When your teenager becomes a fully licensed driver, it means they’re allowed to hit the road on their own, which can be stressful for parents, the teen themselves, and even other drivers. The other hard part about being a teen driver? Figuring out the right car insurance policy. There are so many options out there that all offer different coverages at varying rates, but don’t worry, we’re here to demystify car insurance for teens and their families.

Understanding car insurance for teen drivers

Teen driver insurance is a type of auto insurance designed to cover young drivers, typically between the ages of 16 and 25. Due to their inexperience and higher likelihood of being involved in accidents, insurance companies often charge higher premiums for teen drivers. However, there are several strategies to help manage these costs.

One effective way to reduce the cost of teen driver insurance is by adding the teen to a parent’s existing auto insurance policy. This approach can be more economical than having the teen purchase their own policy. Additionally, many insurance companies offer various discounts that can further lower premiums. For instance, good student discounts reward teens who maintain a high GPA, while discounts for completing defensive driving courses can also help.

Choosing the right coverage options is crucial. While it might be tempting to opt for the minimum required coverage to save money, this can be risky. Comprehensive and collision coverage, along with liability insurance, provide a more robust safety net for young drivers. By understanding these aspects, parents and teens can make informed decisions that balance cost and protection.

When teenagers need car insurance

Teenagers don’t need car insurance when they only have their learner’s permits and are learning to drive. However, they will need insurance before they get their license and drive on their own. When your teen gets their learner’s permit, it’s a good idea to contact your insurance company and find out how much it will cost to add them to your policy.

Most insurance companies won’t let teens have their own insurance policy until they’re 18, so the chances are that even if the teen owns their car, they’ll have to be added to their parents’ policy.

How car insurance protects teen drivers

Because teens are new drivers, insurance experts recommend getting them a lot of coverage to make sure they’re protected in the event of an accident. Distracted driving is a significant risk for teens, making it crucial to have comprehensive coverage to protect them in case of accidents. Car insurance will help safeguard teenagers if they cause bodily or property damage to others. Just getting the state-required minimums for your teen driver may lead to a hit on your finances if they’re in an accident.

Here are the different coverages we recommend getting for teenage drivers:

  • Liability coverage – You’ll most likely have to get this one because most states require minimum liability coverage. Liability coverage has two main types: Bodily injury (BI) and property damage (PD).
    • Bodily injury liability pays for any injuries or death that the policyholder or driver is responsible for after an accident. Bodily injury liability limits are broken out into two numbers (i.e., $25,000/$50,000). The first number is the highest amount your insurance will pay per person and the second is the maximum your insurance will pay for all injuries suffered per incident.
    • Property damage liability covers drivers if they damage someone else’s property, like their car or house. It also provides a legal defense if someone files a lawsuit against you. It’s the third dollar amount you may hear when people are talking about the liability coverage limits (i.e., $25,000/$50,000/$20,000). Property damage liability does not cover damage to your vehicle.
  • Collision coverage – This is the coverage that covers damage to your car when you collide with another vehicle or object. If you hit something, your deductible will apply (collision deductible options typically range from $50 to $2,500).
  • Comprehensive coverage – Comprehensive coverage helps cover damage to your car that’s not from a collision, like if it is stolen or damaged by flood, fire, animals, and falling objects.
  • Uninsured/underinsured motorist coverage – This protects you if you’re in an accident and the at-fault driver doesn’t have any insurance or doesn’t have enough liability coverage to cover the damages.
  • Personal injury protection (PIP) – MedPay/PIP pays the necessary medical bills for the driver and/or passengers after being hurt in a car accident, no matter who is at fault.
  • Upgraded accident forgiveness – Accident forgiveness refers to a policy feature for some carriers that’s automatically earned if a customer goes three straight years without having an accident (this means no accidents for any driver on the policy, not just the main policyholder). After being accident-free for three years, the customer is eligible to have their next at-fault accident waived from their policy. Upgraded accident forgiveness is offered by some carriers too, like Elephant. Instead of waiting three years for an accident waiver, Upgraded Accident Forgiveness would start as soon as the policy begins. To qualify, there can’t be any chargeable or non-chargeable accidents from the past three years for any driver on the policy.
  • Rental reimbursement – Rental reimbursement is coverage that is available when your vehicle is not drivable or needs repairs after a comprehensive or collision claim. Rental reimbursement provides the driver with a rental car while their vehicle is being repaired or replaced.

