Adding a Teen Driver to Your Car Insurance Policy
Has your child just earned their learner’s permit or driver’s license? Congratulations! But now, you might have a lot of questions, including the costs and benefits of adding your new teen driver to your auto insurance policy.
You might be wondering if it’s cheaper to buy your teen a separate auto insurance policy, or one they will pay themselves. But you may be surprised to see just how much cheaper it often is to add your teen driver to your policy. Read on to learn more about the pros and cons.
Costs of Adding a Teen Driver to Your Policy
US drivers pay an average of about $2,150 annually for full coverage on a car. This number can be quite costly, and it has increased by 63% over just the last decade. Each individual’s premium depends on your zip code, gender, type of car, driving record, and several other factors.
Age is one of these factors. For 16- to 19-year-olds in particular, premium costs soar— regardless of whether they’re on their parents’ policies or their own. New drivers are some of the most dangerous on the road—the most likely to get into an accident and more likely than other age groups to file claims. There is a higher accident rate among 16- to 19-year-old drivers than that of any other age group, and these teens are nearly three times as likely as drivers aged 20 or older to end up in a fatal crash.
For these reasons, adding your teen to your insurance policy can be costly—especially if they are driving an expensive or less safe vehicle. Adding a 16-year-old male to your policy will result in an additional $4,861 added to your premium per year, on average. Adding a 16-year-old female will raise your premium by an average of $4,532.
While this number will decrease to the $3,400 to $3,700 range (on average) by the time your child is 19 years old, it’s still a hefty cost to add to your plan. It’s often an increase of about 50% to 100%.
If your teen has already gotten into accidents or received tickets and is raising the family rate, it’s likely a good idea for them to sign up for their own separate policy. Adding teen drivers to your policy can increase the cost of insuring the other cars in your household, even if they aren’t usually driving them.
However, teen drivers who are safe and responsible on the road can greatly benefit from being a part of their parents’ policy. Read on to learn about the advantages.
Benefits of Including Your Teen Driver on Your Policy
Whether you will pay for their insurance as a parent or your teen will pay for it themselves, it is generally much more cost-effective for a teen driver to be a part of their family’s policy. Compared to the $4,500 to $4,900 per year your teen might add to your insurance policy, if they were to purchase their own, it would cost them upwards of $8,700—nearly double.
On her own policy, a 16-year-old female driver pays an average of $6,782 per year, compared to $4,532 on her parent’s policy. A 16-year-old male driver on his own policy pays $7,625 on average per year, while on his parent’s policy he would pay only $4,861.
Of course, this all depends on your teen’s driving record, type of car, and other factors. But first, it’s probably a good idea to add your new driver to your policy as a parent. Remember that this is only possible if a parent is listed on the title of the teen’s car.
As your teen gets older and maintains a good record, the costs can drop quite quickly. On average, the annual cost of your teen’s insurance on your policy will drop by $1,100 to $1,200 by the time they turn 19.
Even after just six months of clean driving, your teen has a high likelihood of finding a much lower premium if you shop around for a new insurance policy rather than staying with the same one.
Another benefit is that while your teen is learning to drive with a permit, your policy likely will cover them at no cost until they get their license. Check with your insurer to learn more.
It’s important to know that even if your teen gets their own insurance policy and pays for it themselves, you’ll still have to sign it with them if they’re under 18—and you’re still liable for their accidents. Your own assets (including savings, investments, future incomes, home equity, and more) will be at risk if your driver under 18 years old faces a liability claim.
So, if you’re worried about being held liable, it’s best not to use that as a reason to have your teen purchase a separate auto insurance policy. If you’re worried about your teen’s safety on the road, it’s best to delay getting their license until they have more practice driving with a learner’s permit or have taken more advanced safety courses.
In general, you or your teen will pay far less money if you add them to your policy rather than getting an individual policy. There are a few extra tips and tricks for saving money on your teen’s car insurance, too—keep reading to find out.
How to Save Money on Your Teen’s Car Insurance
If you’ve recently added your teen to your auto insurance policy, here are a few ways to save money:
- Add your teen as a driver for the cheapest car listed on your policy. You can save a lot if you pick the right car for your new driver—generally a newer (2014 or later) model, a car with advanced safety features, and a less expensive make will get you the lowest premium cost.
- Better yet, consider adding your teen as a driver for your car rather than purchasing a separate car for them, if possible.
- See if your teen qualifies for a good student discount. Typically, this discount can apply to any student driver who earns a B average or higher in school. This may require sharing your student’s transcript with your insurer. The discount is typically around 16%.
- If your teens don’t bring their car to college, you could qualify for a student-away discount. This typically applies to students who go to school more than 100 miles from home, and you could save an average of 18%.
- Consider trying a telematics program. This involves installing tracking devices in the vehicle that report speed and other telemetry data. If the data shows your teen is a safe, responsible driver, you may qualify for discounts on your insurance policy.
- Have your teen take an approved driver training course or road safety course. Certain approved courses can automatically earn your discounts.
- Consider raising your comprehensive or collision deductible to save money on your monthly premium. However, this would mean that in the event of an accident, you’d have to pay more out of pocket.
Check out our other tips for first-time car insurance buyers.
If you’re interested in learning more and helping your teen become more knowledgeable too, check out the 10 most common auto insurance myths.
Getting Started With Your New Teen Driver
Other than the above tips to save money, there are a few other things you should keep in mind when your child becomes a new driver.
First off, it’s a good idea to start the insurance process before your teen gets their permit, so you’re prepared. As stated above, many insurers will cover a driver using a learner’s permit for free. But once your teen gets their license, in Massachusetts, you are required to notify the insurance company within 60 days. Car insurance is required by law for drivers in almost every state—New Hampshire and Virginia are the only exceptions. But it’s recommended that you purchase a more comprehensive insurance plan than the legally required minimum.
You may want to consider switching to an umbrella policy, if you don’t have one already. An umbrella policy helps you cover the costs of damage to others’ property or injuries to others caused by an accident.
When adding a teen driver to your policy, it’s recommended that you increase your liability limits. The recommendation is a 100/300/100 minimum ($100,000 in liability to pay for injuries to others, $300,000 per accident, and $100,000 to pay for damage to other vehicles and property).
It’s also recommended that you purchase a policy with collision coverage to pay for damage to your own vehicle. Depending on where you live and where your teen will park, you may also want coverage to pay for damage from flooding, hail, fire, animal strikes, and theft.
Lastly, to keep your teen’s record clean, remind them that the rules of the road are different for junior operators. In Massachusetts, if you’re a new driver under 18, you cannot drive a car with a non-sibling passenger who is also under 18, unless you’re accompanied by a licensed driver who is 21 or older and has at least a year of driving experience—and they must sit in the front passenger seat. Unless accompanied by a parent, junior operators in Massachusetts cannot drive between the hours of 12:30 a.m. and 5:00 a.m.
Be sure to teach your teen about the dangers of distracted driving, too.
When purchasing car insurance for your teen, be sure to shop around for the best rates and compare rates from at least three insurers. It will be expensive at first—but it will be worth it.
