Resources Published November5, 2019 By Ernest Hamilton

Is It Possible to Save on the Cost of Car Insurance for Teens?

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Is It Possible to Save on the Cost of Car Insurance for Teens?
(Photo : Is It Possible to Save on the Cost of Car Insurance for Teens?)

Teens and car insurance-two scary thoughts when they're used together. Teens and car insurance can be confusing and expensive. For families with a new teen driver, navigating insurance is a challenge. 

The following are some general things to know about car insurance for teen drivers.

  • Teen drivers have the most expensive auto insurance rates because they're seen as the riskiest group of drivers in large part because of their inexperience. Teen drivers also display riskier behaviors, such as texting while driving and speeding. 

  • Many parents wonder if their teen should get a separate policy, and the answer is no, usually, it's not the best idea. That will tend to be much more expensive. 

  • Even if your teen doesn't drive, but they have their license, they will likely need to be named on your insurance policy. 

How Much Will It Cost to Add a Teen to Your Policy?

Before you start shopping for ways to save on insurance, it's a good idea to know how much it's going to cost. 

Every specific situation is unique, but the average household car insurance bill can go up more than 150% when a teen driver is added. Teenage boys are more expensive to insure than girls, and in some states, coverage can cause premiums to go up even more-as much as 200%. 

If you were to add 130 to 140% to your insurance bill, it would be an extra $2,000 a month-it's a substantial amount. 

So, how do you add a teen to your policy?

First, contact your insurance company (although they might have contacted you proactively). You can then go over the changes to your policy and learn more about coverage options for a teen driver. 

Have your teen's license information ready and vehicle information if you have any new ones. Then, once you have that information you can start thinking about comparing. 

For teens aged 16 to 19, the average rate of insurance is $2,999 a year, but that goes down quite a bit when someone turns 20. 

Saving Money on Teen Insurance

When it comes to car insurance for a teen, there aren't a lot of ways to save at least not substantially, but sometimes every little bit can help. With that in mind, the following are some ways you might be able to shave money off your teen's insurance. 

  • Think about usage-based insurance. Usage-based insurance uses telematics, which are also known as black boxes to see driving metrics. Many insurance companies offer something called Pay-As-You-Drive or Pay-How-You-Drive. If your teen doesn't drive often and is a safe driver, this might save you hundreds on your premiums each year. Just as an example, Allstate offers one of these programs with maximum savings of 30% annually, depending on driving habits.

  • Good student discounts are another viable way to save money on the cost of your teen's car insurance. Good student discounts can reduce premiums anywhere from 10 to 30% in most cases. To be eligible, your teen should have at least a B-average. Sometimes participation in after-school activities can factor into these discounts too. 

  • Think about the car your teen is going to be driving. Some cars are cheaper to insure than others. Good cars for teens include mini-vans and large sedans because they're safe, the parts are easy to find when they need repairs, and they're generally reliable. Used cars are going to be cheaper than a new car to insure as well. 

  • Ask if your insurance company offers any discounts for younger drivers who complete certain courses because some will. 

What If Your Teen Gets a Ticket?

It's essential that you impart the importance of safe, mindful driving on your teen both for safety reasons and also because of the costs of insurance. If your teen were to get a ticket for texting while driving, that could send your premiums soaring even more-more than 20% on average. 

If your teen gets a speeding ticket for going just 1 to 15 mph over the limit, that can mean an increase of 20%, and failure to stop might increase rates 19%. 

Teens need to understand that there are limits to them being able to drive if they don't follow the rules and it could easily become unaffordable for your family. If you want to show your teen how important this is, have them pay for a portion of their car insurance, so they have a stake in it as well.

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