Why car insurance premiums are more expensive for teenagers

Car insurance costs are more expensive for teenagers simply because teens are riskier drivers. They have less experience on the road, so insurance companies deem them as a higher accident risk. According to The Zebra, in 2024 the national average annual policy after adding a teen to a family policy is $2,624. The national average annual premium for a teen not on a family policy is roughly double at $4,616.

Younger drivers, including teens, generally see their rates gradually drop as they age. You may have heard that car insurance gets cheaper once someone turns 25, but that’s not entirely true. Yes, you may be paying less for insurance than when you were a teen, but the number doesn’t immediately go down when you turn 25. Instead, most people will see their rates gradually drop as they age. Age is just one factor that determines the cost of an insurance policy. Other factors that affect premiums include car make and model, gender, zip code, and mileage.

So, are teenagers riskier drivers than everyone else on the road? Statistics say yes. According to The Insurance Institute for Highway Safety (IIHS), the teen driver crash rate is nearly four times higher than for drivers 20 and older per mile driven.

Plus, teens may engage in riskier behaviors while driving. According to the National Highway Traffic Safety Administration (NHTSA), car crashes are the leading cause of death for teenagers. A quarter of those crashes involve a driver under 21 who’s been drinking. They found that in 2022, 30% of drivers aged 15-20 who were killed in crashes had BACs of .01 or higher. If you’ve been drinking, don’t drive. The NHTSA recommends planning for a safe ride home, like with a sober friend or via a rideshare app, if you know you’re going to be under the influence.

Discounts and savings for teen drivers

Finding affordable car insurance for teen drivers can be challenging, but taking advantage of available discounts can make a significant difference. Here are some common discounts that can help reduce premiums:

  • Good student discount: Many insurance companies offer discounts to teen drivers who maintain a good grade point average. This not only encourages academic excellence but also helps lower insurance costs.
  • Defensive driving course discount: Completing a defensive driving course can help teen drivers develop safe driving habits and qualify for a discount. These courses teach valuable skills that can reduce the likelihood of accidents.
  • Driver’s education discount: Some insurance companies provide discounts to teen drivers who complete a driver’s education course. These courses offer comprehensive training that prepares young drivers for the road.
  • Low-mileage discount: Teen drivers who drive fewer miles may be eligible for a low-mileage discount. This is particularly beneficial for teens who only drive occasionally or for short distances.
  • Multi-car discount: Adding a teen driver to a parent’s policy can result in a multi-car discount. This can be a cost-effective way to insure multiple vehicles under one policy.

By exploring these discounts, parents and teens can find ways to make car insurance more affordable without compromising on coverage.

Choosing the right coverage for teen drivers

Selecting the right coverage for a teen driver is essential to ensure they are adequately protected on the road. Here are the key types of coverage to consider:

  • Liability insurance: This is a must-have as it covers damage to other people or property in the event of an accident. Given the higher risk associated with teen drivers, having sufficient liability coverage is crucial.
  • Comprehensive insurance: Comprehensive insurance covers damages to the teen’s car that are not caused by a collision, such as theft, vandalism, or natural disasters. This type of coverage provides peace of mind knowing that the vehicle is protected against a wide range of risks.
  • Collision insurance: Collision insurance covers damage to the teen’s car in the event of a collision with another vehicle or object. This is particularly important for new drivers who are more prone to accidents.
  • Personal injury protection (PIP) insurance: PIP insurance covers medical expenses for the teen and their passengers in the event of an accident, regardless of who is at fault. This ensures that medical bills are taken care of, providing financial protection in case of injuries.

By carefully selecting these coverage options, parents can ensure their teen drivers are well-protected while keeping insurance costs manageable.

