Insuring a teenage driver might give you sticker shock when you see the premiums you have to pay. Unfortunately, it isn’t cheap. In fact, you may have to spend thousands of dollars per year to get your teen insured.
While no one wants to pay high insurance premiums, insurance providers have plenty of data to back up the rates they charge 16-year-olds. Teenage drivers don’t have much driving experience, which can often result in a higher risk for claims. Thankfully, you can do a few things to help lower your insurance costs for your teenagers.
Which factors impact the cost of car insurance for teens?
As with any type of insurance, auto insurers base premiums on the risks they face for insuring a driver. Newly licensed drivers generally present more risk to insurance companies than someone that has been driving for years. Even if a teen driver is the safest driver you know, the car insurance company doesn’t have records of their driving history to justify lowering their premiums.
Instead, car insurers base the premiums for teens on several factors. For the most part, they use data from other 16-year-old drivers in similar circumstances to price the policies. Here are several components car insurance companies often use and how they may impact premiums.
Like it or not, gender impacts car insurance costs. It isn’t without merit, though. Data from the Insurance Institute for Highway Safety shows that male drivers aged 16 to 19 have an almost two times higher fatal passenger motor vehicle crash rate per mile driven than female drivers in the same age group.
Whenever a driver gets in an accident and files a claim, insurance companies have to pay out those costs. Fatal accidents likely involve totaled cars and expensive medical bills for anyone else involved in the crash, too.
The exact cost difference between male and female drivers depends on several other factors. Expect premiums for 16-year-old males to be anywhere from 5% to 20% higher than premiums for 16-year-old females. This isn’t always the case, though. In some cases, insuring your male teen could potentially be cheaper.
Teen policy vs. parent policy
The decision to insure a teenager on their own policy versus a parent’s policy might also cost you thousands of dollars a year. In general, it’s much cheaper to insure young drivers on a parent’s policy than having them purchase a policy on their own. You could potentially save as much as 50% or more by doing this.
Depending on how many cars or licensed drivers there are in your family, adding your teen as a secondary driver rather than a primary driver on your policy could also help keep your costs down. Insurance companies may view secondary drivers as less of a risk because they likely won’t be driving as frequently as primary drivers. You could also potentially get access to additional discounts, depending on your insurer and policy. For instance, some insurers offer multi-vehicle and policy bundling discounts that you might qualify for in this case.
Insurers often look at the family’s driving history and use that information to help assess the risk of the teenage driver. After all, new drivers likely learned how to drive from their parents and the examples they set.
Where a teenager lives can dramatically impact the car insurance rates they have to pay. Each state has its own insurance laws which can affect how claims get processed and paid out. Minimum insurance requirements also vary by state. The more insurance required by law, the more a minimum coverage policy is likely to cost.
The location also factors into insurance premiums in other ways. For instance, a congested city might have many more accidents than a rural town. A tourist destination with many drivers unfamiliar with the local roads could see more accidents than a quiet suburb.
Michigan has one of the most expensive car insurance rates in the country and is one of many no-fault insurance states. Michigan also requires expensive minimum coverage and has a large population of uninsured drivers. These factors have resulted in Michigan having some of the highest insurance premiums in the nation.
Other states may have different insurance coverage requirements and population characteristics that can result in much lower car insurance rates. For instance, according to the Insurance Information Institute (III), North Dakota and Maine have some of the lowest average costs in the nation for all drivers, with average annual premiums of $686.08 and $686.25, respectively. Note that these are averages for all drivers and not necessarily indicative of the cost of car insurance for a teen.
The level of coverage you choose has an impact on your car insurance rates. While your state likely mandates minimum car insurance coverage requirements, you have the option to choose more coverage.
For instance, state-mandated property damage coverage of $25,000 wouldn’t be enough if your child frequently drives around $50,000 cars in a wealthy suburb. If they get into an accident with only $25,000 of coverage and total someone else’s $50,000 luxury SUV, your child could be on the hook for the difference.
Liability coverage is also essential to consider. Many states only require $25,000 of bodily injury liability insurance coverage per person. If your teen causes a serious accident that requires the people in the other vehicle to visit the hospital and have life-saving surgery, $25,000 probably won’t be enough coverage to pay for their bills.
Increasing the coverage on your car insurance policy with a teenage driver will typically add to the cost of your premiums. Even so, it could be much cheaper than choosing the state-mandated minimums if your child gets in a serious accident that results in damages exceeding those minimums.
Drivers can also choose to add optional car insurance features that may be useful for a 16-year-old driver. For example, adding roadside assistance may be relatively inexpensive and keep your child from having to change a flat tire on the side of a busy interstate. While teenage drivers should know how to complete this critical task, the cost of roadside assistance could be worth the peace of mind that your child is safely away from the road during the flat tire repair.
The car your teen drives might also affect insurance rates. For instance, newer cars offer some amazing safety features, including automatic braking to avoid a collision. One avoided collision might make a significant difference on your auto insurance rates going forward, but it could also potentially secure you a discount today.
The price of the vehicle often impacts insurance rates, as well. The more expensive a car is, the more an auto insurer will likely have to pay out in an accident, assuming you have enough coverage. If your family owns multiple cars, it’s a good idea for your teen to drive the least expensive one.
How a car drives and protects its occupants in a crash might impact rates, too. For example, minivans aren’t known for excellent acceleration, but they generally protect their occupants fairly well. Similarly, a Honda Civic is an economical sedan designed to get people around town affordably. These factors could potentially result in lower rates than insuring a performance-oriented, convertible sports car, such as a Corvette or a BMW.
