Car Insurance for Teens (Discounts, Rates, & More)

Any parent who has had to purchase car insurance for teens knows that it’s expensive. Likewise, any teen who has had to buy their own policy knows how unrealistically expensive car insurance can be.

If you are looking to learn more about how to cut back on the cost of car insurance for teens, look no further. Our guide will help you understand why rates for teens tend to be high, and help you learn how to bring those costs down.

But we aren’t stopping there. We’re also exploring important coverages for teens, as well as the top car insurance discounts that young drivers can take advantage of. Bottom line? By the time we’re finished, you’ll be that much closer to selecting the best car insurance for your teenager.

Shopping rates is an important step in getting the best policy for a young driver. Begin now by entering your ZIP code in our free car insurance comparison tool above.

Car Insurance for Teens: A Complete Guide

Understanding why teen car insurance is so high is the first step to understanding how to lower rates. If you don’t know the “why” behind the expensive rates for teenagers, you may find yourself overwhelmed as you shop for car insurance for a teenager.

In this section, we will cover why insurance rates are so high, which companies have the cheapest rates, and much more. Let’s get started.

Why are car insurance rates so much higher for teen drivers?

The simple answer is that teenagers are riskier drivers because they have less driving experience. According to the Insurance Institute for Highway Safety (IIHS), “Teen drivers have crash rates nearly four times those of drivers 20 and older per mile driven.”

Why? The IIHS explains that this higher crash rate is due to the following factors:

• Driver error. Teens are less experienced, which means they are more likely to make mistakes like running a stop sign or turning the wrong way down a street.
• Speeding. Teens are more likely to drive too fast and loose control of the vehicle, causing situations like hydroplaning, running off the road around curves, and crashing into objects.
• Passengers. Teens are more easily distracted by passengers. Basically, the more teenage passengers that are added into a teen drivers’ vehicle, the more likely that teen is to get into a crash. This is why most states pass restrictions on teen passengers.
• Night driving. Teens are still learning how to drive, and adding poor visibility into the mix can make crashes more likely. There are also more likely to be factors like alcohol or tiredness at night. States often prohibit teens from traveling after 11 p.m.

Alcohol and teenagers are a dangerous mix, more so than with older drivers and alcohol. In fact, the IIHS reports that in 2018:

Twenty-three present of fatally injured drivers between the ages of 16 and 19 had positive blood alcohol concentrations.

Once again, it comes down to inexperience. Teens are already at risk as they learn how to drive, and teens under the influence are even more likely to make poor driving decisions, like driving too fast and running red lights.

The IIHS video below goes over teens’ high-risk years and explains how to keep teens safer in this critical period.

Now that you know some of the statistics and reasons behind teen crashes, it is easier to understand why insurers automatically raise their rates when they see a teen is added to a policy.

It’s just common business sense. Insurers are taking on riskier clients who are more likely to be involved in crashes that the insurer will end up paying for. Don’t worry, though. There are a few ways to make sure you can get the best teen car insurance rates possible.

Which companies have the cheapest car insurance rates for teen drivers?

It can be challenging to find cheap car insurance for new drivers under 21. One of the easiest ways to make sure you are paying the best car insurance premiums for teens is to shop around and get quotes. Almost every insurer offers free quotes, so you can get a good idea of what they charge.

If an insurer doesn’t offer a free quote, you should be suspicious of a scam, as any good insurer offers free quotes to attract customers.

Before you take the time to fill out quote forms, we want to give you an idea of how car insurance rates can vary. We’ve partnered with Quadrant to bring you data on average rates by age. Rates are also broken up by gender, as males tend to pay more than females (read the next section to find out why).

How much is teenage car insurance per month? At an average of $401 a month for female drivers, and $449 a month for males, USAA has the cheapest rates for teen drivers. But keep in mind that USAA car insurance is also an insurer that only covers active military members, qualifying military veterans, and their immediate families. (Hint: if you’re looking for auto discount insurance for veterans, USAA is a way to go).

On the flip side, teen car insurance rates skyrocket even more with Liberty Mutual, which boasts the highest average monthly premiums on this list. Rates for a 17-year-old female driver is, on average, a staggering $968 a month. But if you think that can’t get worse, think again. For a 17-year-0ld male, that monthly average is $1,143.

Why is car insurance more expensive for teenage males than for teenage females?

Most people aren’t aware that gender plays a significant part in what rates an insurer assigns to them. While some states ban insurers from using gender as a factor, it is often used to determine rates.

Why?

