Car Insurance for Teens: What You Need to Know

Finding the right car insurance for teens requires a little creativity and checking quotes from multiple insurers to find the right mix of discounts.

Laura Leavitt | 

Jan 12, 2022 | 5 min read

Shutterstock

As teenagers grow up, the possibility of obtaining a full driver's license and beginning to drive a car can prompt some major discussions and decisions within the household. Parents may want to avoid paying high premiums for car insurance for teens, but rates do tend to go up when you add a teen driver.

Insurance companies choose to charge higher rates for new and young drivers because the data shows that the combination of increased recklessness and inexperience with driving can cause more accidents among younger drivers.

So, how can you protect your family while also saving a little money where possible? Here are some ways to get started when purchasing car insurance for teens.

What to Know About Car Insurance for Teens

If your family already has an auto insurance policy, one of the first steps is to contact your insurance agent and ask for a quote on what it would cost to add your new driver to the insurance policy. This should be done before your teen obtains their license, because a basic insurance policy will be required for almost all drivers.

Ask your insurance agent for both a state-minimum quote and a quote that includes the coverage you carry for the existing adults in the family. If you have an expensive or very new car, you'll likely want to get a quote for extending comprehensive and collision insurance to your teenager.

However, this is usually not the place to stop, unless you are in a very big hurry to get car insurance for your teen. A little more homework can help you find better coverage, a lower rate, or both.

Weigh the Options of a Separate Policy or Joining a Family Policy

When you're adding a teen driver to your family policy, take this opportunity to shop around for rates. Sometimes, covering a teen can raise your overall rates enough that it may be worth giving them their own policy—where allowed—to help you keep your lower rate in place for the adults in the household. In most cases, the benefits of policy bundling and family discounts can outweigh any benefit of a separate policy. It only takes a few minutes to compare quotes.

Consider Car Models and Comprehensive/Collision Coverage

If your teen will be driving the oldest or least valuable car in the family, talk with your agent about the pros and cons of dropping comprehensive/collision coverage for the car. Costs can be very high for this coverage, and if a car is not particularly valuable and isn't needed for daily commuting to a job, many people may choose to forego this coverage.

Cars also have different rates of risk according to insurers, and if you'll be buying a car for your teen, you'll want to factor this in. They set their rates per car based on the accident history, claims history, and rates of theft for different kinds of cars. Ask your insurance agent how choosing a car with a good track record for low insurance costs could reduce your premium.

Look for Discounts for Your Teen or College-Age Driver

Teens can prove their responsibility and diligence in other ways, even if they don't have a driving record yet. Many insurers offer discounts based on different factors that may demonstrate reduced risk for young drivers:

• If your teen gets strong grades, some insurers see being a good student as a reason to offer a discount.

• If your teen doesn't drive very often, some programs will reduce your rates because of their low monthly driving mileage.

• Some insurers also offer college student discounts if students don't have their cars on campus and live a certain distance from home. The assumption is that, again, they aren't driving very often and therefore aren't creating as much risk for claims.

Take Driver Safety Courses and Consider GPS Monitoring Discounts

If your teen is clamoring to drive, a reasonable requirement is that they take an insurer's driver safety course. The approved course for a given insurer is often tied to a discount, which can be an easy way to get a lower quote.

GPS trackers can also help you get a discount on your insurance. Not everyone may like the idea of a device monitoring how they drive, but if a driver is inexperienced, many of these devices can offer value. Insurers encourage you to carry a specialized GPS tracker at all times that is tied to a branded app on one's phone. Teens can learn whether they've accidentally been speeding or tailgating by looking at the data in the app. These monitors are linked to initial discounts and other perks for safe, conscientious driving.

Get Your Teen's Buy-In, Even If It Isn't Monetary at First

While you can shop as carefully as you want, careless driving choices can result in accidents and persistent increases in premiums for car insurance for teens. You want your teen driver to be driving as wisely as possible, taking reasonable precautions to avoid accidents as they gain experience.

Consider talking about responsibilities. Do you want your teen to provide rides for siblings, pay for their own portion of the insurance through their after-school job, or take on some other family responsibility in exchange for this privilege? Some families may also decide that any boost in insurance premium from an at-fault accident will be the responsibility of the teen, helping to create an incentive for caution and careful driving.

Regardless of what you choose, more buy-in from your teen can be a powerful motivator for careful driving in their first few years behind the wheel. This can help your insurance rates for teens come down faster as they amass experience.

Laura Leavitt

I love a good spreadsheet and will happily calculate compound interest all day, but my biggest focus is helping people achieve their financial goals. That could be saving up for a dream car or calculating the right car payment for your budget so you can get a reliable daily driver. I research and write about personal finance so that making great financial choices becomes easier for us all.