Learning to drive is an exciting rite of passage for most young people. However, as a parent, you might not be as excited since you have to incur the expense of adding your child to your policy. Finding cheap car insurance for teens is essential and requires some homework.
Since new drivers are riskier to insure, the cost is higher. If you are willing to put in a little effort, you can find new driver insurance that won’t break the bank.
Best Car Insurance Companies for Teen Drivers
Typically, it’s significantly cheaper to add a child to your car insurance policy than for them to purchase coverage individually.
For example, QuoteWizard estimates it costs an average of $278 per month to add a teenager to a policy versus $438 per month for them to secure their own coverage. Car insurance for new drivers isn’t cheap, but some companies offer better rates than others.
Here are several of the top options.
1. Erie Insurance
Erie insurance is a terrific option for auto insurance since they offer some of the lowest overall rates in the industry.
Not only do they have teen discounts, but they also provide ways for your teen to be covered and understand the importance of safe driving.
Here are just some of the few benefits of using Erie Insurance:
- They offer a rate lock option, where you can “lock in” the premium rate for each driver who is added to your policy.
- They offer first accident forgiveness, a diminishing deductible option, car safety discounts, and more.
- They have a youthful driver discount, college credit program, and even a discount if your teen has taken a driving course.
Erie Insurance also offers the option to take their teenSMART program. This program, directed towards teens, is currently available in Wisconsin and Virginia.
If your teen completes the program, they’re eligible for a safer driver discount. It’s completely free to enroll as an Erie Insurance member.
Quotes vary based on your state, what your teen has completed in terms of driving and education, and more. But, it’s easy to get an online quote from Erie Insurance.
The main downside to Erie is they only operate in the Mid-Atlantic and Midwest regions.
2. American Family
American Family is another option for car insurance for teens. Like Erie Insurance, they have many benefits for teen drivers and their parents.
Here’s what you can expect with American Family:
- They have a safe driver program. Your teen can participate as soon as they get their license and remain in the program until their 21st birthday. Once your teen completes 3,000 miles or one year in the program, you receive a ten percent discount on your car insurance.
- They offer a good student discount. When your student gets a 3.0 GPA or higher, they receive a discount on their insurance. This applies to all students, even if they’re homeschooled or in college.
- Your teen can also receive discounts if they leave their car at home while they are at college or they spend time volunteering.
The great thing about enrolling your teen in American Family is that they also get all of the benefits that you get. From gap insurance to 24/7 roadside assistance, you’ll know your teen is taken care of should anything happen.
3. State Farm
State Farm has plenty of options that can help you save money on car insurance for teenagers. In fact, I have State Farm and my sister is on my policy. We were able to receive a great rate even when she was 16.
For full coverage, we only paid $130 per month for her. Not bad considering she got a ticket in her first six months of driving.
Overall, State Farm tends to have some of the best benefits for new drivers, including:
- Teens can get 15 percent off of their insurance premium if they complete the company’s safe driver training or a similar training program.
- State Farm gives a discount upwards of 25 percent off of their policy to teens that maintain at least a 3.0 GPA.
- After three years of driving accident-free, your insurance account premium will be lowered automatically.
- If your teen enrolls in their Drive Safe & Save program, they receive a five percent discount. They will also receive up to 50 percent off the policy if they prove to be a safe driver.
- You can get safe vehicle discounts if the car your teen drives is newer than 1994, has airbags, a restraint system, and an anti-theft device.
Insurance costs can add up, especially when you add a teen to your policy. These discount opportunities can reduce the cost if your teen is a safe driver and doesn’t get into too much auto trouble.
Geico is consistently rated as providing one of the best companies for cheap car insurance for young drivers. Reports indicate that Geico often offers the lowest rates. Couples can add a child to their policy for under $200 per month.
Some of the benefits of adding a teen driver to your insurance policy at Geico include:
- A good student discount of up to 15 percent of the premium when your child maintains a 3.0 GPA. Your child is eligible for this if they’re between 16 and 24.
- A good driver discount of up to 26 percent off premiums if they have been accident-free for five years.
- Affinity program discounts for those in certain fraternities, sororities, and honor societies.
Geico competes with Erie Insurance on low rates for teen drivers, but is more widely available.
Progressive is another car insurance company to evaluate if you have a teen. They have many discount options to help reduce costs.