Well, accident data shows that males are more likely to get into accidents. According to the IIHS, “Men typically drive more miles than women and more often engage in risky driving practices including not using safety belts, driving while impaired by alcohol, and speeding.”

The differences between male and female drivers become less significant with age. In fact, 60-year-old men are more likely to pay the same as 60-year-old women.

Teenage males, though, are less likely to drive with the same caution as teenage females. The result? Teenage males often spend a few thousand more than teenage females on car insurance.

Should teen drivers get their own car insurance policy?

When parents get sticker shock, they often ask if teens should just get their own policy. However, it is usually significantly cheaper (often thousands of dollars less) for a teen to go onto a parent’s policy rather than buying a separate policy.

If you are debating whether to put a teen on a separate policy or on a parent’s policy, keep reading. We will cover when teens should have their own insurance or go on a pre-existing policy, as well as what to do if parents divorce.

When Teen Drivers Should Have Their Own Car Insurance Policy

There are a few cases when it makes sense for teens to have their own car insurance policy.

• A teen lives away at college.
• A teen owns his or her own car.
• A teen doesn’t live at home.

If a teen lives away from their parents, either away at college or simply moved out, it is best to have a separate policy. This is especially true if the teen lives in a different state, as every state has different liability laws and insurance requirements.

Parents may also want a separate policy for teens so that the parents’ rates don’t change if a teen gets into an accident, gets caught speeding, or gets a DUI.

However, it usually ends up being more expensive for teens to purchase their own policy. If parents are paying for the teen’s separate policy, it makes more sense to simply add the teen to the family policy.

If you have accident forgiveness, this can also make it more cost-effective to add your teen. If your teen causes an accident, it will be forgiven. This means that your rates won’t go up.

However, accident forgiveness only applies to the first at-fault accident at a company for the whole family. So if your teen crashes your accident forgiveness plan will be used up. Still, it’s a great way to feel a little safer about adding a teen to a family policy.

When Teen Drivers Should Stay on Their Parents’ Policy

In the majority of cases, a teen should stay on their parents’ policy. Not only is this usually the cheaper option, but it also makes sure a teen is completely covered.

A teen who has to buy car insurance on their own is more likely to buy insufficient car insurance coverage to cut back on costs. If the teen is underage, this means the parents are financially responsible if something should happen, such as a teen needing hospitalization after a crash.

If a teen goes on a parent’s policy, however, they are better protected under a parent’s fuller coverage plan. So if a teen lives at home, drives a family car, or comes home from college every weekend, it is worth it to keep a teen on the parent’s insurance plan.

Remember, it’s not so much the cost that matters as the coverage. If a teen has better protection on a parent’s plan, they should stay on it rather than getting their own insurance. The last thing parents or teens need is being stuck with huge bills after an accident.

What to Do About Car Insurance Coverage for Teens if Their Parents Divorce

A common question asked is what to do if parents divorce. Should a teen get their own policy? How do you know which parent’s policy the teen should join?

Luckily, lawyers have plenty of great advice about what to do when divorcing when teens and car insurance are involved. Experts with the Kainen Law Group say that if custody is shared and the teen is driving both parents’ cars, then the teen should be on both parents’ policies.

If one parent has primary custody, the teen should be on that parent’s insurance.

There may be times, however, when the teen stays with the parent without primary custody and drives that parent’s car. In these cases, the Kainen Law Group advises that parents should talk to their insurers to discuss coverage options.

The video below explains a little more about divorce and insurers for teenagers.

No matter who the teen lives with, proper insurance coverage is important. Make sure that you communicate with your ex-spouse to make sure your teen will be protected whenever they drive.

Do you have to get car insurance for your teen driver?

Unless your teen has their own car insurance, they need to be added to your policy. What most people don’t know, though, is that teens with learner’s permits usually don’t need to be added to a parent’s policy until they have a driver’s license.

This is because the teen is covered by the licensed adult who is teaching them to drive. So if you are a parent, your insurance won’t go up until after your teen has a license. However, this rule is not true in every state.

Below is a list of states where the law requires teens with learner’s permits to have car insurance on their own or be added to a parent’s policy, according to AAA.

• Alaska
• California (depends on the insurer)
• Indiana (depends on the insurer)
• Oregon
• West Virginia

It is smart to add your teen as soon as they get their driver’s license, if not sooner. The last thing you want is for your teen to get into an accident the day they get their license and before you called your insurer to add your teen.

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How Teens Can Save on Car Insurance

Luckily, there are ways to save on car insurance for teenage drivers. Since teen car insurance is so expensive, finding ways to cut back on prices without sacrificing coverage is important.

