It seems like just yesterday your teenager was in a children's car seat. But now your teen is ready to borrow the keys.
You might have mixed emotions about them getting behind the wheel. But you’re definitely concerned about the cost of adding your teen to your auto insurance policy.
Luckily, there are plenty of ways to save money when it comes time to insure your teen as a driver. In fact, we've got 15 money-saving ideas for you below.
Read on to learn why teen car insurance costs so much and reasons to include your teenager in the auto insurance discussion. Then check out the potential discounts you can take advantage of and things you and your child can do to reduce auto insurance expenses when your teen gets a driver’s license.
Teen Drivers and Crashes
It’s no surprise young and inexperienced drivers are more likely to get into accidents. And when you see statistics on teen drivers and crashes, it makes sense that insurance companies consider them extremely high risk.
Here are just a few examples:
- Half of all teens will be involved in a car crash before graduating from high school. (National Safety Council)
- Teen drivers have crash rates nearly 4 times those of drivers 20 and older per mile driven. (Insurance Institute for Highway Safety)
- Based on data from 2017, the crash rate per mile driven is 1½ times as high for 16 year-olds as it is for 18-19 year-olds. (National Household Travel Survey)
- In 2017 2,734 teenagers (ages 13-19) died in the United States from crash injuries. Such injuries are by far the leading cause of death in this age group. (National Center for Injury Prevention and Control)
- Young people aged 15-19 represented 6.5% of the U.S. population in 2017. However, motor vehicle injuries, both fatal and nonfatal, among young people in this age group represented about $13.1 billion, or almost 8% of the total costs of motor vehicle injuries. (Center for Disease Control and Prevention)
Teen Car Insurance Costs
According to Nationwide, in many cases, teens on learner’s permits are covered on a parent’s auto insurance policy. But they also say that it is important to talk to your insurer and not assume your teen is covered.
When a teen becomes a licensed driver, they need to be added to an existing policy or get their own car insurance.
Adding a teen girl can raise insurance rates by 50%, while teen boys can increase rates by 100% according to the Insurance Information Institute.
The average increase in auto insurance expenses after adding a teen varies by state from just over 100% to more than 220%.
Teenagers who have their own policies can pay $2,000 – $3,000 or more annually for auto insurance.
While insurance costs may drop as teens get older, gain experience, and maintain a clean driving record, teen car insurance is still a big expense.
The more money that goes toward insurance, the less there is to contribute to other financial goals.
That’s why it’s so important to look at anything you can do to save money on vehicle insurance for your teen.
Additional Reading: What Are the Best Ways to Save Money on Car Maintenance?
Including Teens In the Discussion
Your life is busy and your teen’s calendar is probably full too. But when it comes to researching car insurance costs and ways to save money, involving teens is important.
As teens enjoy their new-found freedom, they also need to accept the responsibility of learning about auto insurance. Help them understand the different coverages offered and the associated expenses.
While you might be tempted to take it over, discussions about the cost of car insurance are part of teaching your teen about money.
15 Ways To Save Money Insuring Teen Drivers
With skyrocketing auto insurance costs, it’s crucial to learn all the different ways to reduce premiums. But keep in mind, many insurers limit the number of discounts they offer.
Depending on the insurer, additional discounts you qualify for may be based on reduced premium amounts – not the full premium you were quoted.
Let’s take a look at 15 ways to save money when it’s time for your teen to take that first solo car ride.
1. Add teens to existing auto policies.
You might think it’s a good idea to get your teen their own car insurance policy as young as possible. But in most cases, the cheapest way is to add your teen driver to your existing auto insurance policy.
2. Drive safely.
A clean driving record is one of the easiest ways to keep your car insurance rates down.
Every driver in your family should consider how their driving behavior can affect not only their safety but the expense of insurance for years to come.
Avoid speeding tickets, driving under the influence of drugs or alcohol, and accidents. Even a small “fender bender” can impact your insurance rates.
3. Shop your auto insurance.
When it comes time to add your teen driver to your policy, don’t assume your current insurer has the lowest prices.
Taking time to shop for insurance coverage is one of the best ways to save money.
Getting quotes from different agencies may take a few hours of work, but it can pay off by saving you hundreds of dollars (or more) each year.
4. Increase deductibles and/or reduce coverage limits.
If you're a planner and have a sufficient emergency fund, you might consider increasing the deductibles you’ll pay if you have to make a claim.
