Adding a teen driver to your auto policy will increase your premium, but many insurers offer discounts to help mitigate the increase. Before handing over the car keys to your teenager, discuss with them the expenses of owning an automobile, the cost of an insurance policy, and how their actions can impact your premiums.
Is Insurance Mandatory for Your Teen Driver?
The age at which a teen can obtain a learner’s permit varies by state, but existing best practices recommend issuing permits at age 16 and intermediate licensing at age 17. State laws and insurance company guidelines vary, but in some cases, a parent’s auto insurance policy may extend coverage to a teen driver with a learning permit. Insurance for teen drivers is important. According to the Insurance Institute of Highway Safety (IIHS), teenage drivers are four times more likely to be involved in a traffic accident than drivers in their 20s. The leading causes for teen crashes include driving errors, distractions while driving with passengers, failure to maintain control of the vehicle at high speeds, driving at night, and speeding. Young drivers need to gain experience before getting behind the wheel on their own. All U.S. states have adopted some aspects of graduated licensing, which enables teenagers to practice driving under supervision before they obtain their license. “Typically, if you have a learner’s permit, you must have a licensed driver in the car with you,” Jake Mathenia, an auto service specialist with Steve Womack’s State Farm Insurance Agency in Memphis, Tennessee, told The Balance by phone. Before allowing your teenager to drive, even with you in the vehicle, speak with your insurance agent to find out if your policy covers a driver with a learner’s permit. “We like to put them on a policy, just in case they’re in an accident, so they’ll be covered as a listed driver,” Mathenia said.
Adding a Driver to Your Policy
While state laws and insurer guidelines vary, parents should consult with their insurance agent to find out whether they must add their teen driver to their policy while driving with a learner’s permit, or after the teen obtains their license. Some states do not require policyholders to list their child on their auto policies until the child gets their license. Typically, the process of adding a driver to a policy is easy and straightforward. “All we need is their driver’s license number and demographic information, and we simply add it into our database and add them to the policy,” said Mathenia.
Costs of Adding Your Teen to Your Car Insurance
According to the IIHS, young drivers statistically have more deadly accidents than more-experienced motorists, and male drivers suffer higher fatalities than female motorists. In 2020, nearly 1,900 male passenger vehicle occupants ages 16 to 19 died in traffic accidents, compared to just over 600 females of the same age. That same year, 891 males ages 45 to 49 died in road crashes, compared to 442 females of the same age. Teen motorists pose higher risk for insurers, so expect to see an increase in your auto insurance premiums after adding a young driver to your policy. To see how much premiums might increase after adding a teen driver to a policy, The Balance utilized the California Department of Insurance’s sample premium lookup tool.
Factors That Affect Car Insurance Rates
Several factors can affect your car insurance rates, even if you do not have a listed teenage driver on your policy.
Age: Adult motorists with years of driving experience typically pay less for auto insurance than teenagers and 20-somethings.Coverages: Adding coverages to your policy increases your financial protection, but it also increases your premium.Deductible: Policies with high deductibles have lower premiums than comparable policies with low deductibles.Driving record: Drivers with accidents or traffic violations on their driving records often pay higher premiums.Location: Insurers usually charge higher premiums to insure automobiles located in areas with high theft rates or in locations prone to extreme weather conditions.Type of automobile: Convertibles, luxury vehicles, and SUVs often incur high insurance premiums.Safety and anti-theft devices: Many providers offer discounts for vehicles equipped with safety equipment such as anti-lock brakes, and anti-theft devices.
How To Get a Deal on Teen Car Insurance
Parents often experience sticker shock after adding kids to their auto insurance policies. Most major car insurance companies offer discounts—some designed for young drivers—which can offset premium increases.
Bundling discounts: Some providers offer a discount when bundling auto and home or renters insurance policies. Defensive driving discounts: Teenagers who take a defensive driving course may qualify for an insurance discount. Good driver discounts: Adults and young drivers can earn lower rates by maintaining a clean driving record. Good student discounts: When your teen driver earns a 3.0 or higher GPA, you may save up to 7% on auto insurance. Multi-car discounts: Parents can often save money on car insurance when they insure all family vehicles with the same carrier. Student “away” discounts: If your teen driver goes away to college and leaves the car at home, you could earn up to a 10% discount.
You can also get a better rate by raising your deductible. However, keep in mind that teenage drivers are more prone to auto accidents. Do not raise your deductible to a level that is higher than the amount you can afford to pay out-of-pocket.
Other Ways To Lower Your Auto Insurance Costs
Some makes and models of vehicles cost more to insure than others. This is why it is important to consider automobile types when adding a teenage driver to your insurance policy and/or buying your teen a car. “People sometimes think they need to buy their kid a brand-new car. Then they get a quote for insurance and weren’t expecting it to be that high,” said Mathenia. He advised parents to do some homework before buying their teenager a car. Automobiles with poor safety ratings can also cost more to insure. Before buying your child a car, research safety ratings at the National Highway Traffic Safety Administration’s (NHTSA) website. Likewise, thieves steal some types of cars at higher rates than others, and they strike more frequently in some areas. According to the National Insurance Crime Bureau, locations with the highest car theft rates in 2020 included Washington, D.C., Colorado, California, Missouri, and New Mexico. Explore the theft rates of various vehicles prior to your purchase. Want to read more content like this? Sign up for The Balance’s newsletter for daily insights, analysis, and financial tips, all delivered straight to your inbox every morning! Multi-car policies can offer significant discounts over single-car coverage. However, young drivers pose higher risk, which can reduce your discount. To qualify for a multi-car policy, all listed drivers must live at the same address.
