Guide to car insurance for teens

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The only thing scarier than your teen getting behind the wheel? The cost of insuring them.

But don’t worry: Armed with the right information, you can choose a vehicle and an insurance policy that provides the most amount of safety for the least amount of money.

Read on to learn everything you need to know about car insurance for teens.

How to get car insurance for teens?

Step 1: Find out which types and how much coverage you need

Your first step for setting up your teenager with auto insurance is determining how much coverage they need.

Depending on the state where they live, coverage requirements vary. “Though there is no one-size-fits-all policy, standard coverage includes a combination of collision, liability and personal injury protection,” said Kevin Quinn, vice president of claims and customer experience at Mercury Insurance.

“Coverage amounts are customizable to the individual, and additional coverage, such as roadside assistance, may be available through an insurance provider.”

Perhaps most important is liability insurance. That’s usually required by law and the minimum coverage amount is set by the state.

However, just because you meet the minimum doesn’t mean you are truly covered. It may be cheaper, but bare-bones liability coverage could leave your teen with a big bill if they get in a severe accident.

And since many teenagers hardly have a dollar to their name, your family’s assets could be put at risk in this situation.

“I recommend liability limits of at least 100/300/100 (bodily injury/total injury/property damage) for a teenage driver’s policy,” says Penny Gusner, senior consumer analyst for Insure.com. “Medical expenses and the cost of car repairs continue to rise. If your teen causes a severe or multi-car accident, the higher limit may keep you from financial ruin.”

To ensure your teen driver is fully protected, consider a policy that includes comprehensive and collision coverage, as well as uninsured/underinsured motorist protection.

Comp and collision are optional and comes with a deductible you must pay before your insurance chips in. Typically, deductible choices range from $250 to $1,000. Choosing a higher deductible can help reduce your premium by around 10%.

Step 2: Find out what type of policy you need

Teens have a couple of options for getting a car insurance policy. “One is being added to their parent’s existing policy, and the other is getting one on their own,” Quinn said.

Get added to a parent’s policy

Ideally, you would add your teen to your existing insurance policy. “Typically, it’s less expensive to insure teen drivers on their parents’ existing insurance policy than it is to have teens buy their own policies,” Quinn said.

However, it’s still not cheap. Adding a 16-year-old teen to your policy will increase your rates and average of 130% to 140% (an extra $2,000 annually), according to our rate data.

You can add your teen to your policy if they drive one of your cars, or have their own car and live at your address. However, you may need to add yourself to the car’s title and registration.

The downside to adding a teen to your policy is that if they get in an accident or cause damage, that can result in your rates getting increased, too. Fortunately, car insurance rates for teenagers tend to go down over time as they build up a good driving record.

“When adding a teen to your family policy, see if it’s possible to associate the teenager with the cheapest vehicle to insure,” Gusner notes. “This can help lower your rates a tad, and every little bit helps when you have a teen driver.”

Get an individual policy 

Generally, if a teenager owns their own car and it’s in their name only, they need to get their own auto insurance policy. However, state laws dictate a minor’s ability to sign up for insurance. Depending on where you live, you may need to co-sign for your young driver. In most it’s required.

This would also be the more expensive option. However, it can be a good idea if your teen racked up several tickets or has multiple accidents on their record. Otherwise, your entire insurance plan could become much more expensive.

“In either situation, it is recommended that you talk to an insurance agent to discuss the necessary coverage required for the teen and the car they will be insured to drive,” Quinn said.

Step 3: Get car insurance policy quotes 

Another important step in the process of getting your young driver insured is comparison shopping with several different car insurance companies.

Auto insurance rates depend on several factors, including the driver’s age, location, gender and more. Rates can vary widely by the insurance company, so be sure to request several quotes before landing on a specific policy.

The easiest way to gather several quotes quickly is by checking online. You can go straight to the insurer’s website and request a quote, or you can use a website that aggregates rates from multiple companies for comparison. You can also go through an insurance broker, who will gather several offers on your behalf.

Getting an initial quote is free. If you like what you see, then you can continue on to start the policy.

“Getting quotes and buying an auto policy is pretty easy nowadays,” says Gusner. “Just make sure to compare like policies — same coverags and limits — when shopping around and to give accurate information so that the rate quote won’t change when the insurer verifies the information you supplied.

