What is the cheapest way to get car insurance for a teenager

You won’t be able to escape a considerable rate increase when you add a teen driver to your car insurance policy, but there are ways to minimize the hit to your wallet.

Keep your teen on your policy

Parents looking for the cheapest car insurance should be aware that it’s usually less expensive to add a teenager to a parent’s auto insurance policy rather than putting the teen on their own policy. If you’re in doubt, though, have your insurance agent run quotes for both scenarios or compare quotes online for the total cost of two separate policies. Quotes are free, so there’s no downside to checking which way is cheapest.

Make sure you’re getting discounts

Common discounts relevant to teens include good student discounts (typically for a B average or above) and, for college students, a “student away at school” discount. If the student attends school 100 miles or more away from home, without a car, you can qualify for a price break on their rates.

In addition, teen driver insurance programs can provide both a discount and valuable driving skills training. Keeping accidents off a teen’s record will safeguard your future rates.

Shop around

This is the time to compare car insurance quotes, especially if you haven’t done so in a few years. For example, among the companies we analyzed in California, rates for two parents and one 16-year-old ranged from nearly $2,000 a year (USAA) to over $6,000 a year (Nationwide and Kemper), for a policy with typical coverage of $100,000 bodily injury liability coverage per person and $300,000 per accident.

Wait it out

Car insurance rates will generally start dropping around age 25. See Forbes Advisor’s analysis of auto insurance rates by age and gender.

Related: The Best Car Insurance Companies

Cheapest car insurance company for teen drivers

The cheapest widely available auto insurance for teen drivers is offered by State Farm.

A State Farm policy for an 18-year-old costs an average of $3,518 per year, which is 29% cheaper than the national average of $4,917.

Although they aren't an option for everyone, Country Financial, Erie and USAA are the cheapest insurers overall. Erie is only available in 12 states and Washington, D.C., while Country Financial is in 19 states. USAA only offers policies to current and former military members.

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Teen drivers are almost always charged considerably more because they are less experienced behind the wheel and more prone to risky behavior. A teen driver pays more than three times as much as a 50-year-old for full coverage.

Cheapest for parents adding teens to a policy

If you are a parent looking to add your teenager to your policy, Auto-Owners is the cheapest option at only $1,832 per year for a 50-year-old and an 18-year-old.

That is only $501 more than without a teenager on the policy, a savings of thousands of dollars. Erie, Farm Bureau and State Farm are other cheaper-than-average options for adding a teen to your policy.

Keeping your teen on your policy saves families an average of $3,108 per year — a 62% reduction in auto insurance costs — compared to the cost of the same 18-year-old getting their own policy.

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Auto-Owners is most often the cheapest option for parents adding a young driver, in part because the company has a flat rate for drivers under 19 years old. It's the cheapest company for adding a 16-,17- and 18-year-old and the second-cheapest for a 19-year-old, behind USAA.

However, other companies' rates can fluctuate considerably, depending on the age of a young driver joining a policy. For example, it costs $1,395 less per year to add a 19-year-old to a USAA policy as compared to a 16-year-old.

Rates for a parent with a young driver

16-year-old

17-year-old

18-year-old

19-year-old

Best insurance for young drivers

Best for teens on their own

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If you are in the position of having to buy a policy on your own as a young driver, State Farm can help keep your costs down. Among widely available insurers, State Farm's average rate of $293 per month is one of the best you'll find.

You can lower that further with discounts like a good student discount or the Steer Clear program, which allows young drivers to reduce rates by taking a safety course. The company, however, does not offer accident forgiveness or gap insurance, which can both be crucial to avoiding expenses after a crash.

Best for discounts

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Discounts are a key tool in reducing the high rates teen drivers pay, and Erie offers a good set of them for young drivers behind the wheel.

• Youthful driver discount,: For drivers under 21 still living with their parents.
• Youthful driver longevity discount: For unmarried drivers who spend two years on another person's Erie policy (usually a guardian or parent).
• Driving training discount: For young drivers who take an accredited drivers training course.