So if you want to be kinder to your budget, keep reading to discover what you need to know about car insurance discounts for teenagers.

What kinds of car insurance discounts are available for teen drivers?

In addition to shopping around for cheap rates, discounts are another great way to cut back on costs for teen drivers. We’ve collected data on what discounts are out there for teen and college-aged drivers, as well as which insurers offer these discounts.

Let’s start with discounts for young drivers who have taken driver’s ed. Drivers usually must be less than 21 years old to qualify for a driver’s ed discount.

While some of the companies’ discounts are on the low side, these discounts are sometimes relative to a company’s price. For example, USAA only has a three percent discount, but USAA already has the cheapest rates in most states. So keep in mind what the resulting rate will be rather than the percentage of the discount.

The next teen discount we want to look at is distant student discounts, also known as resident student or student away discounts.

To qualify for a distant student discount, teens need to be without vehicles and usually must be 100 or more miles away. This is because students who live farther away are less likely to come home often and drive the family car.

While fewer insurers offer this discount, Allstate offers a shocking 35 percent discount for students who live away from home. Watch the video below to learn more about Allstate’s discount and coverage recommendations for college students.

So if you have a policy with Allstate and are sending a child to school, make sure to sign up for the distant student discount. Another education discount is a further education discount (must have a four-year degree or higher). Only three insurers offer this discount:

• Esurance: 15 percent discount but based on the level of education
• Liberty Mutual: 10 percent discount
• Nationwide: 15 percent discount

There are multiple student discounts that can save you money on young drivers from high school to college. If your teen does well at school, he or she can also earn a good student discount. Usually, this means they must meet one or all of the following requirements (depending on the insurer):

• Upper 20 percent of class
• GPA of 3.0+
• Maintain B average
• Dean’s List or Honor Roll
• High school or college student
• Under 25 years old

Students who qualify for a good student discount can earn the following discounts at providers.

If your teen is a good student, make sure you are getting a discount for your teen’s hard work. The next discount is a discount for young drivers (also known as a teen driver discount or a minor driver discount).

Only three insurers offer a young driver discount: Country Financial, Progressive, and USAA. Another discount, a new graduate discount, is only offered by Liberty Mutual. This discount saves drivers five percent and must be within one year of graduation. It is a diminishing discount, which means it drops one percent every year until it falls off.

What is the cheapest car to insure for a teenage driver?

The car you pick can also lead to discounts and lower prices. There is a reason insurers always ask what type of car you drive when you apply for insurance. Insurers look at the model year and vehicle type to determine the following:

• How dangerous is the car to drive? Does the car have a powerful engine that will contribute to speeding? Does it handle curves well? Insurers will look at factors like these and more.
• How well does the car perform in a crash? If you were to get into a crash, what is your risk of injury? A car that flattens like a pancake in crashes will cost more to insure than a sturdier vehicle that holds up well in crash testing.
• How expensive is it for replacement parts for the vehicle? Insurers will charge more a car that needs custom or high-end replacement parts, compared to a standard car from a common dealership.
• What safety features does a car have? A car with safety features like lane departure warning, anti-theft programming, and more can earn drivers discounts.

While it may seem prudent to pick a good car just to lower car insurance costs, it is also important to pick a good car for teen safety reasons.

The IIHS says that the risk of crashing goes up when teens drive sports cars or small cars. Sports cars risk is easy to determine, as these high-powered engines encourage speeding.

While the IIHS doesn’t have a clear reason for why small cars encourage crashes, the theory is that small cars “greater maneuverability may encourage young drivers to make sudden moves.”

Unfortunately, most parents buy or pass down small cars, such as minivans, for their teenagers. And if teens have the choice of car, teens tend to gravitate towards sports cars and other flashy vehicles.

However, larger vehicles perform better in crashes and are safer for teens. The plus side is that insurers know this and will lower their rates for safe vehicles. Below is the IIHS’s list of the safest vehicles for teens under $20,000 and $10,000 (we’ve only listed some of the latest models for each category of vehicle).

These cars will be the cheapest to insure. You can also ask your insurer for recommendations on vehicles for your teen, as your insurer will be able to tell you which vehicles will raise or lower your insurance rates. If you want to learn more about how the safest vehicles are picked by the IIHS, watch the video below.

Researching a vehicle is the best way to determine if it is safe enough for your teen. So make sure to look up crash ratings, safety ratings, and more.

