How to Save On Car Insurance When You Add a Teen Driver

One unexpected problem might be the cost: adding a teen driver to your car insurance can raise your rates by 50% to 100%, according to the Insurance Information Institute.

Most insurers require you to tell them once your child has a driver’s license and will be driving a car on your policy. Failing to do so could result in a denial of claims or even the cancellation of your policy.

Luckily, there are some strategies you can take to keep costs as low as possible when you add a teen driver to your car insurance.

Why Does Adding a Teen to Your Car Insurance Policy Cost So Much?

On the road, teens represent the highest-risk segment of the population because they are more likely to be involved in serious or fatal accidents than any other group. They are also more likely to speed, drive while distracted, drive under the influence of alcohol, and drive at night or on weekends (which are considered riskier times to drive), according to the CDC.

“Teen drivers, who are both inexperienced and sometimes more prone to risky behaviors, tend to have higher rates of crashes. This, in turn, may impact insurance rates,” says Katie Ekstrom, assistant vice president of auto product development at Travelers Insurance.

She adds, “According to the CDC, teens ages 16–19 have the highest crash risk of any age group, with fatal crash rates nearly three times those of drivers 20 and older per mile driven.”

Due to the greater probability of accidents, insurers are more likely to pay out claims when they cover teen drivers. Your insurance company may increase the costs of your policy substantially to make up for that risk.

How to Keep Costs Lower

There might not be much you can do to eliminate the added cost of a teen driver on your policy, but there are some steps you can take to keep costs lower.

Add your teen to your existing policy

It usually costs much less to add a teenager to an existing policy than to have them get their own policy (which they can legally do once they turn 18). This strategy may also provide your teen with broader liability coverage and greater access to discounts than they could get on their own. As a bonus, this simplifies billing and documentation under a single policy.

Assign your teen to a less risky vehicle

Find out how your insurer treats assigning teen drivers to the cars on your policy. If you don’t designate which car your teen is driving, the insurer may automatically assign them to the most expensive car on your policy, which inflates your rates even more. If you have multiple cars, find out if you can assign your teen to the least expensive car to insure.

Sports cars or cars that lack modern safety features tend to cost more to insure than a basic, up-to-date sedan, minivan, or SUV. And if it makes sense, assigning your teen to a car that’s already on your policy can save you money by avoiding the cost of buying and insuring a new vehicle.

When you assign your teen to a specific car on your policy, they must only drive that vehicle. If they drive another vehicle and get in an accident, your insurer may not cover the claim at all.

Look for discounts for your teen

Your teen can help keep rates low if they qualify for certain discounts:

• Driver education discounts. Many insurers have discounts for teens who complete safe driving courses beyond the standard state driver’s license requirements. Some states require insurers to offer these courses.

• Student discounts. Some insurers offer student discounts to high schoolers and college students who can maintain a certain GPA, such as a minimum 3.0 or B average. Your teen would need to provide proof of their grades, such as a report card or a form completed by a school administrator.

Increase the deductible

Your policy deductible is the cash you have to pay out of pocket to cover repairs to your vehicle when you submit a claim. When you choose a higher deductible, you will see lower insurance rates (but you’ll have to pay more for repairs yourself). Talk to your insurer about the potential rate savings you can get if you increase your deductible.

Adjust coverage for older cars

You don’t always need to have full coverage for older vehicles. Once your car’s value drops below a specific threshold, you may want to remove collision coverage and comprehensive coverage, which cover damage to the vehicle itself. If the vehicle isn’t worth much more than it costs to insure, you can easily afford a new vehicle. If the car gets totaled, or you don’t drive the vehicle that often, it might be a good candidate for reduced coverage.

Look at usage-based insurance

Auto insurers often offer usage-based insurance programs that set rates based on how you drive or how much you drive. Pay-per-mile insurance charges you a flat rate plus a per-mile rate based on your mileage. Usage-based insurance, also known as telematics, looks at overall driving behavior to set rates.

“Enrolling in a telematics program can help parents and teens understand their driving behaviors and educate on the importance of driving safely and limiting distractions,” recommends Ekstrom.

Hunt down other discounts

Insurers frequently offer other types of discounts that aren’t specific to your teen, including:

• Policy bundles. “Bundling your home, auto, and other insurance policies under the same provider often leads to discounts. If you haven’t yet bundled, and you’re adding a … vehicle for your teen, it’s a good time to price out options, as many insurers offer meaningful savings for multi-policy customers,” explains Ekstrom.

• Auto-billing. Your insurer could provide a discount when you set your premiums to automatically come out of your bank account, instead of manually paying when the bill comes due.

• Annual premiums. If you pay for a full year of coverage all at once, you may see a slightly lower rate than you’d get if you paid for your policy every month, every quarter, or every six months.

• Paperless policy. If you choose to skip snail mail and paperwork and handle everything with your insurer online or over the phone, you may see a small discount.

Go rate shopping

If you’re not happy with your current insurer’s rates when you add your teen driver, shop around to get quotes from a few other insurers. You should get quotes for the same level of coverage and deductible from at least three insurers, and make sure to mention your teen driver when you’re pulling quotes.

“Probably the best tip we can offer is to work with an independent agent. They serve as a trusted advisor who can help you make sure you have the right coverage at the right price. Insurance rates reflect a wide variety of factors, so it's impossible to predict the exact amount your policy will change with the addition of a new driver. That is one reason why we strongly recommend working with an independent insurance agent, who can give you a more accurate estimate based on your specific situation,” notes Ekstrom.

Keeping Teen Driver Costs Under Control

Adding a teen driver can potentially increase your rates by as much as 50% to 100%, but there are ways to keep your premiums as low as possible by making smart policy adjustments and hunting for as many discounts as you can find. Don’t neglect shopping around for a more affordable policy that meets your needs before your teen gets their license. And of course, do your best to promote safe driving and responsible behavior with your teen.

Frequently Asked Questions

1. Do I have to add my teen to my policy right away?

Usually, yes, once they’re licensed and will drive your vehicles. Not disclosing a teen driver can risk denied claims or cancellation.

2. Is it cheaper to add my teen to my policy or get them their own?

Adding them to your existing policy is typically cheaper and can unlock better coverage limits and discounts than a solo policy.

3. Does the car my teen drives affect the price?

Absolutely. Insurers often rate teens as the highest-risk or most expensive vehicle unless you assign them to a specific car.

4. Are good-student and driver-ed discounts actually worth it?

Often, yes. If your insurer offers them, these are some of the easiest “paperwork wins” to reduce teen-related premium increases.