8 Things Parents Should Know About Car Insurance for Teens

Handing over your keys to your newly licensed teen can be terrifying—and rightly so. In fact, inexperienced teen drivers are often easily distracted and can therefore face a lot of danger on the road.

The insurance company GEICO reports that 1 in 5 16-year-olds will get into a car accident during their first year of driving, and according to the Insurance Institute for Highway Safety (IIHS), teen drivers are nearly four times more likely to get into a car crash than any other age group.

While you’re probably more concerned about your child’s safety than what an accident or other motor vehicle incident could do to raise your premiums, once you add your teen to your insurance policy you might experience a bit of sticker shock. Teens—particularly young men—are some of the priciest people to insure.

Taking measures to ensure your teen is properly insured can help give you a little peace of mind as well as put some extra cash back into your wallet.

Here are eight things you should know about car insurance for teens.


Teens With Learner's Permits Don't Need to Have Their Own Insurance

Teen girl driving with man as the passenger and a boy in the back seat

Claus Carlsen Photography /Getty Images

You should notify your insurance company when your teen driver obtains a learner’s permit, as all companies handle that situation differently and the laws may vary from state to state. While some insurance companies will say you don't need to add your teen to your policy, Allstate Insurance Company recommends it if in the event your child was to become involved in an auto accident.

When your teen graduates to a full-fledged driver’s license, that's when they will be required by law to have coverage—whether on your insurance or their own policy. They will also need their own policy if the car they are driving is in their name.


You Can Assign a Car to Your Teen

Some cars cost more to insure than others—it makes sense, given that it often costs more to fix or replace newer luxury vehicles and/or imports than older models.

If your household has a 2014 Lexus, a 2010 Honda Civic, and a 2002 Pontiac, you won't want your insurance company to assume that the teenager is driving that more-expensive Lexus since they’ll raise your premiums accordingly.

Though not all insurance companies assign cars to specific drivers, you will want to double-check to see if yours does. If so, make sure your teen is assigned as a primary driver to the least-expensive car and that there’s a lower premium to reflect that.


A Used Car Will Lower Your Price Tag

Encourage your teen to buy an older used ca, or, if you’re the one who's purchasing one, explain to them your rationale. Of course, you don’t want to put your teen in an old car that lacks safety features, so have a mechanic conduct a full inspection on the vehicle before you purchase it to make sure that it’s safe and reliable.

Plus, driving a car with solid safety ratings lowers the cost of auto insurance, compared with a car that's flashier and faster. Newer safety features, such as airbags, anti-theft devices, and anti-lock braking systems, can also help to lower the premiums.


Keep Your Teen on Your Policy If You Can

There are exceptions to putting your teen on your policy, but if you have a good policy, it’s typically less expensive to add your child to your policy than to have them purchase their own insurance. If you’re trying to teach your child responsibility by requiring them to pay for their insurance, then have them reimburse you by the billing date each month.

If your teen gets into an accident that raises your premiums, you can remove them from your policy and require them to purchase their own coverage. However, you should double-check the rules and regulations—some states have laws that require you to cosign for insurance coverage, even if your teen has their own policy. 


Encourage Your Teen to Get Good Grades

The good student discount is exactly what it sounds like—your teen will cost less to insure if they earn good grades. The total amount of the discount will vary from state to state.

Statistics show that teens who get better marks in school are less likely to get into a car accident. That means these students are a lower risk, so they can pay less for car insurance.

For some insurance companies, the savings last through college. In most cases, you will have to show proof that your teen maintains a 3.0 grade-point average or higher, or that they made the dean’s list or honor roll the previous semester.

If they don't quite reach that goal, try encouraging them to work harder in school by reducing the amount they owe you in insurance if their grades improve. You might also get a discount if your teen has completed and passed an approved driver’s safety program beyond driver’s education.


Consider Skipping the Collision and Comprehensive Coverage

Collision and comprehensive coverage are not required by law and therefore, are optional. If the car your teen drives isn’t worth more than the deductible, then there’s no reason to pay those premiums. Even if your teen totaled the car, your insurance payout might not cover the premiums you already paid. Check with your insurance company first, however, since you may have to had to fully paid off your car in order to opt out of this coverage.

Another option is to consider raising the deductible on these types of coverage. You’ll pay lower premiums by increasing the amount you’re willing to pay out-of-pocket if the car is damaged.


Tell Your Insurance Company If Your Teen Goes to College Without a Car

Becoming an empty-nester could save you some money on insurance premiums. If your teen heads to a college that’s more than 100 miles away without a car, the insurance company will lower your premiums.

Your teen may still be covered if they come home for the weekend—be sure to check with your insurance provider for specifics. In many cases, you may need to provide proof of enrollment at the college.


Invest Time Shopping Around for the Best Policy

Not every car insurance provider offers the same rates. Get quotes from multiple companies to see which one is best for you and your family.

Explore different scenarios for different quotes, such as which car the teen will drive (if you haven’t purchased one yet), whether you decide to bundle home and auto coverage, or if you choose a higher deductible on the car. 

Remember: The only thing that can stop your teen from causing an accident is their own safe driving. That means no texting or talking on a cellphone behind the wheel and always paying attention to the road, and of course, obeying all the traffic laws.

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Article Sources
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  2. Insurance Institute for Highway Safety. Teenagers. Updated March 2020.

  3. Allstate Insurance Company. My Teen Got A Learner's Permit. Does He Need Car Insurance? Updated October 2019.

  4. Swedler DI, Bowman SM, Baker SP. Gender and Age Differences among Teen Drivers in Fatal Crashes. Ann Adv Automot Med. 2012;56:97-106.

  5. Delgado MK, Wanner KJ, Mcdonald C. Adolescent Cellphone Use While Driving: An Overview of the Literature and Promising Future Directions for Prevention. Media Commun. 2016;4(3):79-89. doi:10.17645/mac.v4i3.536