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Car Insurance Coverages for Teenage Drivers

Now that you know what insurers to pick from and how to save money on teenage car insurance, it’s time to look at what coverages you should have for your teenage driver. It is incredibly important to have your teen driver well protected with insurance, as teenagers are higher-risk drivers.

So in this section, we will go over what car insurance coverages teenagers should absolutely have on their insurance plan, whether it’s their own or their parents.

Why should teens have high liability car insurance amounts?

Liability insurance is made up of bodily injury liability and property damage liability. Both these liability types protect other drivers if you cause the accident by paying for the other drivers’ medical bills and car repairs.

Most states require drivers to have minimum amounts of both bodily injury and property damage liability. However, we always recommend that drivers carry more than the minimum liability amounts. And in the case of teen drivers, the liability amounts should be much higher than the state minimum.

Remember, if your teen is underage you are still liable even if they are on their own insurance. If your teen crashes and injures another driver, you are responsible for the injured driver’s medical and property damage bills.

The higher your liability limit is, the less likely it will be that you will have to pay any costs out of pocket (besides the deductible). The Insurance Information Institute (III) also recommends carrying umbrella insurance in case your teen is sued after an accident.

Most insurers offer umbrella insurance, which is simply extra liability coverage. Umbrella insurance will also cover the cost of a lawyer if your teen (or anyone on your policy) is sued by another driver.

Why should teens have collision car insurance?

Collision coverage is optional in most states but truthfully, a lot of drivers should carry it. Collision coverage is what will protect your teen’s vehicle after an accident. Unlike property damage liability coverage, which covers the other driver’s costs if your teen caused the accident, collision coverage protects your teen’s car.

Think about it: as an inexperienced driver, your teen could make a number of errors that could result in colliding with another car or object. For instance, your teen could take a corner too fast, hitting a fence. Or your teen could lose control in the rain, sliding into a light pole. Perhaps your teen is late to school, and she’s driving distracted by putting on makeup while behind the wheel – facial moisturizer, foundation, blush, the works. All of these scenarios, and so much more, could reveal a need for collision insurance coverage.

Any damages caused by a collision with another vehicle or an object (fence posts, mailboxes, etc.) will be covered under collision insurance. So if your teen backs into another vehicle in a parking lot, collision coverage will protect you.

Why should teen drivers have comprehensive car insurance?

Comprehensive car insurance is another must-have for teenage drivers. It protects your teen’s vehicle in all the situations that collision coverage doesn’t cover. Consider these scenarios:

• Theft: Someone steals your teen’s car when they park outside a friend’s house.
• Vandalism: Someone thinks it’s funny to poke holes in all the tires on the street.
• Bad weather:  This covers a wide range of things, from hail damage to heavy winds (which could knock a tree onto a car).
• Natural disasters: Fire, flooding, hurricanes, landslides, and more.
• Animal collisions: Any collision with an animal, whether the animal ran into the car or you accidentally ran into the animal.

These are the broad areas that comprehensive insurance covers. There will be smaller categories included, such as riot damage or water leaks from flooding.

Since you can never predict when a tree is going to fall or a deer is going to run into your teen’s path, comprehensive coverage will prepare you for anything that may come.

Why should teen drivers have MedPay or PIP car insurance?

We’ve talked about collision and comprehensive, but both these coverages protect the vehicle your teen is driving and not your teen. While healthcare can take care of medical bills, you should still consider getting medical car insurance.

Having medical coverage at your car insurer provides your teen with extra coverage. Car insurance will take care of the medical bills until the limits run out, at which point healthcare insurance will step in. With both these insurances working together, it lessens the chance of you having to pay huge bills out of pocket.

So which medical car insurance should you consider?

The two offered at most providers are MedPay and personal injury protection (PIP). Both these coverages will pay for the driver and passengers’ medical bills, regardless of who is at fault for the accident.

This means that the treatment of injuries, as well as continued checkups or therapy, will be covered. However, there is a slight difference between MedPay and PIP. While MedPay only covers injury bills, PIP covers injury bills and lost wages after an accident.

So if your teen can’t work at his after-school job because of a broken leg, PIP will cover lost wages. Most no-fault states actually require drivers to carry PIP to make sure drivers are protected after an accident, even if they don’t have healthcare.

Why should my teen driver have uninsured/underinsured motorist car insurance?

The final coverage that you should definitely consider getting is uninsured motorist (UM) and underinsured motorist (UIM) car insurance coverages. These coverages are sometimes required in states, as they protect you if another driver hits you but is uninsured or has poor insurance.

Since the alternative is paying the bills yourself if the other driver can’t pay, UM and UIM step in and cover your bills. Since you can’t predict who your teen may crash into, UM and UIM will make sure the bill doesn’t wind up on your doorstep.

