You’re probably wondering what the average cost of teen car insurance is if you have a child approaching driving age. You probably already know that teen car insurance can be expensive thanks to the high risk of accidents for this age group. Check out the average cost of teen car insurance premiums and explore strategies to save if you’ll soon have a new driver in the house.
calculate the average cost of teen insurance
wallethub says teens pay between $225 and $300 a month for auto insurance when added to a parent’s policy and up to $450 a month for an individual policy.
Industry estimates indicate that families will pay 150 percent more for auto insurance after adding a teen driver to the policy. For example, if your current policy costs $1,000 a year, you’ll likely pay up to $2,500 a year with a new motorist in the mix. Your driving history, credit score, and geographic location influence how much your rate will go up.
incharge debt solutions estimates that families who insure two cars will pay 58 percent more for insurance with a teen driver. for families with three cars, the average increase rises to 62 percent.
Despite this dramatic increase, most families find that adding a teen to their policy actually makes more financial sense, as long as they share the family car. many families cannot afford to increase coverage to include another new vehicle and another new driver.
factors in car insurance costs for teens
As mentioned above, the risk associated with insuring teen drivers is one of the biggest factors affecting cost. The National Highway Traffic Safety Administration (NHTSA) reports that driver error causes about 66% of crashes in this age group, due to teens’ inexperience.
According to nerdwaller, gender also plays a role in accident risk, which in turn influences insurance rates. Nerd Wallet cites research from the Insurance Institute for Highway Safety (IIHS); the agency notes that men ages 16 to 19 have a fatal crash rate nearly triple that of other adults. This demographic causes about 66 percent of these types of accidents, a significant decrease from 75 percent in 1975. As a result, WalletHub reports that the average teen pays about 15 percent more for car insurance than the average teen. .
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Car insurance premiums are higher for 16 and 17 year olds than for 18 and 19 year olds. According to the Centers for Disease Control and Prevention, the first age group has a 200 percent higher accident rate than the second, which explains the high cost.
The prevalence of accidents decreases as drivers approach the age of 25. By this time, your teen will have several years of experience behind the wheel and should be able to qualify for an affordable policy independently.
drawbacks of sharing a car policy with your teenager
According to carinsurance.com, some parents avoid adding teens to their car insurance policies for fear they could lose their home or other assets in an accident caused by a new driver. In this case, a separate policy for your teen can keep your peace of mind (although it will cost about twice as much as a joint policy with an experienced driver).
Teenagers are also up to 400 percent more likely to have an auto insurance claim compared to more experienced drivers. if this happens, you’ll likely pay higher premiums for up to five years.
wallethub stresses the importance of checking your state’s laws about adding teen drivers to your policy. Some states require that all members of your household with a driver’s license be listed on your auto insurance policy. Some insurance companies allow you to exclude a teen with a driver’s license if you provide proof that he or she has a separate policy. In some states, you must even include teens who have a permit on your policy (currently West Virginia, Virginia, Pennsylvania, Ohio, North Carolina, New York, Maryland, Indiana, and Illinois).
If your teen has a car, the parent’s or guardian’s name may need to appear on the title. You may also need to sign a separate car insurance policy for your child, since he or she cannot sign a contract before their 18th birthday.
strategies to save money on car insurance for teens
Before you commit to an auto insurance policy for your teen, shop around to get the best possible rate. Although it may seem like a hassle, getting three to five quotes from different insurance companies can save you hundreds or thousands of dollars a year.
many parents make the mistake of simply adding their new driver to their own policy without checking other rates. Because each company has different pricing parameters, you could get dramatically different rates from one insurer to another.
When reviewing quotes for your teen, be sure to take advantage of all applicable discounts. Zebra notes that many car insurance companies offer discounts of up to 15 percent to good students. If you decide to add your teen to your policy, you may qualify for a multiple driver discount. You can also get discounts your teen wouldn’t be eligible for on their own, like a discount for combining auto and home insurance.
Choosing a safe, low-powered car for your teen can result in lower insurance rates. Minivans generally have the lowest insurance rates, though you can also save money with a quiet sedan or small van. If you plan to help your child buy a car to use, check how much it will cost to insure the make and model before you sign on the dotted line.
Because teens are at such a high risk of accidents in their first few years behind the wheel, consider finding a policy with accident forgiveness. This type of arrangement prevents your premium rates from going up if someone on your insurance is in an accident. however, make sure this type of policy covers your young driver (some don’t).
do not pay for comprehensive or collision coverage on vehicles that do not require this type of insurance. You only need this policy if you lease or finance your car or if it’s worth more than $4,000.
With these tips, you can make sure your teen has the necessary auto insurance policies in your state without breaking the bank.