Getting a driver’s license is a rite of passage for many teenagers, but it also comes with the added responsibility of owning and operating a vehicle. One of the most important considerations for teen drivers is finding the right insurance coverage. In this article, we’ll take a closer look at teen driver insurance and what you need to know when shopping for coverage.
Why is Teen Driver Insurance Important?
Teen drivers are statistically more likely to be involved in car accidents than older, more experienced drivers. This increased risk means that insurance companies consider teen drivers to be a higher risk, which can lead to higher insurance rates. However, having the right insurance coverage can help protect both the driver and their vehicle in the event of an accident.
Types of Teen Driver Insurance
There are several types of insurance coverage that may be necessary for teen drivers, including:
- Liability insurance: This type of insurance is required in most states and covers damages to other people or property in the event of an accident.
- Collision insurance: This coverage helps pay for repairs to the driver’s own vehicle in the event of an accident.
- Comprehensive insurance: This type of insurance covers damages to the driver’s vehicle caused by events other than accidents, such as theft or natural disasters.
- Uninsured/underinsured motorist coverage: This coverage can help cover costs if the other driver involved in an accident does not have enough insurance to cover damages.
Factors Affecting Teen Driver Insurance Rates
Insurance rates for teen drivers can vary widely depending on several factors. Some of the key factors that can affect insurance rates for teen drivers include:
- Age: Younger drivers are generally considered higher risk and may face higher insurance rates.
- Driving record: Teen drivers with a clean driving record may qualify for lower insurance rates.
- Type of car: The type of car the teen driver owns can also affect insurance rates, with sports cars and luxury vehicles generally being more expensive to insure.
- Location: The location where the car is primarily driven and parked can also affect insurance rates.
Top Teen Driver Insurance Companies in USA
Here are some of the top insurance companies for teen drivers in the USA:
- State Farm: State Farm offers a variety of insurance options for teen drivers, including discounts for good grades and safe driving.
- Geico: Geico offers affordable insurance rates for teen drivers and has a user-friendly mobile app for managing your policy.
- Nationwide: Nationwide offers discounts for good grades and offers safe driving programs to help teen drivers develop good habits behind the wheel.
- Allstate: Allstate offers discounts for safe driving and also has a mobile app that can be used to track driving habits and earn rewards.
What’s the Best Auto Insurance for Teenage Drivers?
Determining the most appropriate level of coverage for teenage drivers requires a knowledge of the basic coverage levels for auto insurance. The sections below contain basic information about each of the main coverage types:
Liability Insurance for Teenage Drivers
If you’re buying coverage for a teen driver or helping a new driver purchase their own policy, it’s helpful to know the different types of insurance. Almost every state requires some form of liability car insurance, which covers damages for others when a driver is at fault. Here are the main parts of liability coverage:
- Bodily injury (BI) liability: This covers lost wages, medical bills and other expenses for someone who’s injured when you’re at fault for an accident.
- Property damage liability: This covers damage to someone else’s property — such as a vehicle — when you’re at fault for an accident.
The minimum level of liability coverage varies from state to state. For example, motorists in North Carolina are expected to carry 30/60/25 coverage, which means a policy would pay up to $30,000 per person for bodily injury, $60,000 per accident for bodily injury and $25,000 per accident for property damages.
Collision Auto Insurance for Teenagers
Collision insurance protects your vehicle in the event of a collision, no matter who’s at fault. Though collision coverage isn’t required by state law, a lender will likely require it if you’re financing a vehicle since it protects the investment.
Collision coverage will reimburse you for damage to your car and give you a payout up to the actual cash value (ACV) of the vehicle if it’s deemed a total loss. However, collision insurance doesn’t cover damage in non-moving situations.
Here are some situations that would involve filing a collision insurance claim:
- Hitting a guardrail
- Colliding with another vehicle
- Getting damage from a road hazard like a pothole
Comprehensive Car Insurance for Teen Drivers
Comprehensive insurance is another common requirement for drivers financing a vehicle. Unlike collision insurance, it’s geared more toward non-driving scenarios.
Comprehensive coverage will reimburse you for damages in the event of:
- Collision with an animal
- Damage from the environment (flood, hail, fire), tree sap)
- Damage from falling objects
- Theft or vandalism
Other Car Insurance Coverage Levels for Teens
Other types of insurance policies include:
- Gap insurance: This will pay the remainder of an auto loan if a vehicle’s ACV payout is insufficient.
- Medical payments (MedPay): This covers medical bills from the driver or other passengers.
- Uninsured/underinsured motorist (UM/UIM) coverage: This provides additional financial protection if you’re in a wreck where the driver who’s at fault is uninsured or doesn’t have enough insurance to cover damages.
State Farm Insurance Reviews
According to our full coverage rate estimates, teenage car insurance averages $5,827 per year or $486 per month. Rates are higher for teenage drivers compared to other age groups for several reasons, which we’ll explore further below.
Teenage Car Insurance Rates vs. Other Age Groups
Here’s how car insurance for teenage drivers stacks up against other age groups:
|Monthly Car Insurance Estimate
|Average Annual Car Insurance Estimate
What Affects Car Insurance Costs for New Drivers?
As we mentioned above, age and driving records impact the price of insurance, but insurers weigh other factors as well. Local insurance minimums impact the price, and so do traits like the recorded gender on the driver’s license in most states.
Here’s a list of items insurance providers review while estimating premiums:
- Vehicle make and model
- Driving history
- Credit score (in most states)
- Coverage limits
- Deductible amounts
Why Are Teens More Expensive To Insure?
Teenage drivers’ insurance costs more for several reasons. Insurance providers look at factors like age and driving experience when deciding insurance premiums, and being younger with little or no behind-the-wheel experience leads to higher car insurance rates.
