UPDATED: Mar 13, 2020
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The day that you, as a parent, have been dreading is finally here. Your little one has outgrown of his or her bicycle and is ready to get behind the wheel. This is an exciting time for your teenager, yet a very stressful time for you, as a parent. Not only does your child now need to face the challenges of the road, but they also need to face the challenge of finding an affordable auto insurance policy. Luckily, while insurance prices for teenagers are usually outrageously expensive, there are still a few ways for you to save some money when it comes to insuring your teen. Continue reading below to find out:
- What is auto insurance for teenagers?
- When should you buy auto insurance for your teen driver?
- The types of auto insurance that are usually required for teenage drivers.
- Ways teenage drivers can still save money on their otherwise expensive insurance policy
Car Insurance For Teenagers Explained
There are a lot of misconceptions about auto insurance for teenagers. Let’s attempt to clear some of the confusion up. As you may or may not be aware, auto insurance for teens is:
- Required by state law – In all states, you cannot buy a car or even get into the driver’s seat of a car without proper insurance coverage.
- Expensive – It is expensive to insure teenagers because they are in a very high risk group and statistically get into more accidents than any other age group (especially males under 18).
- Important – Often times teens don’t understand the importance of insurance. A lot of teens think they are invisible behind the wheel and will never get into a car accident. They view insurance as another obstacle (or expense) between them and the road. Educate them on why having insurance is important whenever they in the driver’s seat.
When Is The Right Time To Get Car Insurance For A Teenager?
The question of when to get auto insurance for your new teen driver is an important one. Far too many people put off getting insurance for their teenager until the last minute. Luckily, in most states, teenagers are covered under their parents’ policy for as long as they are on their learner’s permit. As soon as they graduate from learner’s permit to driver’s license, however, they need to be insured immediately.
In most situations, adding your teen to your current policy is the most economical way to get him or her insured. It will increase your monthly premium payments by a huge amount, but it is still far cheaper than forcing your teen to go out and buy an individual policy on his own.
Also, realize that most states require anybody living under your roof that is of driving age to be listed on your car insurance policy (even non-drivers). If your teen is of driving age and has their license, they will definitely need to be at least listed, if not insured, as well.
Types Of Auto Insurance For Teens
Now that you are resigned to the fact that your teenager needs auto insurance coverage, let’s take a look at the types of insurance available for teens. An insurance policy for your teen might include one or more of the following types of coverage:
- Liability Coverage – Liability coverage covers the expenses resulting from damages you are responsible for. This includes property damage costs and personal injury costs to others. In these days of multi-million dollar insurance lawsuits and settlements, not having liability coverage can easily ruin a family’s life. This is why liability coverage is a mandatory requirement for all car insurance policies in the United States. Not only should you equip your teen with your state’s minimum required liability coverage, but you should also increase his or her coverage amount to the point you feel comfortable at.
- Collision Coverage – Collision coverage covers the cost of repairing damages to your own vehicle. This is a very common type of auto insurance coverage and is included in most policies. If you are deemed to be at-fault in an accident, if you get into an accident with an uninsured driver, or if the liable party’s insurance refuses to pay you (for whatever reason), collision coverage will still pay to repair your car.
- Comprehensive Coverage – Comprehensive coverage covers the expenses resulting from things other than collisions. Common examples of things covered by comprehensive coverage include theft, fire damage, water damage, damage from animals, and natural disasters.
- Medical Payments Coverage – Medical payments coverage pays for your medical expenses if you are injured in a car accident, whether you are at-fault or not. While nobody likes to think of their teen being injured in a car accident, having this type of coverage is essential in “huge medical bill” America.
- Uninsured or Underinsured Motorist Coverage – Having uninsured motorist coverage will protect you in case you are involved in an accident with a driver who has no insurance or has insufficient insurance coverage and is unable to pay for the damages made to your vehicle. Current estimates put over 11% of all drivers on American roads as “uninsured”, so buying this type of coverage for your teen is not only crucial, it is sometimes required by law.
