Having teen drivers in the house can be anxiety-inducing in more ways than one. Putting a teenager behind the wheel can stress your patience and auto insurance rates.
Car insurance rates rise dramatically for young drivers under 25, influenced by factors that increase the risk of an at-fault accident, such as age, driving habits and even gender.
Unfortunately, you can’t escape all of the financial fallout of adding a teen driver to your car insurance policy. But there are ways to score teen driver discounts and minimize the impact on your premiums.
- 1 How Much Does Car Insurance for Teens Cost?
- 2 6 Ways to Lower Car Insurance Premiums for Teenagers
- 3 Is it Cheaper for Teen Drivers to Get Their Own Car Insurance Policy?
- 4 6 Best Car Insurance Companies for Teen Drivers
How Much Does Car Insurance for Teens Cost?
Brace yourself. Even an excellent family driving record won’t buffer the cost of adding a teen driver to your car insurance. There are a few reasons for this, primarily that teen drivers are at greater risk of being involved in an accident due to inexperience.
Coverage.com indicates the average cost of adding car insurance for teens to a family policy is $2,300 per year, an increase of nearly 130%. Insurance costs will also be affected by the type of car your teen driver has, driving record, state of residence and other factors.
Fortunately, by age 25, new drivers have clocked enough hours behind the wheel for the risk calculation to ease and auto insurance premiums to lower. Car insurance companies will typically reduce insurance rates as much as 50% or more for drivers who are 30 and older compared to their younger counterparts.
6 Ways to Lower Car Insurance Premiums for Teenagers
Whether your family budget can absorb the cost or not, you can still get lower auto insurance premiums for teen drivers. Car insurance companies offer discounts and special programs to reduce the costs of insuring new drivers.
- Take a safe or defensive driving course
- Ask for a good student discount
- Leverage distant student or low mileage discounts
- Opt into car insurance telematics
- Shop around for car insurance quotes
- Pick the right car for your teen
1. Take a Safe or Defensive Driving Course
Many auto insurance carriers provide discounts for drivers of any age who complete safe or defensive driving courses from certified instructors. So while there might be some expense for these courses upfront, safe driving certifications pay off later with a driver training discount that may last for years.
A defensive driving certification might lower your premiums as an adult driver too. Ask your insurance provider. They may recommend an online course you can easily complete.
2. Ask for a Good Student Discount
If your teen makes the grade, there could be savings behind those stellar report cards. Several auto insurance companies, like State Farm and Allstate, provide discounts up to 25% for teen drivers who bring home grade-point averages that land them on the honor roll.
Keep in mind that a good student discount usually applies to college students, too, and might even last for a while after graduation.
3. Leverage Distant Student or Low Mileage Discounts
Your student is probably eligible for a low mileage discount if their daily commute consists of zipping a few miles to school and back. Distant student rates are also a great deal for college students who live on campus but keep their car at home.
4. Let Your Insurer Track the Car
Insurance companies will offer deeper premium discounts if you’re willing to let technology keep an eye on inexperienced drivers. It’s called telematics, and it involves installing an app or a device from your car insurance company that monitors driving history.
Brandon Brown, a personal injury lawyer from Baton Rouge, Louisiana, says he’s opted into car insurance telematics for his teenagers.
“The car insurance company I had offered it as a route to possible discounts. We installed a device in a port on the vehicle,” Brown says. “After the first six months, the car insurance company gave us a report on what the device gathered.”
Although Brown says he had some privacy concerns, he viewed the modest discount as an acceptable trade-off since his teens both have cell phones that routinely share location data.
“It gave me a talking point to let them know their driving was being monitored,” he says. “It gave them a stake in being careful beyond courtesy and common sense.”
Parents should be aware this type of tracking data can be used by major insurance companies to determine liability in the event of a crash, Brown cautions. So if you opt into auto insurance telematics, you may want to adjust the liability limits on the policy’s comprehensive and collision coverage.
