Auto Insurance for Teens and Young Adults
Happiest day of a teen’s life? Getting their driver’s license and their own set of wheels. But one important decision that has to be made is whether they will be added on into their parent’s car insurance policy, or if they will be buying their own insurance policy. Generally, teen drivers are considered high-risk drivers because their lack of experience makes them more prone to accidents and risks. Adding a teen to an existing policy would make the premium go up but you would be saving a lot of money in the long run.
Why it could be cheaper to add a teen to a policy:
According to nerdwallet.com “It costs teens and their families $3,053 less per year, on average, to be covered under a single car insurance policy than it does for teens to buy their own coverage.” Adding them to an existing policy means that they would be sharing discounts that you already have such as marriage, multiple cars, and a safe driving record.
Benefits of a teen buying their own policy:
- Sports and luxury cars are more expensive to insure and if you currently have such a car in your policy, insuring your teen for access to all of the cars in the family policy will be a lot more expensive.
- Teaching your teen driver financial responsibility, you know, to get them ready for moving out of the family home.
Keep in mind that older cars are less expensive to insure versus newer cars, but a new car is also an option. An even better choice is finding an affordable new car that takes advantage of safety technology, which not only helps inexperienced drivers but also qualifies for a discount. Some features to consider when buying a new car are antilock brake system, air bags, electronic stability control (ESC), and strong reviews in crash tests. Now both parents and teen drivers can have the best of both worlds.
Some discounts that you should take advantage of to reduce the price of your teen’s car insurance are:
- Good Student Discount: Students must have a certain GPA or grade average to qualify (depending on the insurance company’s specifications)
- Driver’s Education: Driver’s Ed courses teach teens the rules that they have to follow when on the road and companies tend to give a discount for completing these classes.
Parents can also make several changes to lessen the increase in premium:
- Lowering the coverage of your teen driver’s car to just liability is a great way in reducing costs —especially if the teen’s car is an older model.
- Increasing the deductibles on vehicles that have full coverage.
Every policy and premium is unique and so the best way to know what the most cost effective way of insuring a teen is to get two quotes; one for adding your teen into your existing policy and one for only your teen. It’s important for parents and teens to compare the different prices and choose the best option for them. Feel free to use our price comparison tool to see what options are available to you.