Now that you are educated in the basic insurance coverage types for teens, you are probably asking yourself – how much will all this cost? Well, unfortunately, there is no simple answer to that question. Insurance premiums depend on many things including the type of car, how often your teen will drive, where your teen will drive, and what discounts you take advantage of. Often times, teenagers can pay as little as $400 a year for insurance and other times, they can pay over $4000 a year for insurance. It all depends. Fortunately, there are a bunch of things you can do to help your teen find the best possible auto insurance rates. Let’s take a look at them.
Getting Discounts On Teenage Driver Insurance
Auto insurance rates are based on the amount of risk a company has to take on in insuring the car and driver in question. Most insurance companies will be pretty uneasy about offering low rates or discounts to new teen drivers, but be assured that good deals are still out there. As always, educating yourself and then shopping around for better rates will typically provide you with satisfying results.
If you read our article about auto insurance discounts, you will see many similarities with the tips below. A majority of the discounts available to adults are also available to teens in one way or another. The tips below are simple ways to reduce risk and build trust with your insurance company, and in turn, reducing your premiums.
When it comes to teen drivers, there are seven things that teenagers and parents can do to save money on their car insurance:
- Get under your parents’ policy – As stated above, it is cheaper to put a teen on their family’s policy than it is to insure them separately. This is an easy and cost-effective way to get the large amounts of coverage you believe your teen needs. Not only will adding them to your current policy reduce paperwork and time, but it will also allow them to get a much higher level of coverage than they would be able to get on their own. Recent reports estimate that adding a 16-year-old teenager to your policy will increase your insurance premium by 152%. While this is quite high, realize that if your teen chooses to buy a policy on his own, away from your policy, it will cost them double or triple what it would cost them to stay on your policy.
- Get good grades – Most insurance companies offer “good student discounts”. Most insurers require that the student maintains a B- or a 3.0 grade point average to be qualified. This discount can result in rate deductions of up to 25%. This may be difficult for some, but the savings alone make the effort worth it. Talk to your teen about this. It may encourage them to improve their grades, especially if they are paying for a portion of their coverage.
(Click to learn more about insurance for college students and insurance for international students.)
- Get experienced – If teenagers take a safe driving course, they are often eligible for a discount of 10% or more. Call your insurance company to ask for more details. Many states and counties require driver improvement classes, to begin with. If you can get your teen enrolled in a driver improvement class, you will not only take stress off of the insurance company and your pocketbook, you will also take stress off of your shoulders. The peace of mind knowing that your teen knows how to drive safely is priceless.
- Don’t get tickets! – Every ticket and traffic citation teenagers receive will have a huge effect on their insurance premiums. After a certain number of citations, some insurance companies can decide to drop their coverage and cancel their policy altogether. Make sure to instill safe driving habits in your teen so they do not get hit with these expensive traffic violations.
- Drive a vehicle that is cheap to insure – Most teens would prefer to drive a flashy sports car, but the fact is, the boring, safer cars are the cheapest to insure. Grandma’s old station wagon might not be such a bad option if you are looking for a cheap car to insure.
- Make sure you have safety features – Discounts may be available for cars that have automatic seat belts, airbags, anti-lock brakes, anti-theft systems, daytime running lights, and electronic stability control. Be sure to read our guide on safety features that lower your insurance rates to get more ideas on which safety features you should look for in a car for your teen.
- Shop around – Teenage insurance rates can be extremely expensive; unaffordable, even. To mitigate this, make sure you shop around to find the best rates possible. Many online rate comparison tools offer free insurance quotes from multiple companies. These services are a great place to start in your search for affordable car insurance coverage for teenagers. In fact, the 4AutoInsuranceQuote.com quote comparison tool located at the top and bottom of this page can help you begin. Enter your zip code to begin comparing rates from reputable insurance providers in your area.
Additional Resources For Teen Car Insurance