Average car insurance rates for teens

By now, you understand that car insurance for teenagers is expensive. But how much, exactly, can you expect to spend? Below are the average auto insurance rates for teens with individual policies according to age:

• 16-year-old: $3,989 annually/$332 per month
• 17-year-old: $3,522 annually/$294 per month
• 18-year-old: $3,148 annually/$262 per month
• 19-year-old: $2,178 annually/$182 per month
• 20-year-old: $1,945 annually/$162 per month

Car insurance costs for teens by age and state

Car insurance rates vary due to many factors. Age is one of those, but so is location. Look at the table below to see average rates for teens in each state.

*Rates shown above are average rates for teens in each state (i.e. Avg. Annual Premium)

Car insurance costs for teens by gender

To give you a general idea of the rate differences to expect depending on the teen’s gender, here are the national average annual rates for 16-year-old females and males.

• 16-year-old female individual policy: $6,562
• 16-year-old female on parent policy: $3,086
• 16-year-old male individual policy: $7,483
• 16-year-old male on parent policy: $3,428

Car insurance costs by car type

Though these rates are not specific to teens, we conducted a study to determine the most and least expensive vehicles to insure. Here are the top five cheapest cars to insure in 2021 and their national average rates. Keep in mind that the teen rate will be much higher than the national average of all ages listed below.

1. Chrysler Voyager: $1,272
2. Honda CR-V LX: $1,285
3. Mazda CX-3 Sport: $1,294
4. Fiat 500X Trekking: $1,301
5. Honda HR-V LX: $1,322

What factors can increase the cost of insurance for teen drivers?

The above averages are based on general information. However, your teen’s behavior can have a big impact on the cost of their insurance. If they make poor decisions, it could lead to higher rates.

For example, moving violations – especially DUIs – will drive up the cost of an auto insurance policy. Getting caught speeding or driving recklessly can also result in higher rates. And of course, at-fault accidents on your teen’s driving record will undoubtedly result in costlier insurance.

Also keep in mind that the more recent the violation, the bigger the impact it will have on car insurance rates. Be sure to have a discussion with your young driver about these risks and the importance of driving calmly and responsibly.

QuickTake

A complete guide to adding a teenager to your car insurance policy in 2024

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Best car insurance companies for teen drivers

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7 signs your teenager shouldn't drive anymore

Cheap car insurance for young drivers

Can I drop my child from my car insurance?

See more >

Choose the best car insurance for teens

Step 4: Compare quotes from different companies before buying 

Ultimately, you want to choose the best car insurance company for teens that also offers a low annual and monthly rate. According to our analysis, Progressive wins out as the top insurance company for young adults.

Why? In general, though its pricing is competitive, it isn’t the lowest. However, their rates for drivers with speeding violations and accident claims, which may be more common with new drivers, make them stand out from the rest.

Progressive also boasts a four-star InsureScore for claims service and offers a host of discounts and perks designed for young adults.

Other top choices for young drivers based on average rates, J.D. Powers Claims Satisfaction rating, NAIC Complaint Ratio and other Insure.com data are:

• Liberty Mutual
• Gieco
• Auto-Owners
• State Farm

Save money by opting for car insurance discounts for teen drivers

Step 5: Save money on car insurance

“New drivers are statistically shown to be in more accidents and that makes them one of the more expensive demographics to insure, but there are ways to help offset the cost of adding a teenager to your auto insurance policy,” Quinn said.

“Opting into a usage-based insurance program can help save money on car insurance premiums, particularly if your teenager follows the rules of the road, takes precautions while driving and only drives short distances, such as to and from school.”

A usage-based program also comes with a report, which may help identify any troubling driving behavior your teen is displaying. That would allow you to help correct their behaviors before they become bad habits that lead to tickets or accidents.

Quinn added that your teen may qualify for car insurance discounts if they maintain good grades (usually a B average, take driving classes and pay the premium in full. “Bundling an auto insurance policy with other auto policies or a home policy will help cut down the cost,” he said.

On average, car insurance discounts can lower your rates by around 27%, but it could be more than that depending on the company and driver profile.

Get cheap car insurance for teens

When it comes to cheap car insurance for teens, which company offers the lowest rates? Below are the 10 companies with the lowest rates, based on full coverage with 100/300/100 liability and a $500 comprehensive and collision deductible.