Educating teen drivers on safe driving habits

Educating teen drivers on safe driving habits is crucial for reducing the risk of accidents and lowering insurance premiums. Here are some effective ways to promote safe driving:

  • Taking a defensive driving course: Defensive driving courses teach teen drivers how to anticipate and respond to potential hazards on the road. These courses can improve driving skills and often qualify for insurance discounts.
  • Practicing safe driving habits: Encourage teen drivers to practice safe driving habits, such as following the speed limit, wearing a seatbelt, and avoiding distractions like texting while driving. Consistent practice of these habits can significantly reduce the likelihood of accidents.
  • Using technology: Many insurance companies offer apps and devices that track teen drivers’ behavior and provide feedback on safe driving habits. These tools can help teens become more aware of their driving patterns and make necessary adjustments to improve safety.

By focusing on education and safe driving practices, parents can help their teen drivers develop the skills needed to stay safe on the road and potentially lower their insurance premiums.

Adding a teen driver to your policy

Adding a teen driver to your policy can be a cost-effective way to insure them, but it’s essential to consider several factors:

  • Increased premiums: Adding a teen driver to your policy will likely result in higher premiums due to the increased risk associated with young drivers. However, this can still be more affordable than having the teen purchase their own policy.
  • Coverage options: Ensure you choose the right coverage options for your teen driver, including liability, comprehensive, and collision insurance. Adequate coverage is crucial to protect against potential financial losses.
  • Discounts: Take advantage of discounts available for teen drivers, such as good student and defensive driving course discounts. These can help offset the increased premiums.
  • Policy limits: Consider increasing your policy limits to ensure adequate coverage for your teen driver. Higher limits provide better protection in the event of a serious accident.

By understanding these factors and making informed decisions, parents can effectively manage the cost of insuring their teen drivers while ensuring they have the necessary coverage.

By understanding teen driver insurance, taking advantage of discounts and savings, choosing the right coverage options, educating teen drivers on safe driving habits, and adding a teen driver to your policy, you can help reduce the cost of car insurance for your young driver.

What teenagers should do when involved in an accident 

What happens if you get into an accident as a teen driver? First, don’t panic. We know it can be scary, especially if you’ve never been in an accident before, but you need to be calm enough to follow a few important steps post-accident:

  1. See if anybody is hurt. If they are, call 911 as soon as possible.
  2. Move your vehicle off the road/out of traffic if it’s drivable and turn on the hazard lights.
  3. If it’s not possible to drive the vehicle, call roadside assistance or a towing company to move the car.
  4. Call the police to report the accident.
  5. Exchange contact and insurance information with the other driver.
  6. Take photos of the accident.
  7. Write down any other details about the accident in your phone’s notes app. Include the other driver’s contact info, their vehicle’s make and model, the location, the weather at the time of the accident, the date and time. Also, include any contact information for witnesses.
  8. Get a copy of the police report.
  9. Call your insurance company to start the claims process.
  10. Let the insurance company guide the process from there.

Teenagers must understand they should NOT accept or assign blame when chatting with the other driver. Let the police and the insurance companies work out who is at fault.

How to get cheap car insurance for teens and college students

Like we mentioned above, car insurance for teenagers is usually more expensive, but it doesn’t have to be outrageous. You can find an affordable policy that works for your teenage driver and budget.

The first thing we recommend is shopping around for the best price. While most insurance carriers use the same factors to determine a driver’s rate, they all weigh the factors differently, which is why you’ll find different prices depending on which carrier you use.

As you’re shopping around, ask different carriers about the discounts for teen drivers. For example, Elephant offers a good student discount. High school or college students getting great grades see lower car insurance premiums.

There’s also the “student away” discount that benefits teens in college. If you have a teenager attending school at least 100 miles away from home who isn’t actively driving a car at the moment, you don’t have to pay the same rates as if they were regularly driving.

Other car insurance discounts teenagers might be eligible for include:

  • Safe driving habits
  • Used car
  • Multi-car (take advantage of this for teens still on their parents’ insurance!)
  • Diminishing deductible

When it’s time for a teenager to start driving on their own, it can be a stressful time for their family and the teen, especially with all the insurance options out there. But with Elephant, you can get an affordable policy that helps protect your teen driver. Get a quote online, or easily add your teen driver to your existing policy here

 

Article last updated on January 16th, 2025 at 3:31 pm