Teens have the highest chances for car accidents, so there's probably no way to avoid paying more when you add a teen driver to a policy. Also, reviewing your auto insurance coverage when you have a teen driver is wise. If your teen causes a car accident with more damage than your insurance will pay for, you could be sued.
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Here's a look at car insurance types to consider when you have a teen driver.
Overview: Car insurance when you have a teen driver
|Liability car insurance||Required in most states. Liability insurance pays for the damage and injuries you (or your teen driver) cause others. Because teens have the highest chances of causing accidents, it's smart to have more than just the minimum liability insurance required by your state. Consider at least 100/300/50, meaning:
|Collision and comprehensive insurance||These pay for damages to your own car. They are typically sold as a package together. If your teen crashes into another car, backs into a pole or hits a sign, collision insurance covers your car damage. (If you have a car loan or lease your lender probably already requires these.)|
|Roadside assistance||What if your teen runs out of gas? Or gets locked out of the car? Insurers commonly offer roadside assistance coverage.|
|Umbrella insurance||An umbrella insurance policy adds an extra layer of liability insurance to your auto and homeowners insurance. It's a good way to buy a lot of extra insurance cheaply. You can get a $1 million umbrella policy for about $150 to $300 a year, according to the Insurance Information Institute.|
|Other coverage||Your state may require other insurance types such as uninsured motorist coverage or personal injury protection (PIP).|
The cost of adding a teen driver
There's likely no way to avoid a rate increase when you add a teen driver. The increase can be 20% to 180% or higher, depending on the state, according to Trusted Choice, a group for independent agents.
Cheap car insurance for teens: Discounts
Fortunately, many auto insurance companies offer discounts for teens and students. Common discounts are:
Driver training discount. This is usually for drivers under age 21 who have taken a driver education course. But you generally won't get the discount if:
- Taking the course was a penalty from a court or because of a moving violation.
- The teen had an at-fault accident or was convicted of a moving violation in the last 36 months.
Good student discount. This discount usually requires the teen to be a full-time student at a high school or university and to meet academic criteria. You may be required to submit a transcript every year at renewal time in order to get the discount. A typical requirement is to meet one of the following:
- B average or better.
- Rank in the upper 20% of their class.
- Have at least a 3 in a system that uses a 4, 3, 2, 1 point system.
- Be on the Dean's list, honor roll or comparable list.
Student away school discount. If your teen is away at school without a car, the chances of a claim are reduced. That can get you a discount from many insurance companies. The requirements usually include:
- A driver who's under age 25.
- Going to a school 100 or more miles from home, without a car. The number of miles varies by insurance company.
Driving apps for teens with discounts
Many insurers offer mobile apps that can score driving and provide tips and feedback. Enrolling in a program that uses a mobile app can also lead to a discount. For example:
- Allstate's Drivewise.
- American Family's Teen Safe Driver Program.
- Safeco's RightTrack.
- State Farm's Steer Clear.
More ways to get cheap car insurance for teens
Add the teen to the parents' insurance policy instead of putting the teen on a separate policy. This way the rate increase for the teen driver can be offset by discounts you may already have on the policy, such a multi-line discounts and loyalty discounts. And if you're buying a car for the teen, you may also get a multi-car discount.
Shop around: Compare car insurance by getting quotes from multiple companies. It's possible to save hundreds of dollars just by shopping around, because rates vary so much among companies.
Ask your insurance agent to review possible discounts. Make sure you're getting all the discounts possible.
If you're buying your teen a car, buy one that's safe and cheap to insure. If you're considering a few cars, ask your insurance agent to give you quotes for each. That way you won't have surprises after you buy a car. Here's a list of the cheapest cars to insure.
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Tips for parents of teen drivers
- Know your state's graduated licensing laws: These laws lower the risk of teen drivers by introducing them to the road and driving others in stages. See graduated licensing laws at the Governor's Highway Safety Association.
- Make a written agreement about driving expectations and consequences for breaking rules, such as driving to an area that's off limits. The CDC has a free parent-teen driving agreement that can be downloaded.
- Make sure your teen isn't texting while driving. Technology can help here. There are free apps that block texting while driving. Some phones come with a "do not disturb" feature that can silence calls and alerts while driving.
- Ask your insurance agent when the teen needs to be added to the policy. Some companies will want you to add a teen when they get a license. Others will base the timing on the age of the teen, according to Trusted Choice.
If you have a little sticker shock after you add a teen to your car insurance, remember time is on your side. Rates generally start to drop once a person hits age 25 and then keep going down, assuming the driver doesn't rack up accidents and violations.