Reducing vehicle coverage limits is another option that will reduce your rates. But make sure you understand the trade-offs before you choose these options.
Your financial health could greatly suffer if you have a significant accident and minimal coverage.
5. Bundle insurance policies.
Multi-policy discounts can not only keep more money in your pocket but also help simplify your life.
6. Drive vehicles that are cheaper to insure.
The type of car you drive, and the vehicle's age, makes a big difference in insurance costs because insurers use average claim payments on a given vehicle as the basis for charging premiums.
USA Today shares 25 of the least expensive cars to insure and why they save you money.
7. Assign people to the right cars.
To reduce the insurance expense, assign your teen driver as the primary driver for the cheapest car listed on your policy.
You can also check with your agent about the possibility of excluding your teen from being listed as a driver of more expensive cars you own.
8. Seek all possible other discounts.
Insurers may offer discounts for low annual mileage, signing up for paperless statements or autopayments, and paying your yearly premium in full.
Check out their website and don’t be afraid to ask agents about all the discounts available to customers.
9. Use monitored driving devices.
Parents should model good driving behaviors and insist their teen be a safe driver. But there's also a way to use technology to monitor driving behaviors to save you money.
Programs such as Drivewise from Allstate or Snapshot from Progressive give personalized driving feedback from an app on your phone or plug-in device you install in your vehicle.
You can get discounts for signing up and you can save up to 30% more every six months for safe driving.
This includes safe speeds (under 80 mph), safe hours (limiting late-night trips), safe stops (limiting hard braking), and low mileage (limiting long trips).
10. Get good grades.
Many companies offer insurance discounts for teen drivers who are good students.
Defining “good student” varies by insurer, but many offer “B or better” discounts of up to 25% because statistics show that better students get into fewer accidents and cost less to insure.
These discounts extend through college and up to age 25 by some insurers.
11. Take driver's education & defensive driving courses.
In addition to mandated pre-licensing courses, teens can take a more extensive driver’s education course. These classes usually involve in-person or online instruction and practical experience driving in a car with a trained or certified instructor.
Defensive driving courses are another option for any driver in your family.
Insurance companies reward drivers who take either of these courses with discounts ranging from 5 – 20% or more.
Although they come with a cost, education and training can save lives by improving driver knowledge and skills. The discounts insurers offer for taking these classes can also last for a number of years.
12. Distant college student discount.
If your child goes off to college without a car, they may save you money on insurance if they meet the requirement of a “student away at school.”
Companies like Progressive offer discounts for those 22 or younger on your policy if their college is over 100 miles away from home.
The limited access to a vehicle only when he or she is visiting home puts money back in your pocket.
13. Share cars.
It makes sense that the fewer cars you have on the road, the less you’ll pay for insurance. While it’s necessary for some kids to have their own car, consider the possibility of sharing a car with your child.
It may be inconvenient at times, but when a teen starts driving, the savings on insurance from sharing a car may be worth it.
14. Delay the driver’s license.
There’s a good chance your child will veto this option. But if a teen can wait a year or two to get a driver’s license, it can save your family thousands of dollars.
Putting the brakes on licensing a teen driver also makes sense if they really aren’t excited about driving.
15. Increase liability coverage or add an umbrella policy.
While adding more coverage or an umbrella policy may cost you more upfront, it could save you thousands (or tens of thousands of dollars) if any driver in your family has an accident.
With teens' involvement in so many vehicle crashes, some families choose this option to protect their assets and financial well-being.
Final Thoughts On Insuring Teen Drivers
There’s no doubt that when your teen gets a license, insuring them to drive can put a big dent in your monthly budget. To protect your wealth, be sure you take the appropriate steps to get them properly insured.
Even if your teen is responsible and follows rules, accidents happen and teen drivers are involved in plenty of them.
Remember, don’t go with the first quote you obtain for teen car insurance because you’re too busy to shop around.
Quotes can vary by hundreds (even thousands!) of dollars depending on the insurer and your family’s circumstances. Strive to get a minimum of three quotes before you make any decisions.
As a parent, you’ll always worry when your teen gets behind the wheel of the car. But using the tips here may reduce some of the stress you and your child have about paying for teen auto insurance coverage.
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Vicki and Amy are authors of Estate Planning 101 – a Crash Course in Planning for the Unexpected -coming soon from Adams Media.
Updated September 2020