Teen driver insurance when parents are divorced

Insuring your teenager can be a bit more complex when you’re divorced. Generally, insurers recommend that if the teen driver splits time between both parents, he or she should be added to the policy belonging to the parent with full custody. In other cases, it should be the parent that has custody where the teen attends school.

On the other hand, if you share joint custody with your former partner, it’s a good idea to have your teen by both parents’ policies (regardless of whether the teen is listed as a driver on either policy). Some car insurance companies require anyone related to you living in your household and licensed to be insured.

Importantly, don’t skimp on the coverage for your young driver. If you fail to add them to the appropriate policy, you could risk penalties, nonrenewal, or cancellation of the policy.

Questions to ask when passing down a family car

It’s common for a teenager’s first car to be the one passed down by Mom and Dad. If you plan to gift a vehicle to your teen, ask these seven questions first:

1. Is it safe enough? Older cars don’t come with the latest safety technology that new cars do. Be sure that the vehicle is safe enough to drive, or that you have the budget to make necessary upgrades or repairs.
2. Is it the right size? Consider the kind of driving your teenager will be doing (and how many of their friends you want along for the ride. Bigger isn’t always better. Be sure they can handle whatever size car you pass down.
3. Is it too fast? Teens statistically get into more accidents than experienced drivers. Don’t help them along by handing down a sporty vehicle they’re not ready to handle.
4. Is it too valuable? You also don’t want to risk expensive repairs or theft by gifting a valuable car. Keep in mind – especially if your young driver will be responsible for their own driving expenses — that luxury vehicles also require more expensive insurance, gas, maintenance, and more.
5. Is it reliable? The last thing you want is for your teenager to get stranded in the middle of nowhere or experience a brake failure on the highway. Have a mechanic check it out before you transfer ownership.
6. Is it worth keeping at all? If it turns out expensive repairs are needed, it may not be worth putting in the money to an already depreciated vehicle. Weigh whether it makes more sense to fix up your existing car or buy a new one.
7. Is it expensive to insure? It’s not just luxury vehicles that cost a lot in insurance. Newer vehicles, classics, and other situations can call for a higher premium. Contact your insurance company and double-check the cost of insuring the car before passing it down.

Tips to buy the perfect car for your teen driver

Your teenager probably has a dream car in mind, but you should be part of the car buying process. Here are six tips to keep in mind when shopping for your teen’s new ride:

1. Pick a safe vehicle. Since younger drivers are inexperienced and accident-prone, you want as many safety features as you can afford. Affordable and safe choices for midsize cars include the Chevrolet Impala, Ford Fusion, Honda Accord and Volkswagen Passat. Smaller options include the Ford Focus and Honda Civic.
2. New or used? Decide whether a new car with all the bells and whistles is within budget, or if opting for a used vehicle makes more sense for your family.
3. Check the car’s crash-test results. Whether you opt for new or used, safety should be top of mind. Check out the safety ratings of the teen’s car. The Insurance Institute for Highway Safety (IIHS) has its picks for best used vehicles for teens. These vehicles earn good ratings in their various crash tests.
4. Evaluate your car insurance options. Before you go car shopping, get some estimates for what insurance will cost you. Insuring a teen is pricey no matter what, but the car type makes a difference, too.
5. Employ a money-saving strategy. Since adding a teen to your car insurance policy is expensive, it’s important to snag as many discounts as possible. Find out if your teen can earn a lower rate with good grades or a clean driving record. Also keep in mind that car insurance companies often offer discounts for things like airbags, antilock brakes and antitheft devices such as alarms. Finally, consider what coverage limits make sense for your needs and budget.
6. Consider “spying” for a discount. Your teen will call it “spying,” anyway. Insurance companies refer to the practice as “monitoring” – tracking your teen’s driving habits in exchange for a discount. You could save 10%-15% by installing a GPS tracking device and higher discounts if their driving behavior is deemed good enough by the insurer.

FAQs about automobile insurance for teenagers

You want to be sure you have the right coverage for your teen. So of course, you probably still have questions. Below are the answers to a few of the most common questions about auto insurance for teenagers.

1. When do I have to add my teen to my insurance?

You might be wondering if you should add your teen to your policy after they get a learner’s permit or a driver’s license. That’s up to your insurance company and state’s insurance rules. Most insurers don’t require your teen to be added to a policy until they have their license, though some require it once they have a permit. Be sure to check with your insurance company.

