Any parent who has looked at car insurance for teen drivers knows the increased cost can be astronomical. There are a few factors that contribute to that high price.
The main one is that teens are, on average, more risky to insure than older drivers. In 2017, teens aged 15-19 represented 6.5% of the U.S. population, according to the CDC. However, this same group made up 8% of the total costs of motor vehicle injuries (fatal and non-fatal).
Teens are at high risk for an auto accident because they are new drivers, young, and may be more aggressive (especially males). All of those factors contribute to high auto insurance premiums. Even if your teen is a very competent driver, it really won’t make a major difference.
They’ll simply need to get a few years of driving experience under their belt with no accidents before reasonable insurance rates are a reality. So then what is the best car insurance for teen drivers if you're looking to save money? Here are the strategies and companies that can help you save.
Adding Your Teen To Your Policy: The Pros and Cons
Parents might not like to hear this, but putting your teen on your insurance policy will drastically reduce the cost of car insurance for teen drivers compared to a stand-alone policy.
For an 18-year-old, the savings come out to around half of the price. For a 16-year-old, a stand-alone policy costs an average of $2,000 (or 130% to 140%) more per year according to Carinsurance.com.
Of course, adding your teen to your personal policy will raise your own premiums. And you'll also be liable for any accidents that your teen gets into. Their accident is basically your accident and will likely increase the cost of your insurance even further.
How To Save On Car Insurance For Teen Drivers
There are a few ways that you can reduce the cost of car insurance for teen drivers. First, you'll want to make sure to assign them to the cheapest car on your policy. If you one of your cars is worth $500 and the $20,000, you definitely want to make sure that you're teen is assigned to the $500 car.
Another way to save is to take advantage of available discounts. For example, your insurer may offer a "Good Grades" discount for high school and college students. Check out the cheapest car insurance for college students.
"Student away" discounts can also reduce the cost of insuring students who spend a large portion of the year at an out-of-state college separated from their car. You can also check to see if your insurer gives a premium discount to teens who complete driver's ed courses or safe driver courses.
The Importance of Shopping Around
To keep costs low as possible, you’ll want to shop around. Your current insurance company may not be the best choice when it comes to adding your teen to your insurance.
For one, your insurance company may not offer one or more of the discount programs listed above. Or they may simply have a tendency to penalize teen drivers more than other insurers. The price of car insurance for teen drivers will also vary depending on where you live and your teen's gender (teen males will typically cost more than females to insure).
Even if your insurer traditionally offers low rates for car insurance for teen drivers, a different company may still be able to offer you a better rate if they offer short-term discounts to get new customers in the door.
But you'll want to carefully consider whether switching insurance providers is worth the time and hassle. It certainly could be if the savings are large enough.
Then again, if you’ve had a great experience with your insurance provider and your potential savings from switching are minimal, you may decide that sticking with the insurer that you've come to know and trust is your best option.
The Best Car Insurance For Teen Drivers By State
Recently, ValuePenguin compared the cost of car insurance for teen drivers in various states. Below, you'll find a list of the best insurance providers from five of the states evaluated in the study. This might give you a starting point when doing your own insurance research.
It's important to point out their study only included insurers who were available in at least three of the ten states. This means that small, regional insurers weren't considered.
So while the data below can give you an idea how the biggest players rank in each state, you may still want to get quotes from smaller providers that are only available in your area.
A 50-year-old driver with a clean record can expect to pay between $1,339 (Geico) and $2,267 (Farmers) for car insurance. Adding an 18-year-old to the policy would increase it by $880 (State Farm) to $4,416 (Geico). Here were three cheapest providers of car insurance for teen drivers in California.
- ~$2,740 — Mercury
- ~$2,900 — State Farm
- ~$3,200 — Auto Club
As you can see, costs vary widely even within the same state. It’s certainly worth your time to get multiple quotes before choosing an insurer.
A 50-year-old driver with a clean record can expect to pay between $1,723 (Geico) and $5,095 (Allstate) for car insurance. Adding an 18-year-old to the policy would increase it by $1,777 (Geico) to $5,197 (Progressive). Here were three cheapest providers of car insurance for teen drivers in Florida.
- ~$3,500 — Geico
- ~$4,800 — State Farm
- ~$9,100 — Allstate
A 50-year-old driver with a clean record can expect to pay between $740 (USAA) and $2,730 (Allstate) for car insurance. Adding an 18-year-old to the policy would increase it by $563 (USAA) to $3,380 (Progressive). Here were three cheapest providers of car insurance for teen drivers in Pennsylvania.
It's important to point out that only USAA is only available to active or retired military officers and their families. If you're not eligible for USAA, Erie is the most affordable car insurance for teen drivers in Pennsylvania, followed by Nationwide and State Farm (~$3,300).
A 50-year-old driver with a clean record can expect to pay between $1,327 (USAA) and $3,831 (Allstate) for car insurance. Adding an 18-year-old to the policy would increase it by $1,477 (Geico) to $4,781 (Progressive). Here were three cheapest providers of car insurance for teen drivers in New York.
- ~$3,600 — Geico
- ~$3,700 — USAA
- ~$5,300 — New York Central Mutual Fire
A 50-year-old driver with a clean record can expect to pay between $1,078 (USAA) and $4,047 (Allstate) for car insurance. Adding an 18-year-old to the policy would increase it by $899 (USAA) to $7,458 (Allstate). Here were three cheapest providers of car insurance for teen drivers in New York.
- ~$2,000 — USAA
- ~$3,200 — State Farm
- ~$3,500 — Geico
Going through the above samples, there isn’t one clear company that can be considered the best car insurance for teen drivers in every state. While Geico was the top company in Florida and New York, State Farm outperformed them in California and Texas.
Overall, Geico, State Farm, and USAA do seem to be the cream of the crop, however. All three of those insurers ranked in the top three in three of the five states shown above.
But at the end of the day, unless you’re moving to a different state soon, your only concern needs to be: what's the best and lowest-cost car insurance provider in my state. And to find that out, you'll want to get multiple quotes from insurers in your state or use an online comparison shopping tool like Policygenius.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.