Everything you need to know about car insurance for teens
Did you know that the risk of car accidents is higher for teens from 16 to 19 than it is for any other age? A combination of inexperience and other factors can put your teen at risk.
Because of this, car insurance for teens often tends to be a little pricey. When it comes to driving, you want to teach your teens healthy driving habits as they get started.
You also don’t want to see your insurance bill skyrocket. If you’re getting ready to have a teen driver in your home, we’ve put together all the tips you need in one place!
When should you insure your teen driver?
You are not legally required to have insurance for your teen when they have a learner’s permit. However, here’s a catch: If your teen gets in an accident while learning to drive in your car, your insurance company could void your policy, deny your claim, and refuse to renew your policy.
Because of this, you need to, at the very least, talk to your insurance company and let them know your teen is learning to drive in your vehicle. Depending on what state you live in, you should not have to pay for them until they have their license.
However, taking this little step makes sure you’re covered if something happens during a practice session.
Should you get your teen their own insurance?
When it comes to purchasing insurance for your teen, it depends. It almost always costs less to add your teen driver to your policy instead of getting them their own policy.
The average cost of adding your teen to your insurance is an increase of $1,461 per year. However, the cost of getting them their own insurance can be exponentially higher, running around 4,801 dollars per year.
However, if you buy them a car that’s only in their name, you might need to get them their own policy. There are a couple of ways you can address this.
First, in this situation, look at insurance providers who offer multi-policy discounts. You can also add your own name to the title so that you and your teen are both listed as owners.
This will allow you to keep them on your policy and save money on the cost of insurance.
Look for discounts
You want to make sure you are looking for discounts for your teen driver. There are multiple discounts an insurance provider might offer.
This discount is for your teen entering college. If your teen goes to a college that is at least 100 miles from home and doesn’t take a car with them, they can take advantage of this.
The distant student discount still allows them to drive if they’re home or during other occasions, but because they’re not driving as often, they get a discount.
Depending on what state you live in, your insurance might offer a discount for teens who participated in a driver training course. These courses are built to help your teen driver learn to be more attentive when they’re behind the wheel.
They also teach teen drivers how to avoid behaviors that could lead to them getting a ticket or being in an accident.
Does your teen get good grades? Some insurance plans will offer a discount to teens with good grades.
The discount varies per insurance company; however, for most insurance companies, you can save anywhere from six to 36 percent on your car insurance.
The requirements to get this discount might vary from company to company. Some of the standard requirements are listed below:
- Age: 16 to 25
- Enrolled in college, homeschooling, or high school full time
Your student must also meet one of the following requirements:
- B Average or 3.0 GPA or top 20 percent in your class
- Rank in the top 20 percent on one of the following standardized tests
- California Achievement Test
- Iowa Test of Basic Skills
Parents, this could be the perfect incentive to get your teen to keep their grades up. If you require your teen to maintain the GPA required for this discount to drive, it can cut the insurance cost and boost their GPA.
If your teen isn’t driving much, you can get a discount. You will need to discuss this with your insurance provider.
Depending on the insurance for teen drivers you choose, the miles can vary. You might even be able to find a policy that offers pay-per-mile insurance.
Consider usage-based car insurance
Some insurance companies offer a program where you can plug a device into your car that tracks your driving habits. This shows the insurance company if your teen has healthy driving habits.
If your teen shows that they are driving safely, they might get a lower rate. Typically, if you use one of these devices, you get an initial discount.
Then your insurance rate is calculated based on the information the insurance company receives from the device.
Advantages of usage-based car insurance
The obvious advantages of this are possible lower insurance rates and that it encourages your teen to practice better driving habits. However, like anything, it also has some disadvantages.
Disadvantages of usage-based car insurance
This type of program will note when you brake or accelerate suddenly. While this can help determine whether you’re driving safely, it’s hard for the sensors to be aware of any external factors.
The biggest disadvantage is that if your teen drives like they’re playing a video game, you could get an increase in your insurance bill.
Minimum or maximum coverage?
When you buy car insurance for teens, should you purchase minimum or maximum insurance coverage? Purchasing the minimum amount might sound appealing just to meet the requirements set out by the law.
However, it’s recommended that you actually purchase maximum coverage. Why?
Insurance company perception
If you only purchase the minimum amount of insurance for your teen, the insurance company will consider them a bigger risk.
Not purchasing the maximum amount of coverage starts your teen off with a history of being underinsured.
The last thing you want is for your teen to cause an accident. However, as a new driver, it might happen at some point.
If they are responsible for an at-fault accident and you only have minimum coverage, your insurance might not cover all the costs of the other driver involved.
If your insurance doesn’t cover the cost of damages and injuries, you’re at risk of getting sued.
At times an accident might occur that isn’t your teen’s fault. However, they’re still involved.
If you only have minimum coverage and the other driver isn’t insured, your minimum liability coverage might not cover the damage to your car. In addition, your car getting stolen or damage caused by bad weather might not be covered.
Some states have minimum liability coverage amounts that are as low as 5,000 dollars for property damage coverage, like California and Pennsylvania. This means that any costs over that amount would be your responsibility.
Suggested coverage amounts for teens
How much car insurance do you really need? There is a big difference in minimum coverage versus the amount of coverage that is suggested in order to protect your teen should they get in an accident.
All states except New Hampshire require a minimum amount of liability insurance. However, New Hampshire does require you to prove that you can meet minimum financial requirements.
Depending on what state you live in, the amount will vary. Liability covers damage you might do to other people’s property and your own.
It’s recommended that you increase your liability level as high as you can afford reasonably. However, for most drivers, the best coverage is 100/300/100.
Here’s what that means:
- 100,000 dollars per person
- 300,000 dollars per accident in bodily injury liability
- 100,000 dollars per accident in property damage liability
Remember, this is a minimum recommended, so if you can afford more, get it. This will help ensure that if your teen is in an accident, insurance covers it.
Other coverages you might be required to have by law are personal injury protection coverage and uninsured motorist coverage. Depending on what state you live in, there could be more.
Make sure that you get the maximum amount you are able to afford for your teen. Comprehensive and collision insurance are not required by law; however, if you are still paying for your car, you might be required to have it by your lender.
If you can’t afford to replace your car or major car repairs if you’re in an accident, you want to ensure your teen has this coverage. Essentially, ensure that you get the highest amounts you can reasonably afford for coverage.
This ensures that if your teen is in an accident, you are covered, and it protects you if you get sued.
Insurance companies have other optional coverages that can help keep your teen safe on the road. Make sure your teen has roadside assistance in case the car breaks down while they’re driving.
You can get this through some insurance companies; however, you can also get roadside assistance through other resources. Resources like Life 360 offer emergency assistance and cover more than just the basic roadside assistance you will get through your insurance company.
Get the right car insurance for teens
Are you ready to get the best car insurance for teens? It can be expensive, but with a little bit of research, you can find discounts that will work for your family.
Once your child hits the road, make sure you try out Life360 for free to help keep them safe. With Life360 you can track their driving habits, see their location and receive regular driving reports. And if the worst happens and our Crash Detection feature senses any collision over 25mph, our team immediately reaches out to the driver or passenger involved. If help is needed or we don’t get a response, we’ll alert you and all emergency contacts with the vehicle’s location.