There's a lot to know (and a lot at stake) when it comes to teen car insurance. Here are some basic factors to consider
Sending your teenager out to drive for the first time can be a nerve-wracking experience. Adding to that can be the sometimes-confusing process of getting your teen driver the right car insurance coverage. Even for the safest driving families, teen car insurance can be expensive, and you may never be sure that you have enough or the right coverage in place.
Luckily, there are ways to save on teen auto insurance. You can ensure that shopping for teen auto insurance is a relatively painless experience by arming yourself with accurate information. Once you have the right policy, there's no need to stress over whether or not you and your teen driver are well protected financially and in the process, you’re likely to find numerous ways to help you and the entire family save on your teen auto insurance costs.
Step 1: know your state's laws
If you are the parent of a teen driver, first learn:
- What your state's driving and licensing laws for teens are
- What your state's insurance requirements for teens are
Knowing the former will help you understand the latter, and it may also help you pursue car insurance coverage options and plans more in line with what you actually need to cover your teen. Teen car insurance is expensive enough without paying for coverage your teen won't need or use.
Long gone are the days when teens merely took a one-semester driver's education course to acquire a learner's permit, then embarked on a harrowing one-year journey of parental driving lessons, culminating in the teen throwing his or her chances to a state evaluator.
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The general public and the officials who set rules are more sensitive to teen driving safety than ever before. Greater public awareness of issues such as drinking and driving, seat belt use, and technological advancement of automobile safety features are now the norm. The parents of teen drivers also have new challenges to address when helping kids start to establish safe driving practices. Mobile phones, texting, advanced computers in cars, even in-car monitors and hands-free communication technologies all add to the potential number of distractions that can compete for a teen driver’s focus and attention.
Drivers between the ages of 15 and 24 make up about 15 percent of the total U.S. population, according to data drawn from the last (2010) U.S. Census. The Centers for Disease Control & Prevention (CDC), reports that drivers between the ages of 15-24 are responsible for a far more proportionate amount of the cost of motor vehicle accidents than their population would suggest. Among the CDC findings:
- Accidents involving males in this age group account for $19 billion in direct costs each year
- Accidents involving females in this age group account for Just over 28% of the total direct costs for all accidents ($7 billion)
While the dollar cost is high, the human cost has been heartbreaking. The CDC reported that in 2010, seven young drivers died every day on U.S. highways. The carnage amounted to more than 2,700 deaths involving teen drivers in the U.S. and close to 300,000 serious injuries.
Step 2: understand graduated driver licensing
As a way to address the tragedy of teen driver accidents, in the 1990s, most states started implementing Graduated Driver Licensing (GDL) programs.
A GDL program is an expanded, progressive and generally staggered period of restricted driving privileges extended to inexperienced drivers, giving them the opportunity to learn and hone safe driving practices under direct adult supervision. Most GDL programs involve a three-phase process:
- Phase 1, the learner’s permit status or a supervised practice stage
- Phase 2, intermediate or provisional licensing extended to the teen driver with certain restrictions and training requirements added as a condition
- Phase 3, full and unrestricted driving privileges earned as a result of successfully completing each previous phase
Currently, all 50 states have some form of GDL in place. While the specifics vary from state to state, the general concept is consistent. The most common GDL restrictions (typically imposed in the second phase of the process) are:
- The time of day when teens can drive -- restricted times are usually tied to pre-established state and local curfews set for teens. One of the most common restrictions imposed here will state that teens can't be driving after 11:00 pm and before 5:00 am unless an emergency dictates or work requires otherwise.
- The number and age of passengers -- some states prohibit teens from carrying any passengers beyond an adult supervisor and most states restrict teens from having more than two passengers. Most states also prohibit teen drivers from having passengers under the age of 18 unless an emergency dictates otherwise.
- The relationship of the driver to any passengers -- most states restrict teens from having passengers who are not family members or driving supervisors, unless an emergency or a work-related situation dictates otherwise.
Of course, drivers in a GDL program are still subject to all the rules and regulations all other drivers are, including any applicable insurance coverage requirements.
While most GDL programs were designed for teen drivers, some states have broadened them to accommodate older men and women who are getting a first driving license later in life.
