Car Insurance for Teens: Lowering Average Costs for New Drivers

If you’re anything like me, you still remember how nerve-wracking learning to drive was. Now with 25+ years of experience, I can do it on autopilot most days, but with a 16-year-old looming in my near future, thoughts of teen drivers, promoting safe driving, and having a multi-car policy again are ever-present.

We have constant conversations in the car about safety features the car poses, good driving habits (like no cell phone use!), and why it’s essential always to stay aware of other motorists. 

While we cannot guarantee anything when it comes to teen drivers, sowing the seeds of good habits starts early. I remember one day when my pre-k class was in the gym, one of my students was riding a tricycle. I watched him as he pretended to talk on a phone and text while riding his bike. 

Kids will emulate what we see in the car, so while new drivers are naturally more prone to fender benders and scrapes (I know I had my fair share), we should do everything we can to keep our kids safe while simultaneously keeping our auto insurance rates low!

Related: 5 Things Your Teen Won’t Learn in Driver’s Ed 

How to Set Up Car Insurance for Your Teen

Call your insurance company as soon as your teen gets her permit or starts Driver's Ed classes. Then brace yourself because teens are considered high-risk drivers, so even the best car insurance companies will raise your insurance premiums.

It's common to see insurance rates double—and even triple—upon adding a teen to the family insurance policy. Why? Because teen driving statistics are so poor so insurance costs go up. 

According to the Insurance Institute for Highway Safety, a male teenage driver's chances of having an accident are almost 100 percent. While girls have slightly better driving histories, car accidents are increasing among girls too.

Look for Car Insurance Discounts and Deals 

Though there's no way to avoid an increase when adding a teen driver, there are ways to minimize the damage to your pocketbook.

Shop around for the cheapest car insurance rates in your state. Even if you love your coverage, you may find someone who can write a policy for less than your current insurer. When you call, be aware of the following points—each one may cut your premium by 10 percent or more:

• The type of car you're insuring makes a big difference—you'll pay more if your teen drives a sports car or high-performance car.
• Add your teen to the policy as an occasional driver. (The family member who drives the car more than half the time is considered the principal driver; all other family members are considered occasional drivers.) Of course, this isn't an option if your teen has their own car or you've got more cars than parental drivers.
• Ask your insurance company if your child qualifies for a “good student discount.” Typically teens with good grades with at least a B average will qualify.
• Some states offer premium discounts for young drivers who complete driving courses.
• Is your teen a nonresident? If your teen is at boarding school or college and has a driver’s license but no car, discounts are usually available.
• Accept a higher deductible if you can afford it—you can save.
• Ask about insurance company client discounts. For example, some companies offer a discount for long-term customers or customers who bundle home and auto coverage; think of Flo and her Progressive commercials!
• Most insurers lower car insurance rates for automatic safety belts, anti-lock breaks, and anti-theft devices or green, eco-friendly vehicles.
• If your teen is driving an older car, which would be damaged beyond repair in an accident, you might be able to forego collision coverage.
• Have the entire family sign up for a defensive driving course. Even adult drivers can use a refresher from time to time. 

Under no circumstances should you skimp on your liability coverage, particularly for the youngest age group. For bodily injury liability (medical expenses and legal fees arising from an at-fault accident), carry at least $100,000 per person and $300,000 per accident. For property damage liability, consider at least $50,000 coverage. You might also consider a $1 million umbrella liability policy for extra protection. Check with your insurance agent about the various add-ons for your car insurance policy.

States that Require Driver’s Education

Drivers Ed. or Driver’s Education is required in nearly all 50 states coast to coast, from New York to California. The only states that do not currently require driver training are Alaska, Arkansas, Missouri, Oregon, and Tennessee. In addition, there have been nationwide changes in requirements over the last few decades. For example, when I earned my driver’s license in Pennsylvania in 1996, I was not required to take a course. 

Even if you live in one of the five states not currently requiring driver training, enrolling your teen driver in a class may provide additional car insurance discounts.

Be sure you check with your state's requirements as they vary. For example, New York does not require driver's ed for 18-year-old drivers and above, and North Dakota only requires it for those under 16 years old and allows teens as young as 14 to get a driver’s permit!

Regardless of your state’s requirements, only you can decide if your teen is ready to drive. A handful of children may be responsible enough at 14, but other parents will hold off until their child is at minimum a 17-year-old. 

Best Insurance Companies for Teen Drivers

Even if you love your auto insurance company (I have USAA and will likely never change), it is still wise to get car insurance quotes from other companies to compare the cost of car insurance. Teens are often added to their parent’s policies because companies provide multi-family or multi-car discounts. However, you may be surprised and find an auto insurance policy that is lower once your teen is 18 and has a separate policy. 

According to CNET, a neutral news source, here are the car insurance companies that offer the most comprehensive coverage and the best rates for teen drivers as of June 2022.

• Geico
• USAA
• State Farm
• Progressive
• Amica

All five of these companies rate A+ or A++ and offer accident forgiveness. This sometimes prevents policyholders from seeing a rate increase from just one accident if they are safe drivers or accident-free for a specified time. Each company’s policy is different, so ask for details.

What are the Costs to Add a Teen to Your Insurance? 

Adding a teen driver can double and even sometimes triple your car insurance premiums. The average annual policy for a 40-year-old with a clean driving record is $1771. Adding a teen driver can add an additional $2,500 to your policy. 

The most expensive drivers to cover are teenage boys, specifically those aged 16-19. According to the Centers for Disease Control and Prevention, male teen drivers between 16-19 cause double the fatal accidents as female drivers in the same age range. 

Usually, it is better to keep your older teen or college student on your policy rather than have them get their own policy. However, if your teen has developed a poor driving record in their first few years, you may be better off removing them from your insurance coverage. 

If possible, and your teen has a schedule that allows a part-time job, as them to contribute to the payments for their own car insurance policy. Not only does it cut down your costs, but it also helps them learn the value of money and act more responsibly behind the wheel if they are financially invested.

Keep in mind that cheap car insurance doesn’t necessarily mean better. So, always read the fine print and ask lots of questions to ensure you are receiving the driver discounts you and your teen are entitled to and the full coverage needed, especially regarding liability insurance.