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If you are or know someone who just got their driver’s license and a vehicle, remember that having auto insurance is mandatory in 48 states — and most policies will charge more for those who are new to driving. An insurer may conclude that it’s a greater risk to cover a teenage or first time driver than an experienced driver with safe driving habits.
Car insurance rate premiums shoot up by around 130 to 140% when a teen driver is added to an existing policy and can rise an additional 20 to 40% if that driver gets a speeding ticket or has an accident. Rates like these tend to remain in place until a driver turns 20.
Thankfully, there are ways to cut down on insurance premium policy costs. For instance, driving safer and more efficient vehicles (such as Honda Civics, Toyota Priuses, and Nissan Rogues) tends to cut costs, even for teen drivers. There are also discounts based on how often you use your car: “Some companies offer discounts to motorists who drive less than the average number of miles per year,” says Janet Ruiz, director of strategic communication at the Insurance Information Institute.
Teens may also qualify for good student discounts, or discounts based on taking defensive driving classes or graduated driver licensing programs. “For young drivers,” says Dan Karr, founder and CEO of ValChoice, an independent platform for insurance ratings and analytics, “there are discounts for taking drivers certification courses and maintaining above a B average.”
You may also be able to save money if the younger driver on your policy isn’t using their car because they’re away at college. “If there is a young driver on your policy who is … away at college without a car,” says Ruiz, “you may also qualify for a lower rate.” Every insurance carrier offers different discounts, so it pays to check which ones apply to you before signing up.
5 things to do first
- Decide if you’re getting a separate auto insurance policy for your teen or if you want your teen listed on your insurance. The former is usually considered cheaper in the short term as your own premiums won’t go up. But the latter option is typically safer: Your own policy will be extended to your teen, with few changes made.
- Decide which car insurance coverage benefits are important to you, and make sure to watch out for them when speaking to an insurance agent. For instance, many insurers won’t extend accident forgiveness to younger drivers, but Nationwide will.
- Check which car insurance discounts your teen might be eligible to receive. Many companies offer good student discount benefits, as well as discounts for teens who’ve taken approved safe driving courses.
- If your teen or young driver needs to complete certain tasks in order to qualify for car insurance discounts, they should, whether that entails boosting their grades or taking a training course.
- Compare car insurance quotes from a number of different insurers (taking discounts into account), and make a decision.
Geico manages to knock it out of the park as an auto insurance company, offering both the best and most reasonably priced premiums and insurance coverage of any major company. The company is already number one when it comes to customer service and satisfaction, and you can trust its reputation when adding a new driver to your insurance policy. Leave it to Geico to make things straightforward and simple, no matter the task.
Geico’s individual policy rates vary on a state-by-state basis, but it’s routinely ranked among the cheapest options in any state. It also offers discounts that help cut the cost even further: full-time students who receive good grades (Geico defines this as a B average, Dean’s List or equivalent inclusion) are eligible for up to 15% off.
Most of us aren’t eligible for an insurance policy with the United Services Automobile Association, but if you’ve got a military member or veteran in your family, then your teen driver may be able to get great coverage that’s even cheaper than Geico’s.
USAA allows families to potentially save hundreds of dollars a year over leading insurance providers. It also offers the same discounts as many of its competitors, including benefits for good students and for drivers who have taken driving training courses.
Most people won’t be able to get coverage through USAA, but if you think you might be eligible for a policy, it’s definitely a good idea to get a car insurance quote from it before making your final decision.
Car insurance is more expensive for teens because of the perception that their inexperience makes them more likely to be involved in accidents. Whether this is true or not, the fact remains that one in five 16-year-old drivers has an accident in their first year behind the wheel.
Nationwide is the rare insurance company that extends its accident forgiveness plan to drivers under 18, meaning that if a teen driver is in an all-too-common fender bender, their family won’t see their rates skyrocket. It also offers roadside assistance to teen drivers in the case of vehicle trouble, which should have their parents sleeping a little easier.
Saving money is a major priority for college students and their parents. Nobody wants to spend a lot on a car insurance policy, especially when the vehicle in question may only be used on rare occasions. Just the thought of spending thousands a month in insurance cost on a vehicle that’s almost always in a parking lot is stress-inducing.
Not only does Progressive offer everyday low prices, but it’s also created a series of discounts that apply specifically to college students. In addition to the standard good student discount, Progressive offers discounts to students who are more than 100 miles from home and did not take their cars to school, and usage-based auto insurance rates that saves money for drivers who rarely use their cars.
Progressive’s website also offers a list of tips to help parents determine if they should add teens on their plans or get them their own.
Pennsylvania-based Erie Insurance has been ensuring drivers for nearly 95 years, and its reputation for sterling service extends to young drivers, as well. Erie offers discounts, ranging from 5% to 20%, that help offset the cost of putting an additional (inexperienced) driver on your insurance policy.
Erie offers three different discounts for young drivers. There’s the Youthful Driver Discount, which can be claimed by unmarried drivers under 21 who live with their parents; the Youthful Longevity Discount, which can be claimed by unmarried young drivers who’ve already been covered by a parent or guardian’s Erie plan; and the Driving Training Discount, for drivers under 21 who’ve taken an accredited driver training course. There’s also a distant student discount for families of college students who don’t take their cars to school.
Erie currently operates in Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and Wisconsin, as well as Washington, D.C. If you live in one of these places, it’s definitely worth checking to see what an Erie teen car insurance policy can offer you.
Comparison of best car insurance for teens and new drivers
|Company||Discounts available for teens||Additional benefits|
|Geico||Driver’s education, good student discount||Large customer service network, many additional discounts|
|USAA||Driver training, good student discount||Award-winning service and coverage|
|Nationwide||Good student discount||Accident forgiveness extended to drivers under 18, roadside assistance|
|Progressive||Teen driver, good student discount, distant student||Competitive rates, name-your-price tool|
|Erie Insurance||Youthful driver, youthful longevity, driving training, distant student||Rate lock, first accident forgiveness|
How to save money on auto insurance for teens
Many insurers will allow you to add a teen driver to your policy for free if they just have a learner’s permit, so that covers teens enrolled in driver’s education courses. It’s also a fact that teen boys are more expensive to add to a policy than teen girls, as they’re more likely to be involved in a serious auto accident.
The best overall coverage for teen drivers is offered by Geico, a company renowned for the service it extends to its customers. Geico also offers the cheapest auto insurance rates of any widely available car insurance company (though USAA is cheaper for families of military members or veterans). That said, there are still other companies that offer great benefits and incentives.
The best coverage for you is the one that fits your needs, addresses your concerns, and makes sense for your situation. While Geico’s insurance is the cheapest overall, another insurer may offer discounts that make its product even less costly for you. A different one may have coverage options that resonate with you.
Finally, it’s important to remember that what makes an auto insurance provider good for teens isn’t that different from what makes one good in general. Karr explains: “ValChoice includes claims handling as the most important factor for the reason that if an insurance company doesn’t pay a claim, it doesn’t matter how low the price was.” Remember to do some research on your prospects and evaluate all options before making a decision.
Written by Scott Fried for Roadshow.