Here are some of their best discounts:
- You can get a multi-car discount of around 12 percent if you have multiple cars on your policy.
- There is a continuous insurance discount. This means the longer your teen is on your policy, the more money you save.
- Your teen can enroll in Progressive’s Snapshot program. The safer they drive, the more you’ll save.
- As long as your teen is under 18, they’ll automatically get a teen driver discount.
- If your teen has grades that are a “B” average or higher, they’ll get a good student discount.
It is worth noting that Progressive is the only option on this list that does not automatically cover your teen under your policy while they have their permit.
When your teen gets their permit, you need to contact your agent to get them added to your policy.
Allstate is known for having amazing car insurance coverage. Numerous studies indicate that coverage through Allstate competes with insurers like Geico on price.
Similar to the other auto insurance companies, your teen could qualify for the following:
- A smart student discount that lasts until your child is 25 years old. Your teen can qualify for this as long as they’re a full-time student, have completed the teenSMART program, or live 100 miles away from home (but leave their car at home).
- Drivewise, which is a safe driver discount that your teen can earn after enrolling in the program and practicing safe driving.
- Accident forgiveness and the claim satisfaction guarantee, just like your policy.
Allstate also offers rental reimbursement, even on a teen policy. This means that if your teen is in an accident and their car ends up in the shop, Allstate will help cover the cost of a rental car.
To qualify for USAA, you must be a member or former member of the military. You can also be an eligible family member of someone who was in the military.
Due to qualification requirements, it’s more difficult to get coverage through USAA. However, USAA often has the cheapest car insurance for young drivers, so they are worth considering if you are eligible.
Some of the perks USAA offers include:
- Students and teens who are 21 or younger can take a driving course to receive a discount on their auto insurance.
- If your teen gets good grades, they’ll qualify to receive a discount on auto insurance.
- You can get up to ten percent off for loyalty to USAA and adding on a new policy.
- You’ll also receive multi-vehicle discounts and accident forgiveness automatically.
It’s free to join USAA if you are eligible. If you have a new driver, check them out for coverage.
Pros & Cons Of Adding A Teen To Your Policy
There’s a lot to consider when adding a young driver to your auto insurance policy. While it’s expensive, there are other things to consider, including:
- They can practice safe driving, which means reduced costs in the future
- Your earned perks, such as safe-driver discounts, can help offset the added cost
- You can earn other benefits, such as multi-car discounts
- It tends to be less expensive than your teen getting their own policy
- You now have a “risky” driver on your policy
- A higher chance for premium surges if your teen gets into an accident or receives a ticket
- An increase in your premiums
You must also consider that many insurers won’t extend individual coverage to risky teen drivers. That means your child can only have coverage on your policy. Keep that in mind as you look for coverage options.
How To Save On Car Insurance For New Drivers
There is one reason why it’s more expensive to insure teens: motor vehicle crashes are the leading cause of death for teens in the United States.
Drivers between the ages of 15 and 19 cause eight percent of the total costs associated with auto accidents, according to the Centers for Disease Control and Prevention (CDC). These drivers make up just over six percent of the population.
Despite that, there are still ways to save on car insurance premiums, including:
- Raising your comprehensive and collision deductibles
- Taking advantage of driver training discounts
- Enrolling in monitored driving, when offered by the insurer
- Encouraging your child to get good grades to qualify for a good student discount
- Setting rules for your child, like limiting the number of people in the car or not using a phone while driving
- Having them drive a safe, reliable car as they’re cheaper to insure than a sports car
- Comparing rates to save money
Adding a teenage driver to your policy is expensive. However, when you stack discounts and compare rates, you can mitigate the price increase.
Compare Rates Before Deciding on Coverage
Like any other purchase, it’s important to shop around when choosing car insurance for you and your teen. This can help you save money and still receive quality coverage.
Insurers adjust rates throughout the year, so you never know what savings may be available. Thanks to tools like Gabi and PolicyGenius you can compare rates in minutes and find out if you’re leaving money on the table.
While car insurance can be expensive, especially with teens, it is possible to make it affordable. With the available discount options and benefits, you can find a plan that works best for your family.
The bottom line is that your teen needs auto insurance coverage. What better way to teach responsibility, and save some cash, than by making sure they have the same insurance benefits as you?
How much do you spend on insurance for your teenage driver each month? When was the last time you compared auto insurance rates?
Source: Frugal Rules