Car insurance is critical for any driver (it’s even mandatory in 48 states), but it’s especially important for new drivers, whose inexperience makes them more likely to have accidents. Finding the right policy, however, can be a challenge. What sort of coverage do you need? How do you balance cost and coverage? Do you really need collision coverage? It’s a lot — but we’re here to help.
Before we dive in we want to address one thing: Because most insurers have come to the conclusion that it’s a greater risk to cover a first-time teenage driver than experienced drivers with safe driving habits, the prices are often much higher than they are for older drivers. When a teen driver is added to an existing policy, car insurance rate premiums shoot up by around 130 to 140% and can rise an additional 20 to 40% if that young driver has a car accident or gets a speeding ticket. Rates like these tend to remain in place until a driver turns 20.
Read more: Best cheap car insurance for 2021
Adding a teen driver to an auto insurance policy can get pricey, but there are ways to soften the blow to your wallet.
NationwideRead more: Best car rental companies in 2021
5 things to do before choosing a car insurance company for a teen
- Decide if you’re getting a separate auto insurance policy for your teen or if you want your teen listed on your insurance. The former is usually considered cheaper in the short term as your own auto insurance premium won’t go up. But the latter option is typically safer: Your own policy will be extended to your teen, with few changes made.
- Decide which car insurance coverage benefits are important to you, and make sure to watch out for them when speaking to an insurance agent. For instance, many insurers won’t extend accident forgiveness to younger drivers, but Nationwide will.
- Check which car insurance discounts your teen might be eligible to receive. Many companies offer good student discount benefits, as well as discounts for teens who’ve taken approved safe driving courses.
- If your teen or young driver needs to complete certain tasks in order to qualify for car insurance discounts, they should, whether that entails boosting their grades or taking a training course.
- Compare car insurance quotes from a number of different insurers (taking discounts into account), and make a decision.
Comparing the best car insurance companies for teens
Geico manages to knock it out of the park as an auto insurance company, offering both the best and most reasonably priced premiums and insurance coverage of any major company. The company is already No. 1 when it comes to customer service and satisfaction, and you can trust its reputation when adding a young person to your insurance policy. Leave it to Geico to offer affordable car insurance that makes things straightforward and simple, no matter the task.
Geico’s individual policy rates vary on a state-by-state basis, but it’s routinely ranked among the cheapest options in any state. It also offers discounts that help cut the cost even further: full-time students who receive good grades (Geico defines this as a B average, Dean’s List or equivalent inclusion) are eligible for up to 15% off.
Further, Geico has an extensive list of resources available for teen drivers that promote safe driving and teach them the basics of auto insurance.
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USAA
Most of us aren’t eligible for an insurance policy with the United Services Automobile Association, but if you’ve got a military member or veteran in your family, then your teen driver may be able to get great coverage that’s even cheaper than Geico’s.
USAA allows families to potentially save hundreds of dollars a year with the cheapest car insurance option of leading insurance providers. It also offers the same discounts as many of its competitors, including benefits for good students and for drivers who have taken driving training courses. Also impressive is that teens that transition from a family policy to their own auto insurance may qualify for a 10% Legacy discount on their insurance.
Most people won’t be able to get coverage through USAA, but if you think you might be eligible for a policy, it’s definitely a good idea to get a car insurance quote from it before making your final decision.
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Nationwide
Car insurance is more expensive for teens because of the perception that their inexperience makes them more likely to be involved in accidents. Whether this is true or not, the fact remains that one in five 16-year-old drivers gets an accident on their driving record in their first year behind the wheel.
Nationwide is the rare insurance company that extends its accident forgiveness plan to drivers under 18, meaning that if a teen driver is in an all-too-common fender bender, their family won’t see their auto insurance rate skyrocket. This insurer offers roadside assistance to teen drivers in the case of vehicle trouble, which should have their parents sleeping a little easier.
Also, like a few other insurance companies on this list, Nationwide has a wealth of educational resources available to new drivers, as well as articles targeted toward adults who may be adding a teen to their insurance policy.
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Progressive
Saving money is a major priority for college students and their parents. Nobody wants to spend a lot on a car insurance policy, especially when the vehicle in question may only be used on rare occasions. Just the thought of spending thousands a month in insurance costs on a vehicle that’s almost always in a parking lot is stress-inducing.
