Getting insurance policies for 16-year-old drivers comes with some of the highest rates, mainly due to their lack of experience.
Many parents search for affordable teen auto insurance quotes when a child receives their driver’s license.
You can get individual coverage for your teenager or include them in the family policy.
According to Forbes Advisor‘s analysis, adding a teenage driver to your car insurance raises the annual rate by an average of 82%.
However, there are several ways to reduce your expenses on insurance for new drivers. Let’s take a closer look at the topic of teenage car insurance.
We’ll examine the average rates and available discounts offered by different insurers, as well as other strategies to save on your child’s car policy.
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Why Does Teen Driver Insurance Have High Rates?
The main reason is inexperience, which significantly increases the risk of accidents. Consequently, the price of insurance for a teenage driver goes up.
Even a careful and responsible teenager may struggle to handle critical situations while driving.
According to a study by the Insurance Institute for Highway Safety (IIHS), car crashes per mile are four times higher among 16-17-year-olds compared to 20-year-old drivers.
Insurance companies carefully analyze the statistics of road incidents and shape their quotes based on the level of risk.
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As a result, teenagers receive the highest rates, which can impact parents’ budgets.
What Is the Average Teenage Car Insurance Cost?
According to Forbes, the average cost of insurance coverage for a 16-year-old young driver is approximately $447 per month or $5,367 per year.
Including a teenager in a parent’s car insurance policy can significantly raise rates by 150%.
For example, if your current annual rate is $1,500, with a 16-year-old driver on the policy, you might pay around $3,750.
Families that include their child in the policy and insure two vehicles experience a 58% increase in their annual premium.
Insuring three cars results in a 62% increase.
The following factors also influence the price of car insurance for young drivers, according to the Insurance Institute for Highway Safety:
- Age: The youngest drivers face the highest premiums. As your child grows older and gains more driving experience and safe driving skills, the rates will start to decrease.
- State and location: Place of residence matters both for teenagers and adults. Rates are higher in heavily trafficked urban areas compared to rural areas. Additionally, premiums vary depending on the state. The cheapest car insurance for teens is offered in Hawaii, with full coverage costing around $1,079 and minimum coverage at $352. The most expensive premium is found in Louisiana, with full coverage costing $13,409 and minimum coverage at $5,447.
- Gender: Car insurance for boys is typically more expensive than for girls. On average, there is a $1,055 gap for the 13-19 age category, according to 2021 data. This is due to statistics showing teenage boys are more prone to accidents than girls.
Adding a young driver to your insurance can significantly increase expenses, but it makes financial sense in terms of savings.
Getting individual teenage driver insurance will be even more expensive.
Depending on the age and gender of the insured, the price can range from $4,266 to $9,422 per year according to research from Forbes.
How to Find the Cheapest Auto Insurance for Teens: Top Strategies
Wondering how to get a good deal on auto insurance for your teenager? Look at effective methods that can save your family hundreds of dollars.
Include your teenager in your existing car insurance policy
Perhaps the easiest way to get cheap auto insurance for teens is to add them to your policy. Although your rates will increase significantly, it’s still less expensive than getting an individual insurance policy.
If you’re considering both options, consulting an independent insurance agent for auto insurance tips may be beneficial.
They can calculate the cost and monthly premiums based on your specific circumstances for each type of policy. You can also get a rough idea of car insurance prices for teenagers by using free online cost calculators.
Explore all available discounts
Insurance companies often offer special discounts for teenagers. Before choosing an agency, carefully review its services and offers. Here are some popular options:
- Good student discount: If your child earns grades of B or higher in school, you may qualify for a 10% discount on car insurance for new drivers.
- Away-from-home discount: If your teenager attends a school more than 100 miles from home, you may be eligible for a rate reduction of up to 25%.
- Teen driver insurance programs: Some companies allow young drivers to attend safe driving courses and practical training. Completing such programs can result in a 10% reduction in premiums for teen car insurance.
Compare insurance rates
We recommend finding and comparing rates from multiple companies to understand the pricing variations for new driver insurance.
This advice is handy for those who haven’t changed insurers in a while. For example, Erie and USAA offer the lowest teen rates, around $4,000 annually.
State Farm and Nationwide offer competitive premiums ranging from $2,000 to $3,000 for college students included in their parent’s policy.
Choose a safe car for your teenager
Pay attention to the vehicle when looking for the cheapest teen auto insurance. Select a low-power, safe car that allows your child to gain driving experience.
Sedans and compact SUVs are considered the most favorable for insurance. Sports cars and new models tend to be more expensive to insure.
You can get discounts on new drivers’ insurance if you agree to have telematics devices installed in the car. These devices track speed, driving time, duration of trips, sudden braking, and other parameters.
The collected data can affect the cost, so the more carefully your teenager drives, the lower the insurance premiums.
Find insurers offering accident forgiveness
Considering the number of accidents caused by teenage drivers, it’s advisable to find an insurer that offers accident forgiveness for auto insurance for teens.
Typically, after accidents, insurance companies increase their rates, up to 56% if the accident was at fault and involved injuries, and up to 49% if there was property damage.
Accident forgiveness means that the insurance company won’t increase the premium after an accident.
However, the incident will still be recorded in the young driver’s history, which can impact their rates when switching to another insurance agency.
Avoid unnecessary policies
You can obtain cheap car insurance for new drivers under 21 by only getting the necessary coverage.
For example, comprehensive insurance and collision coverage are not mandatory in most states. They may only be required if you have a new model with low mileage or a car worth over $4,000.
Companies That Provide the Cheapest Car Insurance for Young Drivers
There are several insurers among the leaders in the market for low-cost auto insurance for 16-year-olds:
|Insurance company||Individual policy||Family policy|
Auto insurance for teenage drivers may seem like an expensive endeavor. Luckily there are numerous ways to reduce the financial burden and secure good coverage for your child.
Take a careful approach when selecting an insurer, comparing rates and discounts.
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Greg is a Chartered Financial Analyst (CFA) with 22+ years experience in Financial Services. He has held numerous FINRA Securities licenses (series 7, 63, 65, and 66), and is an expert on Investment Products and Financial Planning. Greg has 22+ years experience as a real estate investor and degrees in Psychology and Philosophy.
Greg has been quoted/interviewed in Yahoo Money, Yahoo Finance, USA Today, Authority Magazine, Realtor.com, Business Insider, and others.
Greg is an avid runner, and the father to identical twin girls and their awesome brother. His love of budgeting and his kids led him to join The Great Resignation in 2021.
Disclaimer: Any Financial Tips on ChaChingQueen are general and informational. Speak with a professional about your specific situation.