Parents can pay nearly $8,000 a year to insure a 16-year-old, with rates dropping each year as teens get older.
Experts recommend opting for higher liability limits and full coverage to avoid being underinsured and to lower future premiums.
Discounts for good students, usage-based tracking, bundling policies, and shopping around yearly can help lower costs.
For teenagers, getting your driver’s license comes with excitement and a sense of freedom. For parents, there’s stress about safety, as well as the added expense of car insurance.
Recently, The Zebra, a company that works to simplify insurance shopping for consumers, published a report that did a deep dive on car insurance for young drivers. Their work revealed that it could cost parents nearly $8,000 per year to insure their teens.
On top of that, male drivers cost more to insure than female drivers, and where you live also affects how much you’ll pay in car insurance.
To break this down, and give parents some tangible tips to save money on their teens’ car insurance, ConsumerAffairs interviewed Susan Meyer, a licensed insurance agent and insurance analyst at The Zebra.
“While everyone likes to think their teen is a better driver than the average, teens pay the highest for insurance for a reason,” Meyer told ConsumerAffairs. “Statistically teens are three times more likely to be in a car accident per mile driven.”
What to know about coverage
Meyer offered some practical tips for parents when they’re looking through different policies for their teen driver.
"Car insurance for teens is expensive and when choosing your coverage options, it can be tempting to go with the minimum coverage, especially if your teen is driving a clunker that isn’t worth much,” she said.
“However, we generally recommend against minimum liability coverage (unless it's all you can afford). It can actually result in higher insurance costs later as insurers view drivers carrying minimum-only coverage to be riskier.”
Meyer explained that teens also risk being underinsured in the event of an at-fault accident, meaning you can be on the hook for financial damages.
She said that her team recommends that parents go with 50/100/50 liability limits and full coverage with a deductible of $1,000 for their teen drivers.
Avoid these mistakes
While insurance shopping isn’t always fun and can often come with headaches, Meyer encourages parents to do it once a year to make sure they’re getting the best rates for their teens.
“When you have a teen, every single birthday makes a major difference in rates. The average annual rate for a 16-year-old boy is $8,139, which goes down to the (comparatively) low $4,495 by age 19. If you’re not regularly shopping around for insurance, you could be missing some huge savings.”
Additionally, she recommends that parents regularly check their own insurance policies when adding teen drivers.
“Another mistake that parents make is not increasing their liability limits when adding a teen driver to their policy. This can protect against lawsuits or damages that arise if your teen is involved in an accident. It’s also important to note that your teen won’t qualify for most accident forgiveness programs, as eligibility usually requires three to five years of clean driving.”
Are there ways to save?
Though parents might be stressed about the added expense to their monthly premium, Meyer says that there are ways for parents to save money.
Good students and good drivers: If your teen is a good student or a particularly good driver, you can check for discounts that might apply to them or consider getting a telematics device. Since this focuses on how they actually drive, it can help counteract their age a bit.
Bundle: Regardless of age, bundling your policy with a home or renters policy, or increasing your deductible, can save you money.
College: If your teen goes to college out of town and doesn’t drive a car there, you can lower your coverage. In this situation, you may be able to remove your teenager from the policy, then add them back on as a temporary driver during school breaks.
Check your carrier: Your choice of insurance company will also make a big difference in what you pay. Some carriers offer better deals for teens than others. Also, don’t forget to look at smaller regional carriers that may not be as familiar but could still have competitive rates for teens.
Parents can pay nearly $8,000 a year to insure a 16-year-old, with rates dropping each year as teens get older.
Experts recommend opting for higher liability limits and full coverage to avoid being underinsured and to lower future premiums.
Discounts for good students, usage-based tracking, bundling policies, and shopping around yearly can help lower costs.
For teenagers, getting your driver’s license comes with excitement and a sense of freedom. For parents, there’s stress...