Not only does Progressive offer everyday low prices, but it’s also created a series of discounts that apply specifically to college students. In addition to the standard good student discount, Progressive offers discounts to students who are more than 100 miles from home and did not take their cars to school, and usage-based auto insurance rates that save money for drivers who rarely use their cars.
Teens can also take advantage of Progressive’s Snapshot program, which rewards drivers for driving safely with discounts and other savings.
Progressive’s website also offers a list of tips to help parents determine if they should add teens on their plans or get them their own.
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Erie Insurance
Pennsylvania-based Erie Insurance has been insuring drivers for nearly 95 years, and its reputation for sterling service extends to young drivers as well. Erie offers discounts, ranging from 5% to 20%, that help offset the cost of putting an additional (inexperienced) driver on your insurance policy.
Erie offers three different car insurance policy discounts for young drivers. There’s the Youthful Driver Discount, which can be claimed by unmarried drivers under 21 who live with their parents; the Youthful Longevity Discount, which can be claimed by unmarried young drivers who’ve already been covered by a parent or guardian’s Erie plan; and the Driving Training Discount, for drivers under 21 who’ve taken an accredited driver’s ed course. There’s also a distant student discount for families of college students who don’t take their cars to school.
Erie currently operates in Illinois, Indiana, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, Wisconsin and Washington, DC. If you live in one of these states, it’s definitely worth checking to see what an Erie teen car insurance policy can offer you.
Comparison of best car insurance for teens and new drivers
| Company | Discounts available for teens | Additional benefits |
|---|---|---|
| Geico | Driver’s education, good student discount | Large customer service network, many additional discounts |
| USAA | Driver training, good student discount | Award-winning service and coverage |
| Nationwide | Good student discount | Accident forgiveness extended to drivers under 18, roadside assistance |
| Progressive | Teen driver, good student discount, distant student | Competitive rates, name-your-price tool |
| Erie Insurance | Youthful driver, youthful longevity, driving training, distant student | Rate lock, first accident forgiveness |
How do you save money on auto insurance for teens?
There are ways to cut down on insurance premium policy costs. For instance, being a safe driver and using more efficient vehicles (such as Honda Civics, Toyota Priuses and Nissan Rogues) tends to cut costs, even for teen drivers. There are also discounts based on how often you use your car: “Some companies offer discounts to motorists who drive less than the average number of miles per year,” says Janet Ruiz, director of strategic communication at the Insurance Information Institute.
Teens may also qualify for good student discounts, or discounts based on learning safe driving habits from a defensive driving course or graduated driver licensing programs. “For young drivers,” says Dan Karr, founder and CEO of ValChoice, an independent platform for insurance ratings and analytics, “there are discounts for taking drivers certification courses and maintaining above a B average.”
You may also be able to save money if the younger driver on your policy isn’t using their car because they’re away at college. “If there is a young driver on your policy who is … away at college without a car,” says Ruiz, “you may also qualify for a lower rate.” Every insurance carrier offers different discounts depending on your coverage option and other factors, so it pays to check which ones apply to you before signing up.
It’s also worth noting that many insurers will allow you to add a teen driver to your policy for free if they just have a learner’s permit, so that covers teens enrolled in driver’s education courses. It’s also a fact that teen boys are more expensive to add to a policy than teen girls, as they’re more likely to be involved in a serious auto accident.
Progressive offers a variety of discounts for college students to save on car insurance.
ProgressiveHow do you pick the best coverage?
The best coverage for you is the one that fits your needs, addresses your concerns, and makes sense for your situation. While Geico’s insurance is the cheapest overall, another insurer may offer discounts that make its product even less costly for you. A different one may have coverage options that resonate with you.
What makes an insurance policy for teens a good one?
What makes an auto insurance provider good for teens isn’t that different from what makes one good in general. Karr explains: “ValChoice includes claims handling as the most important factor for the reason that if an insurance company doesn’t pay a claim, it doesn’t matter how low the price was.” Remember to do some research on your prospects and evaluate all options before making a decision.
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Written by Scott Fried for Roadshow.
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