Teenagers are one of the riskiest groups of drivers to insure. That means car insurance for a 16-year-old can very expensive. In fact, most teenagers find it’s more economical to be placed on their parents’ policy to keep rates low.
How much is car insurance for a 16-year-old? Are there any tips you can use to lower car insurance rates? Today, we’re explaining everything you need to know about the price of auto insurance for teenagers.
Auto Insurance is Expensive for Teenagers Because They Have No Driving Experience
Auto insurance rates are higher for teenagers because they lack driving experience. Insurance companies always rely on statistics to set insurance rates. Statistics show that teenagers are more likely to get into an accident than someone with 5, 10, or 20 years of driving experience.
Of course, that doesn’t mean you can’t get car insurance as a 16-year-old. Insurance rates might not be as high as you think.
Sure, you’ll pay a lot of money for insurance if you’re trying to insure a brand new SUV. However, many teenagers drive older cars. On an older car, you might be able to significantly lower insurance costs by dropping comprehensive and collision insurance.
Overall, car insurance for a 16-year-old is more expensive than many other types of car insurance – but it’s still a manageable expense. As long as you spend time shopping for the best deal, you’ll have no trouble finding a car insurance policy that meets your unique needs.
Why Is Car Insurance Higher for Teenagers?
Generally speaking, teenagers are worse drivers than older, more experienced people. Yes, it’s a stereotype – but the entire auto insurance industry is built on stereotypes.
Insurance companies look at national accident statistics that show a clear correlation between teenage drivers and accidents. In the United States, more than two-thirds of all car accidents on highways are caused by teenage drivers every year. This statistic remains surprisingly consistent over the years.
Ultimately, a 16-year-old doesn’t have the same amount of experience as an older driver. Some 16-year-old drivers will go their entire lives without being in an accident. Others will cause five severe accidents before they turn 20. Like all insurance plans, insurance companies set rates based on current statistics.
Statistics also show that teenage males cause more accidents than teenage females.
The Average Annual Insurance Cost for a 16-Year-Old is $2593
The average 16-year-old driver in the United States will pay about $2593 per year in insurance, assuming they are on their own insurance policy (not their parents) and buy the state minimum in coverage. If the driver purchases the recommended amounts of liability coverage (50/100/50), that premium jumps up to $2,957. For full coverage auto insurance, which is more expensive, 16-year-olds can expect to pay close to $7000 annually.
16-year-old females will pay less than 16-year-old males. The reason for this is because insurers view male drivers as being faster drivers and also being more aggressive on the road.
This annual rate of $2593 can significantly increase if you get into an auto accident or get ticketed for a traffic violation. With insurance rates for 16 years olds already astronomically high, it is imperative to maintain a good driving history. It’s even more critical to maintain safe driving habits.
To get the best insurance rates for a 16-year-old, you’ll want to stay on your parents’ policy as long as possible. Most states allow this until age 21, although some states raise the limit until 26. Some states also have restrictions related to college, allowing you to remain on a policy at 26 provided that you’re still in college.
Do Rates Drop with Age?
Generally speaking, insurance rates drop with age.
However, this isn’t necessarily true when you’re 16. Typically, insurance rates will rise when you turn 18 because you’re more likely to do more driving. The reason for this is because this is the age when many kids move out of the house.
Furthermore, you will eventually move off your parents’ policy – like when you leave the house or graduate from college. When this occurs, and you need to get your own policy, then you can expect rates to rise significantly.
Conclusion: How Much Should You Pay for Car Insurance at 16 Years Old?
How much is car insurance for a 16-year-old? Rates vary around the world. In general, 16-year-old drivers will pay higher car insurance rates than older, more experienced drivers. However, many drivers find the prices to be manageable – especially when they take the time to compare auto insurance quotes from multiple providers.
Furthermore, it’s always cheaper to stay on your parents’ policy and drive your parents’ vehicle. You’re allowed to do this in most states until age 21, although some states extend the limit to age 26. If you’re on your parents’ policy, you might pay just $621 per year to be added to their insurance.
If you absolutely need to have your own insurance policy, then consider driving an older car and dropping collision and comprehensive coverage. By maintaining liability coverage, you can legally drive on the road while avoiding high insurance costs.