5. Shop Around for Cheap Car Insurance for Teens
Experts recommend shopping around for at least three quotes before adding a teen driver to your car insurance policy. If your current car insurance company isn’t the best deal, ask your insurance agent about rate matching or any discounts before switching.
6. Pick the Right Car for Your Teen
Many people buy a car, then find out how much they’ll pay to insure it but your insurance agent can run those numbers before you ever buy.
If you’re buying a car for your teen, narrow down the options and use a quote calculator or talk with your agent to see what you’ll pay to insure each one. There might be a clear winner.
Is it Cheaper for Teen Drivers to Get Their Own Car Insurance Policy?
Most of the time, it’s much cheaper to add teen drivers to a family policy than for a teenage driver to get their own policy. A teen might pay three times as much on their own — if they could even get a policy.
Most major car insurance companies require young drivers to be 18 years old — or older in some states — before allowing young drivers to purchase insurance.
Frankly, it makes good fiscal sense for most teen drivers and college students to stay on their parents’ car insurance policy.
Auto insurance companies don’t impose age limits, so young drivers can remain on the family insurance policy indefinitely as long as they share the same permanent address.
6 Best Car Insurance Companies for Teen Drivers
The following car insurance companies offer teen driver discounts and other programs like defensive driving courses, making them some of the cheapest car insurance options for teen drivers.
- State Farm
- American Family
State Farm has various discounts, but their best rates are for teen drivers who enroll in the Steer Clear Program. To complete the program and earn a discount, drivers under 25 work through online modules and practice skills while recording training trips through an app.
Geico has some of the best base rates of the major companies for insuring teen drivers, with discounts on multi-vehicle policies and other incentives that make car insurance more affordable. Full-time students with a B average earn up to 15% off as part of Geico’s good student discount.
Progressive has defensive driving courses and good student discounts, but the most affordable car insurance rates are for teen drivers participating in the Snapshot program. Snapshot is a monitoring program available to all drivers that utilizes an app to track driving habits and usage.
Nationwide has several discounts for teen drivers that include rewarding stellar students and offering a distant student or low mileage rate for those who keep their cars parked in the driveway.
Also available to teens and other drivers is an app called SmartRide that teases a 40% discount depending on how safe you drive.
Allstate has a partnership with teenSmart, a safe driving course that offers certification and a discount on car insurance. The program requires participating in driving simulations and completing activities focusing on behaviors leading to crashes.
Allstate also provides telematics through an app called Drivewise, as well as distant student and good student discounts.
American Family Insurance uses telematics through the Teen Safe Driving Program, which provides a 10% discount once your teen driver has passed 3,000 miles or one year of driving experience. This discount continues to be applied automatically to your family policy premiums until the young driver turns 21.
3 Factors to Consider When Shopping for Teen Car Insurance
Opting in to safe driving courses and telematics isn’t the only way to get cheap car insurance for teens. You can also try one — or all — of these strategies to lower your car insurance costs and get a little breathing room for your family budget.
1. Raise Your Deductible
Raising your deductible — or the amount you pay out of pocket for an accident before insurance kicks in — will lower your car insurance. However, think carefully about whether you have the savings to cover a minor accident upfront.
2. Choose Minimum Coverage Limits
Using the minimum coverage your state requires can lower auto insurance rates but cost you more in the long run if there’s a car crash. It’s advisable to have an emergency fund before adjusting liability limits for a young driver.
Coverage matters just as much as what you pay for it. Here’s what you need to know to figure out the right coverage for you and how to get it for the best price.
3. Buy Gently Used, Safe Vehicles
If you or your teen driver purchase a car, choose an affordable, safe model that will be cheaper to insure. And double check that your auto insurance company has your teen as the primary driver for the least expensive vehicle on a multi-vehicle policy.
Use the U.S. Department of Transportation’s NHTSA’s 5-Star Safety Ratings to help research potential cars for your teen driver.
Adding a teen driver to your policy can be prohibitively expensive, but you can still save money and get a little peace of mind to help your teen driver hit the road safely.
Kaz Weida is a senior writer for The Penny Hoarder.