What other car insurance coverages are there for teens?

There are a few other coverages for car insurance for high school students, often called add-ons, that can provide some extra protection for your teen’s car. Take a look at the list below to see if there are any you want to ask your insurer about.

• Gap insurance: If you bought your teen a new car that is less than two years old, gap coverage will replace the car if it is totaled with one of the same make and model. If the car has a loan or lease, gap insurance will pay the difference between what your insurer gives you for the depreciated value of the car and what is still left on your loan/lease.
• Roadside assistance: If your teen’s car breaks down, roadside assistance will help. It covers dead batteries, towing, being locked out, running out of gas, and more.
• Rental car reimbursement: If your teen crashes the family car and it is in the shop for more than a day, rental car reimbursement will pay for a rental car until yours is repaired.
• Modified car insurance: If your teen installed a new speaker or has a custom paint job, modified car insurance will protect these modifications if they are ruined in an accident.

The bottom line is that the more coverage you add to your policy and the higher limits you set, the better protected your teen will be after an accident.

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Frequently Asked Questions: Car Insurance for Teens

Before we end our guide, we want to go over a few frequently asked questions about teens and car insurance. So if you have any remaining questions after reading our guide or just want to learn more, keep scrolling.

#1 – What company has the best car insurance for teenage drivers?

From the perspective of price, the best insurers for a teenage driver will be Geico or USAA. Those who want discounts will find plenty of options with larger providers such as Allstate, Progressive, State Farm, and Travellers, in addition to Geico and USAA. But for the best overall insurer for teenage drivers, we suggest comparing quotes and consulting with agents, and even friends and relatives.

#2 –Does a 15-year-old need car insurance?

This will depend on a few things. At this age, your teen probably has a permit. Whether they should be added to your policy will vary from provider to provider. This could help ensure an added level of protection in case something happens. Consult with your insurance company to learn more about their policies.

#3 – Will the car insurance rate drop when your teen turns 18 or 21 years old?

Unfortunately, rates don’t really drop significantly until after a person drives for several years. However, rates are highest for 17-year-old drivers, as 17-year-olds just received their licenses in most states.

Don’t be discouraged by the high rates, though. If your teen is accident-free and you take advantage of teenage discounts, you can bring the rate down. As your teen ages and continues to be a safe driver, insurers will take note of this and reduce your rates.

#4 – If my child does not drive any of my cars, does my child have to be on my policy if she/he lives with us?

When you apply for car insurance, you have to list all drivers in your household. However, if your child has their own car and insurance, even if they live with you, your insurer can exclude them from your policy.

#5 – If my child lives in one state with me but can save money by being on the other parent’s policy in another state, should my child go on the other parent’s policy?

If it is a case of shared custody, your child needs to be on both parents’ policies. If you have custody of your child, you need to put them on your policy. You can’t put your child on another parent’s policy, especially if they live in another state.

This is because states have different liability laws. Putting the child on another parent’s policy could leave them open to liability if they get in an accident in your state.

As well, lying about where your child lives to put them on another policy is considered fraud. So your best bet is to keep them on your policy unless there is shared custody.

# 6 – Will you have coverage if your teen has an accident but is not on your insurance?

If your teen has their own coverage, they are fine. However, not putting your teen on your policy places you at risk if they don’t have insurance.

While insurance is on the car, not necessarily the person, it will be trickier to get the accident costs paid for and your rates will go up if your uninsured teenager crashes your car. Not to mention that you are liable for any costs if your teenager is underage.

Bottom line? Place teenagers on your insurance as soon as they get their license.

#7 – How should parents plan for teen insurance costs?

Parents should plan ahead by talking to their insurer about costs and taking advantage of discounts. Another consideration is buying a safe car for teenagers, as this lowers their risk of being in a crash. In addition, safety features on a car, like a lane departure warning, will help keep your teen safer and lower costs.

There’s no doubt about it: insuring a new, teenage driver can be both exciting and scary. Even though teens are associated with not-so-great driving and higher-than-normal rates, not all is lost. Saving money and forming good habits is possible, even at a young age. As your teen continues to get the hang of being behind the wheel and maintain a good record, rates will gradually go down.

Hopefully, you are now ready to start preparing for the costs of insuring a teenager. You can begin shopping for the best car insurance quotes for teens now by plugging in your ZIP code in our free online tool below.

References:

1. https://www.iihs.org/
2. https://www.quadinfo.com/
3. https://www.iii.org/

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