Understanding Car Insurance for Teens

Summary:

• Adding a teen to a car insurance policy is crucial for legal compliance and financial protection, as teen drivers have the highest crash rates due to inexperience and distractions. Options include adding them to an existing policy (typically more cost-effective) or purchasing a standalone policy if the car is in their name.
• Coverage options include property, liability and medical insurance, with additional options like collision, comprehensive and uninsured motorist coverage (depending on state/legal requirements). Agents can provide tailored advice.
• To save on premiums, seek discounts for good grades, safe driving or driver education courses; avoid unnecessary coverage; choose safe cars and consider raising deductibles to lower costs. Regular policy reviews can keep rates optimized.

Getting a driver’s license can be an important step in your teen’s journey to adulthood. It also offers some unique opportunities to you as a parent. You’ve probably thought about all the good advice you can share from your own years of driving, and maybe you even recognize the need to be a responsible role model when you’re behind the wheel and they’re in the car. With so much attention on safe vehicle operation, you might forget to include the topic of auto insurance in your conversations with your teen. The solution? Put your new driver on the road to success with a discussion about the importance of having a policy with the right coverage. 

Car insurance requirements for teens

Let’s face it, teen drivers lack the behind-the-wheel experience that comes from years of practice. Things like poor judgement, distraction and anxiety are all factors that make teens 16 to 19 years old the highest crash risk among all age groups. That’s where auto insurance comes in; it’s meant to help protect you against financial loss when something like property damage, injury or theft happens.

Auto insurance is a legal requirement for drivers in all states except New Hampshire. If your teen has a driver’s license, lives with you and drives your car, they must be listed on a policy—either yours or their own. Don’t risk having a claim denied by your carrier because you neglected to insure your teen driver.

Get started by alerting your agent

It’s a good idea to notify your insurance company when you have a teenager approaching driving age. Your agent can let you know if your teen will be covered under your existing auto insurance policy when they start driving with their learner’s permit. Although most insurers don’t make coverage a requirement until your teen has a license, others might, and some may want to add your teen to your policy when they turn 16, regardless of whether they have a driver’s license or not. 

Insuring a teen driver: policy options

When it comes to car insurance for your teen, your choices are to add them to your existing policy or to get a new policy that covers the teen. Here’s how they compare:

• Adding a new teen driver to your existing policy will likely increase your rates, but that increase will likely be less than the cost of a standalone policy for your teen. The money saved from adding a driver to a family policy makes it the most common way to cover a teen driver, and some companies will also discount the premiums on all of the policies that are part of the family coverage. Keep in mind that adding a teen to your policy increases your chances of needing to file a claim, which could cancel a claim-free discount you may have earned.
• Purchasing a standalone policy may be necessary if the vehicle’s title is in the teen’s name. Although a separate policy also affords your teen some independence, it’s a good idea to talk with your agent about whether the advantages of a standalone policy will outweigh its higher cost. It’s also worth noting that some insurance companies do not offer standalone coverage to teenagers.

The right insurance coverage for your teen

Once you’ve decided to add your new driver to your policy or get them their own, you’ll want to review the different kinds of car insurance coverage available, including property damage liability and bodily injury liability coverage. Property damage applies to damage to other people’s property in a crash; bodily injury is for individuals who suffer injuries or fatalities caused by the insured driver.

Some specific coverages (such as bodily injury liability and property damage liability) may be required by your state, others (such as collision or comprehensive coverage) might be a requirement of your auto loan and, finally, there may be some additional types of coverage (such as personal injury protection and uninsured motorist coverage) that are simply a good fit for your situation. Your agent will have more information and will be able to answer any questions you have about the best car insurance for your teen driver.

Ways to save on car insurance for teens

Here are some auto insurance tips to help you save on coverage for your teen:

• Ask your agent if you qualify for any discounts. Insurance companies may reward you by reducing your rate when your teen demonstrates safe behaviors. Discounts are usually given for things like getting good grades in school, driving infrequently and completing a driver’s education course.
• Avoid unnecessary coverage. A teen who is away at college and not driving may qualify for reduced coverage. Collision and comprehensive insurance may not be worth getting on an older car.
• Raise your deductible. It’ll lower your premiums, but you’ll have to pay more out of pocket if you file a claim.
• Pick the right car for your teen. Insurance companies charge less to insure safe cars than they do unsafe ones. Look for a vehicle that can withstand a crash, avoid choosing one that has a lot of extra horsepower and consider a model that has robust safety features like electronic stability control.

Review the coverage for your teen driver

Signing your teen up for an auto insurance policy or adding them to one you already have is an important step in a lifetime of safe driving. Just remember that regular reviews of your coverage, your discounts, your claims and your rates are also important, and they can be a good way to keep your teen involved in the insurance process. With the right coverage and the right rate, you’ll be able to rest easy, knowing that you’ve taken important steps to help protect yourself from financial loss involving your teen driver.