When you’re a parent, the thought of your teen driving can be anxiety-producing. Even so, you can’t run away from the reality of what it means to be the parent of a teen driver.
You want your teen to learn the rules of the road, to be a responsible and prepared driver and you want to make sure they have adequate insurance. States regulate car insurance, so every state has different requirements.
In general, there are four broad categories of car insurance. There are no-fault, choice no-fault, tort liability, and add-on.
There are minimum amounts of liability coverage in all states which pay the other driver if they’re injured in a car accident.
The minimum requirements outlined by state law probably won’t completely cover your teen driver or vehicle, so you’ll likely want them to have coverage beyond these minimums.
You might also consider options like uninsured motorist coverage. Uninsured or underinsured coverage applies if your teen is injured by a hit-and-run driver who flees the scene, or your teen’s damages are beyond the at-fault liability limit.
The following are some other things to know about car insurance for teens.
First, many parents wonder if their teen with a learner’s permit needs their own car insurance.
The answer is no.
You do need to contact your insurance company as soon as your teen gets a learner’s permit. How they handle that will likely vary not only the company itself but also the state where you live.
While your teen won’t need a separate policy, your insurance company might recommend adding them to your policy.
When your teen gets their full driver’s license, then by law, they will need coverage. This coverage can be on your insurance, or they can have their own policy. If you’re buying your teen a car in their name, they’ll need their own policy.
Some people describe insurance as following the car. The insurance follows the car, and not the driver is the concept here. If the car is insured, and the driver isn’t excluded from that insurance, the driver should be covered.
Assigning a Car
If your teen is going to be driving, you can assign one of your cars to them on your policy. That’s important to know because it tends to cost more to repair luxury vehicles or newer cars.
So, for example, if you have a high-end newer model car and then an older car, assign the older car to your teen. Then, you’ll pay less for insurance for your teen.
Not all companies will let you do this, but if your company does, it’s often worth the savings.
When a teen is the primary driver of the lower-value car, there’s a lower premium.
If you’re getting a vehicle for your teen, a used car means you will pay less in car insurance, most likely. If you get a newer or flashier car, you will pay more to insure your teen driver.
Of course, you do want to balance newer safety features with this as well. A car that’s too old might be unreliable and not equipped with modern safety elements.
How Much Is Insurance for a Teen Driver?
Insuring a teen driver is expensive. In some states, you might find that your insurance bill goes up by more than 100% when you add your teen. Teens get into accidents at higher rates than older drivers, and that’s the simply reason why it’s so expensive to insure them.
The risk for teen drivers is four times higher than for older drivers. The CDC says the worst age for accidents is 16. The crash rate for 16-year-olds is twice as high as for drivers who are 18 and 19.
If your teen gets in an accident or gets a ticket, your premiums will go up even more. Any moving violation can affect your rates and make them go up as much as 20% beyond what you’re already paying for your teen driver.
According to Insurance.com, the average car insurance rate for a 16-year-old is $3,989, and it goes down to $3,522 for 17-year-olds.
While insurance for teens is costly, there are discounts available to younger drivers. Most car insurance companies aren’t proactive about advertising available discounts. Instead, you need to ask them what’s available.
Some of the possible options that might apply to your teen driver include:
- Good student discount: It’s common for insurance companies to offer discounts for teens who do well in school. Usually, doing well means maintaining at least a B-average. There may be discounts for both high school and college students who make good grades.
- Defensive driving: If your teen takes a defensive driving course beyond what’s standard with driver’s ed, they may be eligible for a discount. Depending on the state you live in, a defensive driving discount can be significant—if your teen takes a course with a state-approved organization, you might get a discount of 10 to 15%.
- Student away discount: This won’t apply to every teen, but if your teen is away from home for high school or college, you might be eligible for a discount on their premium.
Another way to save money on your teen’s insurance is to raise your deductible.
You have to be careful before taking that option, though. Teens are more likely to get into an accident, and if your teen gets into an accident that’s their fault, you have to pay the deductible.
If you were to raise your deductible to $1,000 from $500, your annual premium might go down by around $400. At the same time, if your teen were in an accident, you’d have to then be prepared to pay the $1,000 out of pocket if they were in an accident.
If your teen is approaching the time when they’ll start to drive, go ahead and talk to your insurance carrier sooner rather than later. After hearing what your current carrier has to say, you can determine if you need to start comparing insurance options and shopping around.