Watching a teenager get behind the wheel of a car for the first time can be both exciting and nerve-wracking. Seeing the price of teenage drivers insurance is probably the latter. But why are young drivers so expensive to insure?
In this article, L.A. Insurance covers the topics examining the coverage needs of teenage drivers and what factors influence the price of an auto insurance policy. Our research team has thoroughly reviewed providers to find the best car insurance companies, so we’ll also give our recommendations for coverage.
What is Teenage Drivers Insurance?
While you may have heard the terms “teenage drivers insurance” or “teen car insurance,” there’s technically no type of car insurance policy exclusive to teenagers. Whether a driver is a 16-year-old or a 96-year-old, they’ll need to meet a state’s minimum requirements for liability insurance. If the car is being financed, a lienholder will likely require collision insurance and comprehensive coverage as well.
Liability Insurance
When acquiring car insurance in Colorado, whether it’s for a teen driver or assisting a new driver in obtaining their own policy, understanding the various insurance types is crucial. In Colorado, like in many states, liability car insurance is typically mandated. This coverage is designed to handle damages for others in the event that the driver is deemed at fault. It’s an essential consideration, especially in cities such as Aurora, Colorado Springs, Longmont, and more. Here are the main parts of liability coverage:
- Bodily injury (BI) liability: This covers lost wages, medical bills, and other expenses for someone who’s injured when you’re at fault for an accident.
- Property damage liability: This covers damage to someone else’s property — such as a vehicle — when you’re at fault for an accident.
Collision Insurance
Collision insurance protects your vehicle in the event of a collision, no matter who’s at fault. Though collision coverage isn’t required by state law, a lender will likely require it if you’re financing a vehicle since it protects the investment.
Collision coverage will reimburse you for damage to your car and give you a payout up to the actual cash value (ACV) of the vehicle if it’s deemed a total loss. However, collision insurance doesn’t cover damage in non-moving situations.
Here are some situations that would involve filing a collision insurance claim:
- Hitting a guardrail
- Colliding with another vehicle
- Getting damage from a road hazard like a pothole
Comprehensive Insurance
Comprehensive insurance is another common requirement for drivers financing a vehicle. Unlike collision insurance, it’s geared more toward non-driving scenarios.
Comprehensive coverage will reimburse you for damages in the event of:
- Collision with an animal
- Damage from the environment (flood, hail, fire, tree sap)
- Damage from falling objects
- Theft or vandalism
Other types of insurance policies include:
- Gap Insurance: This will pay the remainder of an auto loan if a vehicle’s ACV payout is insufficient.
- Medical Payments: This covers medical bills from the driver or other passengers.
- Uninsured/Underinsured Motorist (UM/UIM) coverage:This provides additional financial protection if you’re in a wreck where the driver who’s at fault is uninsured or doesn’t have enough insurance to cover damages.
Why Are Teens More Expensive to Insure?
Teenage drivers’ insurance costs more for several reasons. Insurance providers look at factors like age and driving experience when deciding insurance premiums and being younger with little or no behind-the-wheel experience leads to higher car insurance rates.
That’s because data shows younger, inexperienced drivers are usually more likely to be involved in serious accidents. In the United States, car crashes are the second leading cause of death among teens, according to the Centers for Disease Control and Prevention (CDC). The CDC also states that the risk for crashes is highest during the first month’s teens have their driver’s licenses.
What Affects the Price of Insurance?
Mentioned above, age and driving records impact the price of insurance, but insurers weigh other factors as well. Local insurance minimums impact the price, and so do traits like gender in most states.
Here’s a list of items insurance providers review while estimating premiums:
- Vehicle make and model
- Mileage
- Age
- Location
- Driving history
- Credit score (in most states)
- Coverage limits
- Deductible amounts
What Car Insurance Does a Teenager Need?
Drivers should make sure their insurance policies provide adequate financial protection but increasing coverage limits for teens can be a good idea since they’re more likely to be in crashes.
Liability coverage is a good example. Buying the state required minimum isn’t enough to protect you from lawsuits, and sometimes it’s not enough to cover an accident.
Another option is accident forgiveness, which keeps your insurance rate the same after the first at-fault accident on your policy. The “forgiveness” varies by state and insurer, and a policyholder usually must be claim free for a number of years to be eligible or pay to add it to their policy.
Because some insurance companies include accident forgiveness for free and others offer it as an inexpensive add-on, it could save you money overall if your young driver has an at-fault car accident. This type of insurance isn’t available from every provider. In conclusion, if a car is still being financed, you’ll likely need to maintain comprehensive coverage and collision insurance until the loan is paid off regardless of who is driving.
How to Save on Teenage Drivers Insurance
Even though teen drivers typically pay more for insurance coverage, there are a few options for lowering insurance costs. You should discuss how much the policy costs with your teen. This is also an opportunity to reinforce good driving habits and compare car insurance quotes to get the best rate.
Stay On a Parent’s Policy
Adding a teen to an existing policy is typically less expensive than a young driver buying their own coverage, according to the III. Having an experienced driver as the policyholder will help them qualify for a better rate and may give you a greater choice of discounts. That said, adding a teen still means a bump in your insurance premium.
Look For Discounts
One way to offset the price hike that follows a young driver is with discounts. Insurance providers offer several ways to reduce car insurance costs based on customers’ demographics or the types of vehicles they own.
Here are some common car insurance discounts:
- Good student: Good grades could mean savings, as students who maintain at least a B average might get a discount on coverage.
- Student away: If a student is away at college and rarely drives, you might get a discount.
- Driver’s education: Some insurance providers offer discounts for taking driver training courses.
- Defensive driving course: Enrolling in a defensive driving course may qualify you for a discount.
- Safe driver: Insurance providers sometimes offer lower prices to customers who have good driving habits and remain claim free for several years.
- Multi-car: Having multiple vehicles on a single policy might get you a discount.
- Multi-policy: You can save by bundling different types of insurance policies (such as homeowners and auto) with one company.
- Safety features: Having features like air bags and anti-theft systems may qualify you for savings.
Choose a Higher Deductible
A deductible is the amount of money a policyholder pays up front for a claim before insurance coverage takes over. Having a low deductible means paying less money when you file a claim, but it usually comes with a higher insurance premium.
While raising your deductible can decrease your premium, keep in mind that filing a claim will be more likely if you have a teen on your policy.
Our Recommendations for Car Insurance
Insuring a teenage driver can be a balancing act between price and the quality of coverage. L.A. Insurance auto insurance experts recommend getting auto insurance quotes from several companies and looking at comparisons like State Farm vs. Geico to see which providers meet your coverage needs. We’ve identified State Farm and Geico as the best choices for young drivers. Get a quote from us to begin your teen driver insurance policy.