Guide to Finding the Best Car Insurance for Teens
There’s no way around the fact that teens can be dangerous drivers. The Insurance Institute for Highway Safety notes that the crash rate for teen drivers is three times that of drivers age 20 an older, and motor vehicle crashes account for about one third of deaths of 16- to 19-years-olds and are the leading cause of death for teens, according to the National Highway Traffic Safety Administration. When immaturity and inexperience are combined with speeding, alcohol, and other behaviors, teen drivers become a risky factor on the road.
Insurance companies aren’t blind to this. Car insurance for teens is significantly higher than for adults, and families adding a teenage driver can expect to see an average annual premium increase as much as 80 percent, according to a Quadrant Information Services study.
Add to Family Plan vs. Separate Auto Insurance Policy
While it’s always a good idea to shop around for rates, insurance experts advise that families add teens to their insurance plan for the best rates and coverage. Families should be aware that gender, age, driving experience, and even grades can affect car insurance for teens; teenage boys, for example, can be extremely expensive to insure.
Getting car insurance for teens by adding them to the family policy has several benefits. Factors such as owning a home, being married, and having a good credit history can lower auto insurance rates, and your teen can share in those discounts by joining your policy. If you plan on adding a new car for your teen to drive onto your existing policy, you may qualify for a multi-car discount, depending on your insurance company. Often, insuring a group of cars also is cheaper than buying a policy for only one car.
A family policy, which insures all drivers for all vehicles, also can provide coverage for everyday driving situations, such as family members borrowing each other’s cars.
Typically, teens who are minors are not able to purchase an independent policy due to their age. But if you have a teenage driver who is legally an adult (18 years and older), you might consider encouraging them to get their own policy, which may help reduce your own costs and liability. While there may be short-term benefits to this strategy, the long-term costs can be higher.
There may be some situations, however, when your 18+ year old may want to get his or her own policy, even if the rates are higher. Some teen drivers (18 years and older) are ready to establish financial independence when they are old enough to work and drive, and having their own policy can give them experience with budgeting and financial responsibility. If your family has a luxury car, a family policy could be a detriment as your rate would have to cover your teen as a driver on that car as well.
Families with teens (18 years & up) also may best be served independent insurance policies for teens who rack up tickets and crashes. In this case, premiums and liabilities may warrant the teen driving an old, safe car with its own policy.
Adding a teen to your car insurance policy
Teens typically do not have to be added to family car insurance policies until they become fully licensed drivers. While they do not need insurance while they hold a learner’s permit, it’s a good idea to notify your insurance provider that your teen now has a learner’s permit and discuss rates, possible discounts, when to insure, and the process for adding your teen when she gets her license.
While not all states require driver’s education, in many cases completing a driver’s education course can lower insurance rates. Teens often can take courses through their high school or through a third-party company that may also offer online courses.
For most parents, their biggest question will be how much car insurance for teens will cost. The short answer is “a lot,” and rates will vary by state.
Unfortunately, if your teen gets a ticket, rates will continue to increase . Premiums could increase annually (the exact amount will vary by state and driving history) and stay higher for a period of time after a ticket was issued, as long as the teen does not get additional tickets or become involved in a crash.
Buying a new insurance policy for your teen
If you want to help your 18 or 19 year old purchase their own insurance policy, the first thing you can do is teach them to shop around. Before signing a policy, talk with different insurance companies to find the best rates and coverage for car insurance for teens.
LendingTree allows you to compare insurance rates from 20+ top-rated carriers, which you could help your teen do online.
Tips for Getting Cheap Car Insurance for Teens
While there’s no getting around the high cost of insuring teenage drivers, there are ways to lower rates through good behavior and informing your insurance company about life changes. Here are some potential deductions:
Good student discount: In many cases, if a student has a “B” average or higher, and is younger than 25 years old, insurance companies may offer a discount on car insurance. According to Consumer Reports, premiums could drop as much as 14 percent for good grades – an average national savings of $263.
Defensive driving discount: Many insurers may offer to drop rates for students who take basic and extra driver’s education classes and defensive driving courses. Course offerings vary by state, and some states require that courses be state approved.
Raising your deductible: While this option could prove costly if a driver on the policy gets in a crash, generally agreeing to a policy with a higher deductible will drop the annual premium’s rate. According to Consumer Reports, increasing a deductible from $200 to $500 can decrease the premium on collision insurance between 15 and 30 percent, if the deductible goes up to $1,000, rates could decrease as much as 40 percent.
This option is best for families with good driving records. For anyone considering it, however, they must take into account whether they could afford the deductible if a crash happens.
Choosing an old, safe car: While your teen may be pining over a red Mustang, brightly colored sports cars will hike up your premium. Auto insurers are most concerned with the cost of repairing cars, so newer, more expensive cars come with higher rates. Your teen may have to settle for an 8-year-old Camry to keep insurance rates low.
Good driver discount: After several years of safe driving, your teen likely will be eligible for a rate drop because he or she has established a good driving record.
Going off to college? If your teen attends a school at least one hundred miles from home and doesn’t take a vehicle, he or she may be eligible for a rate decrease.
In all situations, you should check in at least once a year with your insurance agent to discuss your teen’s driving situation and possible discounts. Each year of safe driving and good behavior could have a significant impact on your car insurance rates, and be sure to ask your agent for discounts and rate decreases as your teen grows into a responsible driver.