What You Should Know Before Buying Car Insurance for Teenagers

Shutterstock

When it comes time to buy car insurance for teens, there are several things you can do to lower the cost. It can be much costlier than necessary if you just buy it without planning to get better car insurance rates.

Add the Teen to Your Policy

Instead of buying a new policy, which would be considerably more expensive, it is cheaper to add the teen to your policy. Forbes says that many car insurance companies will let you add a teen to your policy when they get their driver’s permit for free. You will start paying higher premiums once they get their driver’s license.

Some states will not let you get coverage while the teen has a learner’s permit; other states require it.

Avoid Buying Minimum Coverage

Forbes also advises that you not try to save money by buying minimum coverage for your teen driver. They are more prone to get into accidents, which is why it is better in the long run for you to get full coverage. Although you could just get covered for the other person’s car and property (liability car insurance), it is better to cover any damage that may occur to your car, too (comprehensive car insurance).

Each state has minimum coverage requirements when you buy auto insurance. The minimums are often insufficient to cover all costs that could be involved in a more serious accident. If that happens, you become liable to pay any excess amounts—which could be quite high.

Bundle Your Insurance Policies

Most insurance companies give discounts to people who have more than one policy with them. It may include a homeowner’s and an auto policy, or they may have a multi-car insurance discount.

When you talk to your car insurance agent about adding your teen, see if there are any additional discounts you might qualify for to reduce your rates further. At the same time, get an auto insurance quote to know what it will cost to add your teen to your policy with all possible discounts factored in.

Once you have that quote, get several car insurance quotes to compare them to the one from your insurance company. You can get car insurance quotes online, or Experian says you can get quotes from an independent agent who sells policies for multiple auto insurance companies.

Compare the Costs

After you have received several quotes, compare the features of the policies and the cost. Remember that if you switch companies, you will lose at least one discount—which is one you get for staying with the company for several years.

Another discount you may no longer have is accident forgiveness if your insurer offers it. It is a discount you get when you and anyone else on the policy are accident-free over a three- or five-year period. In some cases, you can choose to pay extra for the privilege.

Accident forgiveness means that if you are involved in an at-fault accident your car insurance rates do not suddenly jump sky-high. It could make sense to purchase this option if your car insurance company does not offer it for free when you have high-risk drivers on your policy.

Car Insurance Costs for Teens

Buying car insurance for a teen can be quite expensive. When you put a teen on your policy, you can expect to pay an additional $1,530 annually. Buying a separate auto insurance policy for them will cost an average of $4,980—more than three times as much.

Because 16-year-olds are more apt to be a little reckless with their driving—or more easily distracted by texting while driving—the National Highway Traffic Safety Association says they are 23 times more likely to get in an accident.

According to the AAA Foundation for Traffic Safety, 16- and 17-year-olds are twice as likely to get into accidents as 18- and 19-year-olds. They are also about three times as likely to get into accidents as 20- to 24-year-olds.

The higher accident rate among younger teens is why there is a large difference in the cost as they get older. According to USAToday, putting a 16-year-old on their parent’s policy will cost an average of about $2,419 per year, but $8,765 if they had their own policy. In comparison, a 19-year-old would only cost their parents about $1,495 on their parent’s policy, and about $4,649 if they had their own policy.

Most states will charge more for male drivers than for female drivers. USAToday states that young male drivers are more likely to have risky behavior and be involved in deadly crashes. Some states prohibit gender-based rates: California, Hawaii, Pennsylvania, Michigan, Massachusetts,  North Carolina, Maine, and .

Good Grades Can Lead to a Discount

Maintaining good grades in high school or college can result in a discount when buying new car insurance.

CarInsuranceComparison says that most insurance companies that offer this discount require a minimum of a B average. Either your school administrator must send proof or a current report card may verify it. Bankrate says that this discount can go up to age 25 and be based on their last year of school’s record.

An Accident or Ticket Increases the Cost

An accident or a ticket would raise the cost of car insurance considerably. CNET mentions that if a teen gets either one, it could raise the premiums by 20–40 percent.

Before buying car insurance for teens, check with at least three other companies to find your best auto insurance deal. While it may be less expensive to add it to your policy, it is possible to find it somewhere else. Car insurance companies are highly competitive, and most are raising their rates.

The Epoch Times copyright © 2023. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.