4 Tips for Adding Your Teen to Your Car Insurance
For teenagers, getting their first car is a milestone—it serves as a symbol of maturity and independence. Nonetheless, most teens aren't in a financial position to pay their own car insurance. But with teenagers aged 16–19 being the most likely to damage their cars, going uninsured isn't an option.1
If your teen is approaching driving age, you may be preparing to add them to your car insurance. It's important to be aware of these four things before you do so:
1. Your Rates Will Increase
Adding a teen to your policy will inevitably increase your rates. It doesn't matter how good a driver they are; teens are the most inexperienced drivers and, therefore, the riskiest to insure. While the average annual cost of auto insurance for a 25-year-old is $3,348, the same is $7,396 for an 18-year-old driver. However, it's typically still cheaper to add a teen to your policy than to put them on their own.2
You might want to investigate other car insurance companies and compare what your costs will be once your teen is added to your insurance. Remember that they will likely be on your insurance for years. Your current provider may or may not offer the cheapest rates available to you in the long run, and it's worth investigating all your options before making any changes.
2. The Car They Drive Matters
While it may make your teen happy to be handed the keys to their shiny new dream car, that's probably not the best choice when it comes to lowering auto insurance costs.
Your auto insurance rates drop about 3.4 percent for every year your car ages. While rates depend on a number of variables, insuring a brand new Audi convertible is likely to cost much more than a used Mazda. Regardless, as your teen acclimates to life behind the wheel, it's advisable that you buy them a safer, possibly used car, as opposed to a new one that "looks" nicer.3
A good idea is to get your teen involved in the car shopping process. Have them research which cars are affordable and safe, but also allow them to have a say by looking for one they'll like.
3. Know Your Insurance Policy & State Policy
It's difficult to make generalizations about auto insurance because so much depends on the actual insurer itself. Insurance companies differ widely in rates and policies. Your insurance company may have a policy about new teen drivers that you're not even aware of. For instance, certain companies don't charge to cover your teen while they have their learner's permit. Overall, the best option is to have a discussion with your insurance company about your teen's situation and how it will impact your car insurance.
Moreover, states have different policies when it comes to age and insurance requirements. Certain states require that teens are covered by insurance to get their learner's permit, while others only require that licensed drivers be covered. Either way, it's smart to inform your insurer when your teen gets their learner's permit and even smarter to get them insured as soon as possible.
4. Investigate Discount Options
Again, this differs from company to company, but certain insurers offer discounts for young drivers. Check whether your insurance company offers any of these to get some relief on your teen's auto insurance:
- Good Student Discount: This discount rewards student drivers for achieving high grades. The threshold depends on the insurance company.
- Safety Discount: If your teen takes an approved safe driving course, they may qualify for this discount.
- College Discount: Let your insurance company know when your teen leaves for college. If they're not taking a car with them and are attending a college over 100 miles away, you might get some insurance relief.
Among all the financial considerations to make before adding your teen to your auto insurance, there's a more personal consideration, too: holding your teen accountable. The first year of licensure is typically the riskiest for teenagers. Ensure that you teach your teen important safety and car care principles before easing them into independent driving.1
1. CDC.gov, 2022
2. Statista.com, 2022
3. TheZebra.com, June 27, 2022