Finding the Cheapest Car Insurance for Teens

Auto Insurance, Insurance
Finding the Cheapest Car Insurance for Teens

If you’ve ever had to buy car insurance for a teen, you know that coverage can be brutally expensive. It costs more than $1,500 per year on average to add a teen driver to a family policy, according to a NerdWallet study.

Car insurance for teens is expensive because teen drivers represent a huge risk for car insurance companies. Car crashes are the leading cause of death for U.S. drivers ages 16 to 19, and drivers in that age group are nearly three times as likely as those ages 20 or older to be in a fatal crash, according to the Insurance Institute for Highway Safety’s Highway Loss Data Institute.

It’s especially important for parents of teen drivers to compare prices from different insurance companies and look for discounts. When NerdWallet researched the cheapest car insurance quotes for middle-aged couples with one teen driver, we found quotes that ranged from about $1,000 per year to more than $20,000.

Cheapest insurance rates for families with a teen driver

The following table shows the five companies that offer the cheapest rates for teens when added to a family policy. Our rankings are based on national averages, and discounts aren’t available in every state, so you may find different results where you live. Check with your agent for details.


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USAA

  • Up to 10% discount for good students.
  • Up to 25% discount for students who attend school at least 100 miles away from home and leave their cars behind.
Get a quote Available only to active military members, veterans and their families.

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Nationwide

  • Up to 15% discount for drivers ages 16 to 24 with a B average or better.
  • Under the company's Family Plan, relatives living in the same household can all share discounts.

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American Family

  • Good student discount available; percentages vary.
  • Discount for drivers younger than 24 who attend school more than 100 miles away from home and leave their vehicles behind.

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State Farm

  • Up to 25% discount for good students.
  • Up to 15% discount for teen drivers who go at least three years with no tickets or at-fault accidents and complete an approved safety course.

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Geico

  • Teens can move from their family plan to their own policies at same rates.
  • Up to 15% discount for good students.
  • Additional discounts available for car safety features

One combined policy saves money

Teen drivers can also buy their own insurance policies, rather than being covered under their families’ plans. But according to a NerdWallet study, teens can save by getting auto coverage on their parents’ policy in all 50 states and Washington, D.C. It costs teens and their families $3,053 less per year, on average, to be covered under a single car insurance policy than it does for teens to buy their own coverage.

Tips for saving money on teen car insurance

Adding a teenager to your family’s car insurance is guaranteed to increase your premium, but discounts can lessen the blow. Companies offer price breaks of up to 25% on young drivers’ policies, but amounts and availability vary by state and company. Most discounts are good for “up to 10%” or “up to 15%” off premiums.

Here are some of the ways teens can save:

Get good grades. Students with a B or better average in school were 33% less likely to have an accident within their first year of driving than those with lower grades, according to a 2001 study in the journal Accident Analysis & Prevention. Good student discounts can range from 10% to 25%, depending on the insurance company and state.

Take a professional training course. Young drivers who took a training course were less likely to get a traffic ticket, less likely to have a collision and less likely to be in an accident resulting in injury or death than those who didn’t, according to a 2015 University of Nebraska-Lincoln study. Insurers may offer discounts of up to 10% for drivers under 21 who complete an approved course.

Leave the car at home. Many insurers offer teen drivers a discount if they’re attending school at least 100 miles away from home and leave their car behind. Students are fully covered when they drive while at home on breaks. USAA offers an away-from-home discount of up to 25%, but for most other insurers the price break is around 7%.

Sign a driving contract. Some insurance companies offer discounts or benefits for teens who sign a driving contract in which they promise to always wear a seatbelt, never text or eat while driving, call for a ride if impaired, pay any traffic or parking tickets, maintain good grades and contribute to the cost of car maintenance, gas and insurance. Discounts vary by state and insurance company.

Next steps

It’s important for teens to have car insurance coverage — not only to comply with the law, but to bring some peace of mind. Parents should strongly consider buying more than the bare minimum, considering the high odds that teen drivers will be involved in a crash and the possibility that family assets will be at risk. NerdWallet’s car insurance comparison tool can help you get started with your shopping.

To recap our findings:

Cheapest car insurance for teens

InsurerDiscount
USAAUp to 10% for good students.
NationwideUp to 15% for good drivers age 16-24 with a B average or better.
American FamilyVaries.
State FarmUp to 25% for good students.
GeicoUp to 15% for good students.

METHODOLOGY

NerdWallet ran insurance quotes for 500 ZIP codes across the U.S. to determine cost of insurance for teens and parents, together and separately. For teens, we averaged car insurance quotes for males and females ages 16-18, and licensed at 16. For parents, we averaged quotes for a man and a woman, age 45. We ran rates for a 2012 Toyota Camry and 2012 Ford Escape and assumed 10,000 miles driven per year. All drivers were quoted liability coverage limits of $100,000 per person, $300,000 per incident and $100,000 in property damage (commonly referred to as 100/300/100). We included comprehensive and collision coverage, and added uninsured motorist and personal injury protection if required by the state. We averaged the four lowest quotes available to all shoppers to remove outliers and mimic consumer behavior.

Juan Castillo is a staff writer at NerdWallet, a personal finance website. Email: jcastillo@nerdwallet.com. Twitter: @JCastilloNerd.

This post was updated. It was originally published Feb. 6, 2015.


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