Teens pay the highest insurance rates, and even if the rates drop slightly when the teen years are over, they often remain high until they drop once the adult reaches 25 years old.
If you’re paying those incredibly high insurance rates, you’ll probably be happy to find that there are things your teen can do to get lower insurance premiums.
Read on to learn why insurance for young drivers is so high, and then the steps young drivers and their parents can take to cut down that rate and discover the top insurance companies for teens.
Reasons Behind High Insurance Rates for Teens
Insurance premiums are based on risk, so drivers with the lowest risk classification pay lower rates than drivers in higher risk categories.
Statistical Risk for Teen Drivers
Teens are twice as likely to be involved in a fatal crash than drivers of 20 years old. But when you calculate the miles driven, teens are almost three times more likely to be in a fatal crash than older drivers, according to the CDC.
Teen boys carry far more risk, statistically, than teen girls, so in most places, the cost of insurance is higher for young males than females.
Because teen drives have such a high risk, insurance companies charge the highest premiums to make up for it.
Young Drivers Lack Experience
When you build a driving record, insurance companies have something to base your premiums. Unfortunately, teen drivers haven’t had time to develop a driving record. So, as a default, they’re considered high-risk until they prove otherwise.
One of the reasons premiums drop so drastically through your 20s is that you’ve driven enough years to prove yourself as a good driver.
7 Tips for Teens to Save on Insurance
When you combine several discounts, you might be shocked to see how much you can save. For example, some people save so much with good grades and driver’s education discounts that when they turn 25, their car insurance rates hardly drop because those discounts no longer apply.
#1 – Good Grades Lead to Lower Insurance Premiums
Generally, if your teen gets a 3.0-grade point average or higher, they’ll qualify for a good grade discount. It’s one of the most common discounts, and most insurance providers offer it. So you can expect to save around 10% to 15% for getting good grades.
Going to college can increase your lifetime earning potential, and if your teen gets good grades while there, they can start saving now thanks to lower insurance premiums.
#2 – Drivers Ed Helps Teens Improve Skills
Each state has a graduated driver’s license system, and typically, you can drive earlier if you complete a driving course. But even when it’s not required, it’s a wise choice to opt for driver’s ed training.
Depending on where you live and who your insurance provider is, you may be able to complete the course with your teen through a remote class. Otherwise, look for an in-person course near you and sign up early because there are often waiting lists to get in.
#3 – Inexpensive Cars Mean Lower Insurance Risk
Even though there’s not much you can do about your teen’s risk classification, you can lower the risk of the vehicle they drive. So, for example, if your teen drives an inexpensive, older car, they’ll get lower insurance rates because there’s less value to insure.
Also, you may be able to drop full coverage from an old car and only carry liability coverage, which will help you further save.
#4 – Focus on Vehicle Safety Features
Another approach to lowering your teen’s risk through their vehicle is to have them drive a car with the best safety features. Many features in newer cars, like automatic braking, lane-keeping assist, and blind-spot monitoring, help teens avoid crashes.
Cars with high safety ratings are more likely to protect your teen and reduce the associated injury costs following a crash.
Car insurance companies set premiums lower for vehicles less likely to be involved in an accident and keep their inhabitants safe.
#5 – Consider an Insurance Company With a Teen Program
Some insurance companies welcome teen drivers with special programs to encourage safe driving. Usually, they’ll offer an app that tracks driving habits. These apps are similar to telematics apps and devices any driver can use to get a discount, but they have features specific for teens.
If your teen uses a safe driving app from your insurer, you might be eligible for a discount.
#6 – Compare Car Insurance Rates for Teen Drivers
Some car insurance companies are a better fit for some people than others. Adding a teen driver to your policy might change who your best-suited provider is. The only way to know is to collect quotes from several insurers and see how much you could save by switching providers.
#7 – Drive Carefully to Build a Safe Driving Insurance Record
The only way to build a driving history is to drive. And if your teen drives safely, they’ll create a clean record. Your insurance provider should start rewarding your teen for their established good driving record within three years.
One of the most critical aspects of safe driving is staying off your smartphone. So, make incentives for driving hands-free with your teen.
The Best Insurance Companies for Teens
While it’s true that the right company for your teen might not be best for another teen, the following companies tend to offer the best rates, discounts, and programs for teen drivers:
- State Farm
Don’t limit yourself to this list, though, because you might find a company that’s even better for your family’s needs after adding a teen driver.
Even though teens cost a lot to insure, you can find ways to save through discounts and choosing the right vehicle. Also, cheer yourself up by remembering that this won’t last forever. Eventually, your teen’s rates will decrease, and maybe someday, they’ll be paying their own bills.
Melanie Musson writes and researches for the insurance comparison site, AutoInsurance.org. She’s passionate about helping families find ways to get the right insurance for the best price so they can protect and build their financial stability.