Teenage drivers need car insurance just like any other driver, but it will probably be more expensive to insure them.
Auto insurance protects you from the financial risk that you’ll have to pay out of pocket if you cause an accident or your car is stolen or damaged. Not only can car insurance save you potentially tens or even hundreds of thousands of dollars in liability, medical expenses, and repairs; it’s also legally required in every state but two.
When you’re 15 years old and you’ve received your learner’s permit, you’ll need car insurance coverage before you can even get behind the wheel. Fortunately, you can be added to your parents’ car insurance policy.
However, adding a teenage driver to their car insurance policy will be expensive, and more so for outright purchasing a new car insurance policy for a teen. That’s because young drivers are notoriously not great drivers, and car insurance companies are in the business of managing their risk. Carriers consider experienced drivers safer to insure and dramatically reduce their premiums around age 25.
Car insurance means that you’re protected in the event that you’re liable for bodily injury or property damage you cause with your car. Depending on your coverage needs, it can also reimburse you for the costs you incur when your car is damaged, destroyed, or stolen.
For young and teenage drivers, who are less experienced, these coverages are especially important. If you cause an accident, you’re unlikely to have the funds to pay someone’s medical bills or replace a car you totaled, and your parents may struggle to pay these bills as well.
When you purchase car insurance, you’re purchasing an amount of coverage in each component that comprises your coverage. These components are:
Liability protection, which is the only coverage type that you’re required by law to purchase, and reimburses the victim in an accident in which he or she incurs an injury or his or her property is damaged.
Personal injury protection, which is kind of like health insurance in that it pays for your medical bills or those of your passengers after an accident.
Collision and comprehensive insurance, which are usually combined, since one (collision) pays out when your car is damaged by another vehicle, and the other (comprehensive) when your car is damaged by some other kind of impact or stolen. Collision and comp will be necessary if the insured car is leased or paid for with an auto loan.
Uninsured/underinsured motorist insurance, which pays the difference when the other party is liable but doesn’t have enough coverage to pay your bills.
If you’re young, it may be expensive for your parents extra to add you to their existing car insurance plan, sometimes even doubling their premiums. It could cost even more for them to purchase a new car insurance policy for you, which they would have to do if, for example, they also bought you a new car.
Even though you, personally, may be an excellent driver at a young age, auto insurance companies consider teenagers in general to be most reckless drivers. The reason for this is that car insurance companies use statistics to show how often teenagers and young drivers cause an accident, and generally don’t have the capacity to examine each driver’s ability at an individual level.
Insurers factor in your age and driving experience when determining how much to charge you for premiums. With all other factors — such as location and car type — being equal, young and teenage drivers pay more than anyone else. At age 25, premiums drop significantly, and they continue falling the more experience you get behind the wheel, until plateauing in your early 60s.
Car insurance for young and teenage drivers can be more affordable, because virtually every car insurance company offers some kind of discount. While some savings remain nearly identical between insurers, others may offer other types of reductions. Policygenius can help you sort through the available car insurance discounts and make it easy to compare car insurance policies until you find one that fits your needs.
Some of the most common discounts for young drivers are:
If you’re a good student, whether in high school or university, you’ll be eligible for a premium discount. Usually, that means meeting one of the following academic achievements:
Rank in the top 20% of your class
Maintain a grade point average of at least a B or 3.0
Make the Dean’s List or Honor Roll
Score in the top 20% of a recognized standardized test
You’ll be eligible for these savings up to age 25, and qualifying for it may be as simple as providing your insurer with your report card, transcript, or a note from a school administrator.
Home-schooled students are also eligible for the good student discount. To prove your academic achievements to your insurer, you have to be in the national top 20% of one of the standardized tests:
If your state administers statewide standardized testing, you may be eligible to use those scores as well for your good student discount. Check with your insurer for details.
If you go to school away from home, you may be eligible for a car insurance discount, because you’re not actually driving the car as much.
Also known as student-away discounts, you may be eligible for a considerable savings – Allstate advertises as much as 35% of your premiums – if you leave your car with your parents. Car insurers typically require that you be at least 100 miles away to qualify for the resident student discount.
Many drivers take a driver’s education course when they’re learning how to drive. In fact, almost every state requires new drivers to take one. If you do, your car insurance will let you save on your premiums upon successful completion of a driver’s ed course.
After age 21, you probably won’t be able to take driver’s ed. However, you may be able to take a defensive-driving class if your driving record is less than perfect. In return, some insurers may offer you a discount.
Some colleges partner with car insurance companies to offer a discount to young drivers. You’ll have to check with your insurer to find out if you qualify, or your school itself may advertise the deal.
If you join the military after high school, you may also be eligible for an auto insurance discount. Get in touch with your insurance company to figure out what kind of savings they offer to members of the armed forces.
Zack Sigel is a SEO managing editor at Policygenius. He covers personal finance, comprising mortgages, investing, deposit accounts, and more. His previous work included writing about film and music.