How much does car insurance for a 16-year-old cost?
As discussed above, the exact cost of car insurance for you or your 16-year-old varies based on several factors. To give you an idea of how much you may have to pay for an individual policy for a 16-year-old male or female, here’s a quick summary from three major insurers based on quotes received in April 2021.
Average car insurance cost for 16-year-old males and females
For the quotes below, drivers were newly licensed 16-year-olds living in Delray Beach, Florida, with a clean driving record. They drove a two-wheel-drive 2015 Mazda CX-5 Sport. These quotes are for teenage drivers on their own policies.
Full coverage car insurance quotes had limits of 10/20/10 with $500 deductibles for comprehensive coverage and collision coverage. The 10/20/10 numbers represent coverage limits of $10,000 for bodily injury coverage for one person, $20,000 for bodily injury coverage for all people, and $10,000 in property damage liability coverage.
|Company||Insurance cost for 16-year old male||Insurance cost for 16-year old female|
|Geico||$3,935.30 per six months||$4,367.30 per six months|
|Progressive||$2,437 per six months||$2,259 per six months|
|State Farm||$3,646.59 per six months||$3,264.67 per six months|
Why car insurance for teenagers is so expensive
As a whole, teenagers can be riskier to insure than other groups. The National Highway Traffic Safety Administration (NHTSA) says, “Teen drivers have a higher rate of fatal crashes, mainly because of their immaturity, lack of skills, and lack of experience. They speed, they make mistakes, and they get distracted easily.”
The Insurance Institute for Highway Safety (IIHS) backs this up with statistics. Fatal crashes are about three times as likely for 16- and 17-year-olds than drivers ages 20 and older. The crash rate for 16- to 19-year-olds is almost four times higher than drivers age 20 and older, too. With these jarring statistics, it’s easy to see why car insurance is typically so expensive for teenagers.
How to save money on your teen’s car insurance
You could potentially save money on car insurance for your teenager in several ways. Typically, the best way to keep costs down is to add your teen to your policy, rather than opting for their own policy. Another way you might lower costs is by increasing the deductibles on the car insurance plan. You will likely have to pay more money out of pocket after an accident if you do this, though, and make sure you can cover the car insurance deductible cost you choose. Auto insurance companies generally offer a variety of discounts you could potentially qualify for, too, depending on your situation and the company you choose. Here are the details:
Many insurance companies reward students that maintain good grades. Generally, these students are seen as more responsible at school and as a driver. Each car insurance company might have its own definition of a good student, but many seem to use the B average (3.0 GPA) or better as a benchmark. Progressive states their average good student discount is 10%.
Driver education could help you learn the basics of the rules of the road to advanced strategies to minimize your chances of getting in an accident. Insurers might provide a discount for taking a driver’s education course. Check with your insurer to see if this is an option, how much it could save you, and which driver education courses might qualify. GEICO offers this discount but notes the total discount can vary by policy.
Safe driver or defensive driver education
Your car insurance company might offer a discount if your student takes a safe driver or defensive driver education course. These courses help motorists learn how to help lower their risk of getting into an accident. For instance, Allstate allows you to take the teenSMART driver education program as one of three options to qualify for its smart student discount. Some insurers might view this as the same as a driver education discount, but GEICO offers two distinct discounts for driver’s education courses and defensive driving courses.
Student away at school
Depending on your policy, you could potentially qualify for a discount if your 16-year-old is attending a school a certain number of miles away from home and is not taking their car with them. In general, these discounts make the most sense for college students, but college isn’t necessarily a requirement. Some 16-year-olds could be attending a boarding school and potentially qualify you for this discount.
Insurers realize that when a student is away at school, it reduces the chance of driving the vehicle and the chance of potential accidents. Students do come home for breaks and might want to drive, so it makes sense to keep them insured.
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Getting car insurance for teenagers can feel overwhelming. Here are answers to some frequently asked questions.
What's the cheapest car insurance for a 16-year-old?
The cheapest car insurance depends on your family’s particular situation, location, and more. We found that Progressive is the cheapest insurer among those we received quotes from for a 16-year-old driver in Delray Beach, Florida. To find the most affordable option for your 16-year-old, consider getting quotes from several car insurers.
Should you add your teen to your auto insurance policy?
Adding a teen driver to a family insurance policy is often much cheaper than purchasing their own car insurance policy. That said, it may not be possible or the best fit for every family. You could choose to get quotes to add a 16-year-old driver to your policy and separate quotes for their own policy to compare your options before deciding.
Does your 16-year-old need car insurance?
Not all 16-year-olds need car insurance. If your teenager doesn’t have a driver’s license or never drives and doesn’t own a car, there might be no need for insurance. However, almost every state requires all drivers, including 16-year-olds, to have the state’s minimum auto insurance coverage before driving a vehicle.
The bottom line
Car insurance for 16-year-olds typically isn’t cheap. Their lack of driving experience as young drivers could lead to more car accidents and more fatalities than older driver age groups. These factors, along with others, might end up costing insurance companies more money. To cover these costs, insurers typically charge teenagers higher rates than other drivers.
Your family may be able to save money on car insurance if you add your teen to your policy rather than having them purchase their own policy. Shop around with the best car insurance companies to find out which offers the best rates for your situation. When shopping around, ask what insurance discounts you might qualify for and what you and your teen need to do to earn them.
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