responsible for an at-fault accident, your insurance may not cover all of the costs incurred by the other driver. You risk being sued for any damages that your insurance doesn’t cover.
- Minimum liability coverage does not cover damage to your vehicle if your teen driver is in an accident and the other driver is uninsured. Minimum coverage also won’t pay for damage caused by bad weather, and you have no protection if your car is stolen.
Ways for Teens to Save on Car Insurance
While car insurance for teens can be pretty costly, there are several ways to reduce your costs. According to The Balance, parents of teen drivers should see if their insurance company offers the following discounts:
- Good Student Discount: Many car insurance companies offer a Good Student Discount for students with a 3.0 GPA or higher. To qualify for this discount, you’ll have to provide your insurance company with your teen driver’s most recent report card or transcript. On average, teen drivers who qualify for the Good Student Discount can save up to $283.
- Defensive Driver/Safe Driving Discount: Statistics show that teens who take a defensive driving class or other professional driving course are less likely to engage in reckless driving that can lead to citations and accidents. Your insurance company may require your teen driver to take a specific course to qualify for a safe driving discount, so check with your provider before your teen driver enrolls in a class.
- Student “Away” Discount: If your teen driver is away at college or not living at home while in high school, they may qualify for an “away” discount. This type of discount can save you up to $404 on average.
Now that you know what insurance companies take into account when insuring teen drivers, you can decide what policy is best for your teen. You’ll rest easy knowing your teen driver is protected, and you might even save some money.
Sources:
Best Car Insurance for Teens & Young Drivers
Cheapest Car Insurance for Teens (and Their Parents)
Finding the Cheapest Car Insurance for Teen Drivers
Car Insurance for a 17 Year Old: Everything You Need To Know
What Are the Best Cars for Teens?
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