Step 3: start building a teen coverage plan
Once you have a clear understanding of what the licensing requirements, restrictions and procedures for teen drivers are in your state, you can then begin to address whatever teen car insurance requirements might apply. As a general rule of thumb, your state's insurance coverage requirements apply to both experienced and teen drivers. Slight nuances may apply if your state has a GDL and specifically attaches a classification to the driver type during each successive GDL phase. In those cases, you may find that full coverage for your teen driver isn’t required until that teen driver is recognized by your state as a full privilege or unrestricted driver.
Once you have a clear understanding of your teen driver’s status in your state, take the necessary steps to put the required coverage in place to ensure your teen is in legal compliance. The most likely minimum coverage options you will need to acquire for your teen include:
Every state sets a minimum required level of both bodily injury and property damage liability coverage for licensed driver. Some states additionally require licensed drivers to carry uninsured or underinsured motorists coverage.
There are a few states known as no fault car insurance states and these states typically required licensed drivers to also carry a no fault coverage option like medical payments or personal injury protection (PIP) coverage.
Some car insurance companies are more adroit at helping families welcome teen drivers into the fold while others seem to go out of their way to discourage them. A small niche of insurance companies have gained a lot of Internet traction peddling insurance that doesn't set the best tone for teen drivers and their families: fast, cheap and easy. You can get some direction on teen car insurance companies with our guide on the subject.
Let your teen driver help and get them free car insurance quotes now
Step 4: decide on a separate policy or added coverage
There are very few instances when purchasing a separate policy for a teen needing car insurance is going to be more cost-effective than adding a teen driver to an existing policy (either to a specific parent's plan or as part of a family plan.) In fact, many insurance companies will not sell car insurance policies directly to people who are under the age of 18. (A couple exceptions include emancipated minors or drivers under the age of 18 who have a special dispensation for being an orphan, or who have express permission from a parent or other recognized authority.)
Even when you decide to add a teen driver to an existing policy, you will be faced with the reality that, unfortunately, your rates will increase when you add a teen driver to your personal policy or even to a family policy. Teens are inexperienced drivers and are more likely to cause accidents. Insurance companies hedge against this by increasing the rates they charge for covering a teen driver.
If you add a teen driver to an existing policy, you may be able to blunt some of that increase by getting a multi-driver discount from your insurance company. If you are buying your teen driver a separate vehicle, you may be able to save some money by having multiple cars on the same policy.
Step 5: look for ways to save
One of the best ways to save on teen car insurance is to buy a car that is considered to be safe. In most states, insurance providers offer additional savings to drivers with safe cars. To determine safety ratings, cars are ranked by how thy score on the collisions damage index, various theft indices, and a liability-rating index. Most insurers also consider the safety devices that may or may not come with a vehicle when determining whether to give a discount on a premium. There are also some insurance companies that will give you discounts when you add certain safety or anti-theft devices to a car. For example, adding an audible alarm to a car your teen will be driving and you will be insuring can get all of you discounts with certain insurers.
You can still save money, even if you have already purchased a car for your teen, handed down an older one, or if your teen has purchased his/her own car. You can even find ways to save money on the insurance if you're just going to let your teen drive one of the family cars.
(Check out our guide on teen car insurance costs)
Most insurance companies will offer you multiple ways to save money. Families can receive discounts by:
- Insuring more than one car
- Taking out other insurance policies from the same company
- Limiting the number of miles driven in a year
- Driving safely
Teen drivers may be able to get even more discounts designed specifically for their age group. Many companies offer discounts to teens that have completed a driver's education or defensive driving course. A growing number of insurers offer discounts when teens and parents enroll in safe driving programs whereby they pledge to engage in safe driving activities and perhaps even limit the hours and miles teens drive.
In some cases, you can even save on your teen driver car insurance premiums if your teen is a student who maintains a solid grade point average (usually a B or better.) If your teen driver is enrolled in a college that is more than a set number of miles from home and isn't taking a car to campus, some insurance companies will discount your premium.
(Find some more interesting car insurance premium discounts here)
Welcoming your teen into the world of driving can be both exciting and stressful. You will want to give him or her every advantage for starting and maintaining safe driving habits. Putting in place the best possible teen car insurance coverage plan is one step in that process.
You will benefit from speaking with a local, licensed car insurance agent experienced in helping families with teen drivers. An agent can answer any questions you may have, can help you find discounts on your car insurance coverage, and can point you toward programs to help you and your teen set some good, safe driving habits. Reply! can help make the experience easier for you by connecting you to car insurance agents in your area familiar with the challenges of helping families add teens to their driving and insurance ranks.