Teens and Driving, an Expensive and Risky Combination

Fran Majidi
February 19, 2019

You may have a teen who is reading the DMV driver manual and itching to borrow the family car as soon as he/she has a permit. Your teen may even be lucky enough to have you buying them a car. The high-achieving teen has saved up and plans to buy their own car and even pay their own insurance. Even though many teens are putting off driving because it’s become so expensive, for the most part, the adulting of it all is just as enticing for them as it was for you when you were growing up. For you and your child, there’s one obstacle in fulfilling the dream of independence on the road: There’s no denying that teens have the highest insurance rates around. It’s their inexperience that automatically profiles them as high-risk drivers. The good news is that there is no longer a gender bias in auto insurance rates for teens, or anyone for that matter, in six states, which includes California. Also, the shocking increases in auto insurance after adding a teen are decreasing, albeit slowly. Also, if your teen is a good student, they may be eligible for a Good Student discount, which is very helpful in lowering auto insurance rates. Check in with your agent to see if taking a driver safety class may also offset some portion of the insurance hike you’ll likely see when your teen reaches driving age. It’s always best to comparison shop your rates with multiple insurers for free by visiting a site like the one here.

The following are some FAQs about how a teen affects your car insurance rate and how you can get your teen on the road, cheaply, safely and legally.

Will Adding a Teen to My Car Insurance Break Me?

Over the past few years, rates for teens have been steadily decreasing. According to The New York Times, policies increased by an average of 78% (approximately $670 more a year). Compare that with 85% in 2013, however, and you’ll see that it’s getting better. Analysts say the overall decrease in rates are attributed to safer automobile technology, fewer teens getting their driver’s license and “graduated” driving programs that allow teens to slowly gain driving experience. While states are slowly banning gender as a factor in determining rates, according to the NYT, putting a male teenager increases rates at an average of 89% compared with 66% for female teens. With that said, rates vary sharply from one state to the next. Compare adding a teen in Rhode Island (your rates go up 150%!) to Hawaii (up only 8%).

Do the Fall in Rates Mean There Are Fewer Accidents?

No, according to the National Highway Traffic Safety Administration (NHTSA), car crashes are were up 9% percent from 2014 to 2015. Many of these accidents were caused by distracted driving. Car crashes are still the leading cause of death among teenagers, according to the Centers for Disease Control and Prevention.

When Do I Put a Teen on My Auto Insurance?

As soon as your child gets a permit and before he/she begins practicing driving in your car, you can add them on your auto insurance. Never try to hide the fact that you have a teen living in your home to avoid the hike in prices. Even though adding a teen to a car insurance policy is expensive it will cost you much more if there is an accident for which they are not at all covered. In some cases, your teen will automatically be covered by your insurance unless you exclude them on your policy. Don’t exclude your child and don’t assume they are automatically covered without you reporting them. You will not be covered at all if they have an accident in your car if you exclude them on your policy. Not all insurance companies will be understanding and they may not pay for damages if you say you assumed they were included without you adding them on. Also, if you fail to tell your insurer about your teen driver after you renew your policy, your insurance company may deny you coverage altogether. The more understanding insurance companies that cover an accident with a teen that was not included charge back payments in premiums dating back to when the teen got his/her license.

Adding a Teen with a Learner’s Permit to Auto Insurance

Generally speaking, there isn’t a grace period for adding a teen driver to an auto insurance policy. You are expected to do it ASAP. Don’t expect your insurance agent to remind you to add your teen either. Some insurers will see that your children are approaching an age where permits are granted in your state but they may or may not call you. It’s your responsibility to add your teen to your policy. In the following states, it’s mandatory to list teens with driving permits on your car insurance policy: Illinois, Indiana, Maryland, New York, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia. In these states, insurers can start billing you the rate increase as soon as your teens are of age to drive!

Adding a Teen to Auto Insurance

Even though the national average is an 85% hike in your auto insurance rate if you add a teen to your policy, depending on where you live, it can increase anywhere between 50 and 100%. Teens between the ages of 16 and 19 have the highest rates of accidents. Over 2500 young people between the ages of 15 and 20 die each year in car accidents. If your state offers a graduated drivers license system, make use of it. If they do not, enroll your teen in a driving school and practice with them often. The graduated drivers license systems have seen a 20% drop in teen car fatalities since their adoption in 1998. Another option to saving money is to hold off on getting the teen a driver’s permit and exclude him/her on your car insurance policy, but make sure they do not drive your car at all.

How Much Is Car Insurance for Teens?

Insurance rates are competitive so it’s hard to say how much you’ll pay to insure your teen individually or even how much your insurance will go up if you add your teen to your policy. However, do keep in mind that holding off on buying your child a car will allow you to set more rules on the family car. With that said, you may have reasons (like an after-school job) that requires your teen to buy a car. In all of the scenarios listed above, we highly suggest that you comparison shop rates with multiple insurers before deciding on the policy that seems right for you. Visit smartfinancial.com to compare rates and connect with the agent offering the most reasonable rates for the coverage you simply cannot to go without.

Car Insurance for Teens

Cheap car insurance for teens is not easy to find because it’s not cheap to cover accidents, something inexperienced drivers have more often than experienced drivers. The best car insurance for teen drivers is one with full coverage so that you do not have out-of-pocket expenses if your child does damage to another driver’s car. Also, in some states, parents have to co-sign a teen’s auto insurance. Rarely is it cheaper to buy your child a separate policy from your own. It’s almost always cheaper to add them to your policy. To give you an idea of what you should expect to pay to buy an individual policy for your teen, the average annual rate quoted for a teen is more than $3,000 compared with the average increase on a parents insurance, which runs about $620. Again, these are national averages and they may or may not reflect rates in your state. For free multiple quotes using zip codes visit here.

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