2. Can my insurance company force me to add my teen to my policy even though I don’t allow him or her to drive yet?

The rules can vary by state or insurer, so contact your insurance company to learn the requirements. But know that, yes, most insurers require you to list all licensed members of your household on the policy.

3. Is it cheaper to put my teen on his or her own policy, or on the family policy?

Usually, it’s less expensive to add a teenager to your family policy than getting separate insurance coverage. For example, we found that in one hypothetical situation, it would cost about $1,800 more to insure a teen separately, compared with adding that same driver to a family policy.

4. If my teen isn’t on my insurance and crashes the car, is the damage covered?

Your car may be covered, though there may be consequences such as increased rates. If you failed to report your teen as a driver, there is a chance that your insurer may deny coverage or only cover the incident if you pay premiums going back to when the teen was licensed. Whether your insurer pays or not, it may decide to not renew your policy when it’s up. And, if your teen was specifically excluded from the policy, your insurer isn’t obligated to pay anything. That means you’ll be financially responsible for the damages.

5. When do auto insurance rates for teens start to go down?

It usually takes about three years of a clean driving record. After that point, insurance rates for young drivers drop significantly.

6. How can I minimize the insurance costs of a teen driver?

There are a number of discounts available to lower insurance costs. One that’s specific to teens: good-student discounts. Typically, teens with a 3.0 or higher grade point average can expect a significant discount. Other ways your teenager can help lower the cost of their insurance is by taking a defensive-driving class or choosing a vehicle with special safety features, like airbags, anti-lock brakes or a security alarm system.

7. How much will my rates go up if my teen crashes or gets tickets?

You can expect a 20%-40% increase in your rate if your teen gets into an accident or receives a ticket. To minimize the risk of crashes, stress to your teen the importance of avoiding distractions, like texting or talking to friends while driving.

8. Will the type of car my teen driver uses affect my premiums?

Yes. For the lowest insurance premiums, your teen should opt for a minivan or sedans. Sports vehicles and brand new cars tend to be the most expensive to insure. Also, look for safety features like automatic seat belts and daytime running lights, which can help save on costs.

9. Does State Farm offer insurance discounts for teen drivers?

State Farm offers a variety of discounts, some of those specific to young drivers and some that anyone, including teen drivers, may qualify for. The State Farm good student discount is around 20%, on average. Other discounts to check into are State Farm’s driver training/defensive driving discount and safe driver discount.

Expert advice for teen drivers

Now that you’re fully equipped with information about insuring your teen driver, it’s just about time to hunt down the best policy. But before you do, consider these final tips:

Know your state laws. Though the advice around insurance for teens is generally applicable, there are many nuances according to the state you’re in. In particular, you should pay attention to Graduated driving licensing (GDL) laws. These laws dictate when your teen can begin driving and who is allowed to be in the car. GDL laws involve three stages: learner, intermediate and full privilege.

Notify your insurer right away. You may be wondering when you need to let your car insurance company know that your teen is driving. The answer: ASAP.

Many companies let parents list a teen with a learner’s permit on the policy at no charge until they become a fully licensed driver or turn 18 years of age, whichever is first. However, some companies require the teen driver to be added to the policy and start charging premiums immediately.

Know when to pull the keys. Teenagers are still kids who need supervision and discipline. If your teen’s driving becomes unsafe or irresponsible, it may be time to pull back the reigns and revoke their driving privileges for a while. Signs your teen shouldn’t be driving include too many people in the car, using drugs or alcohol and calling or texting while driving.

Retain proof of insurance. Even if your teen isn’t on your policy or lives with their other parent, you should keep proof on hand. It’s common for auto insurers to watch out for fraud and verify that your child is not required to be on your policy or has been removed. Keep a copy of their new insurance policy and/or proof of their new permanent address.

If you are looking for more helpful information on how to find the best car insurance company for your teen driver, check out our Guide to best car insurance for teens.

Casey Bond

Contributing Researcher

 

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Casey Bond is a seasoned writer and editor who has covered personal finance for more than a decade. Previously, she reported on money, home and living for HuffPost. She has held editorial management roles at Student Loan Hero and GOBankingRates. Her work has appeared in Forbes, Money.com, Yahoo! Finance, U.S. News & World Report, and more. In 2019, she won a NEFE Excellence in Personal Finance Reporting Award. She is also a Certified Personal Finance Counselor.