That’s because data shows younger, inexperienced drivers are usually more likely to be involved in serious accidents. In the United States, car crashes are the second leading cause of death among teens, according to the Centers for Disease Control and Prevention (CDC). The CDC also states that the risk for crashes is highest during the first months teens have their driver’s licenses.
A report from the Insurance Institute for Highway Safety (IIHS) said over 2,300 teens between the ages of 13 and 19 were killed in motor vehicle crashes in 2019. The IIHS showed young males accounted for about two out of three teenagers killed in car crashes. Per mile driven, teen drivers aged 16 to 19 have crash rates almost three times higher than drivers aged 20 and older, according to the IIHS.
Do Teenage Drivers Need Car Insurance?
Drivers should make sure their insurance policies provide adequate financial protection, but increasing coverage limits for teens can be a good idea since they’re more likely to be in crashes.
Why Purchasing Enough Liability Coverage Is Important
Buying the state-required minimum of liability coverage isn’t enough to protect you from lawsuits, and sometimes it’s not enough to cover an accident, according to the Insurance Information Institute (III).
If a state only requires $50,000 in bodily injury per accident and a driver causes $70,000 worth of medical bills, they’re on the hook for the remaining balance. Depending on the value of your assets, it may be worth increasing coverage to $100,000 or more. This can help ensure a greater peace of mind when it comes to your teen’s driving habits.
You Should Also Consider Accident Forgiveness
Accident forgiveness keeps your insurance rate the same after the first at-fault accident on your policy. The “forgiveness” varies by state and insurer, and a policyholder usually has to be claim free for a number of years to be eligible or pay to add it to their policy.
Because some insurance companies include accident forgiveness for free and others offer it as an inexpensive add-on, it could save you money overall if your young driver has an at-fault car accident. This type of insurance isn’t available from every provider.
Lastly, if a car is still being financed, you’ll likely need to maintain comprehensive coverage and collision insurance until the loan is paid off — regardless of who is driving.
How To Save on Auto Insurance for Teens
Even though teen drivers typically pay more for insurance coverage, there are a few options for lowering insurance costs. You should discuss how much the policy costs with your teen. This is also an opportunity to reinforce good driving habits and compare car insurance quotes to get the best rate.
Stay on a Parent’s Policy
Adding a teen to an existing policy is typically less expensive than a young driver buying their own coverage, according to the III. Having an experienced driver as the policyholder will help them qualify for a better rate and may give you a greater choice of discounts. That said, adding a teen still means a bump in your insurance premium.
Look for Discounts
One way to offset the price hike that follows a young driver is with discounts. Insurance providers offer several ways to reduce car insurance costs based on customers’ demographics or the types of vehicles they own.
- Good student: Good grades could mean savings, as students who maintain at least a B average might get a discount on coverage.
- Student away: If a student is away at college and rarely drives, you might get a discount.
- Driver’s education: Some insurance providers offer discounts for taking driver training courses.
- Defensive driving course: Enrolling in a defensive driving course may qualify you for a discount.
- Safe driver: Insurance providers sometimes offer lower prices to customers who have good driving habits and remain claim free for a number of years.
- Multi-car: Having multiple vehicles on a single policy might get you a discount.
- Multi-policy: You can save by bundling different types of insurance policies (such as homeowners and auto) with one company.
- Safety features: Having features like air bags and anti-theft systems may qualify you for savings.
Choose a Higher Deductible
A deductible is the amount of money a policyholder pays up front for a claim before insurance coverage takes over. Having a low deductible means paying less money when you file a claim, but it usually comes with a higher insurance premium.
While raising your deductible can decrease your premium, keep in mind that filing a claim will be more likely if you have a teen on your policy.
Teenage Car Insurance: Conclusion
Young drivers can expect to pay significantly more for car insurance coverage. Because teen drivers lack the necessary experience on the road and are more likely to get in car accidents, insurance providers will always charge higher rates.
While overall costs may be high, there are still several ways you can reduce teenage car insurance costs, such as being aware of discount opportunities, comparing provider quotes and taking part in app-based safe driving programs.
What’s the Best Insurance for First-time Drivers?
Insuring a teenage driver can be a balancing act between price and the quality of coverage. Our insurance experts recommend getting auto insurance quotes from several companies and looking at comparisons like State Farm vs. Geico to see which providers meet your coverage needs.
Our Recommendations for Car Insurance
We’ve identified State Farm and Geico as smart choices for young drivers. You can read more about them below.
State Farm Auto Insurance: Most Popular Provider
State Farm earns our top spot for young driver coverage due to its many discounts. Students can get 25% off their policy with the good student discount, as long as they who have a GPA of at least 3.0 or rank in the top 20% of their class. State Farm also rewards customers of all ages, offering a good driver discount as well as savings for drivers who have installed anti-theft devices. In terms of cost, we give State Farm 9.0 out of 10.0 stars. The company also has solid reviews for customer service.
Keep reading: State Farm review
Geico Auto Insurance: Editor’s Choice
Geico has built a strong reputation around keeping costs low and providing great customer service. According to the National Association of Insurance Commissioners (NAIC), Geico was the country’s second-largest car insurance company in 2021. Similar to State Farm, Geico offers discounts for good driving and good grades. The Geico Mobile app also offers an easy way to view policy information or file a claim.
Getting the right insurance coverage is an important consideration for teen drivers and their families. By working with a reputable insurance company that understands the unique needs of teen drivers, you can ensure that your teen is properly protected on the road. Be sure to compare coverage options and rates from different insurance companies to find the policy that best fits your needs and budget.