Erie has some of the lowest rates we found, $3,067 per year for a teen driver on their own and $2,088 for an older driver adding a younger one to their policy. However, the company only offers coverage in 12 states.

Best for accident forgiveness

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Young drivers have a tendency to behave more recklessly than their older counterparts, and Auto-Owners' accident forgiveness allows a reprieve from a first incident. The company offers the ability to pay more for its accident forgiveness, which means your rates won't go up after one accident.

Some companies require drivers to be longtime customers to earn that perk. Auto-Owners also offers cheaper-than-average coverage for a teen on their own and the lowest rates we found for adding a young driver to a parent's policy. One drawback is that you will have to work through an agent and cannot manage your policy online.

How to lower rates for teen drivers

There are several key ways that young drivers can lower the price of their auto insurance and save money.

The first is by qualifying for discounts, as most major insurers offer discounts young drivers can take advantage of.

You can also see if your insurer offers accident forgiveness at a reasonable price. It will cost more in the short term, but young drivers are prone to getting into accidents, and the savings will be significant if that happens.

Another significant way to reduce costs is by omitting coverages — such as collision insurance.

Collision insurance is costly for teen drivers because this demographic is statistically more likely to get into an accident and file an insurance claim than more experienced drivers.

It's important to remember that if a teen driver is at fault in an accident without collision coverage, they will have to pay for repairs themselves. Unless your car is older and valued at only a few thousand dollars, we recommend you maintain collision insurance.

Expert Insights to Help You Make Smarter Financial Decisions

ValuePenguin has curated an exclusive panel of professionals, spanning various areas of expertise, to help dissect difficult subjects and empower you to make smarter financial decisions.

1. Do you feel that parents having their teen children take on the responsibility of a big purchase, such as a car, provides a teachable moment that is worth the monetary cost? Why or why not?
2. Some states prohibit the use of gender to determine insurance rates, even though the motor vehicle death rate of male 16- to 19-year-olds is nearly double that of females of the same age. How do male and female teens pose different levels of risk to insurers?
3. The North Carolina Department of Transportation has the right under law to suspend teens’ driving privileges if they drop out of school or do not pass at least 70% of their courses. Should academics play a strong role in a teen’s eligibility to drive? Why or why not?
4. What is the psychological difference between learning in the classroom and learning "on the road" as a driver?

The commentary provided by these industry experts represent their viewpoints and opinions alone.

Emily Barkley-Levenson, Ph.D.

Assistant Professor of Psychology, Hofstra University

Do you feel that parents having their teen children take on the responsibility of a big purchase, such as a car, provides a teachable moment that is worth the monetary cost? Why or why not?

A lot of the attributes that make up what it means to be responsible, like self-control and delayed gratification, are still developing during adolescence and into early adulthood. In fact, the part of the brain that is responsible for these processes, the prefrontal cortex, is still maturing until around age 25. These are also skills that can be trained and improved with practice, which means that the teen years are a great time to work out those self-control muscles, so to speak. Taking on increased responsibility and autonomy with a car can provide an adolescent with lots of chances to build up their self-control and delayed gratification skills. There’s also a phenomenon called the endowment effect, where we value things more if they belong to us or we have a sense of ownership over them. So having your teen pay for their car themselves (or at least contribute their own money toward it) should increase the value they place on it, leading to safer and more responsible behavior.

Some states prohibit the use of gender to determine insurance rates, even though the motor vehicle death rate of male 16- to 19-year-olds is nearly double that of females of the same age. How do male and female teens pose different levels of risk to insurers?

The research is quite clear that men engage in more risky behaviors than women, including wearing seat belts less frequently and running yellow lights more often. Women perceive a higher likelihood of negative consequences and less enjoyment from these actions than men do, which leads to less risk-taking behind the wheel. I expect these findings would play out similarly with adolescent boys and girls as well. That said, statistical averages can’t predict the actions of any particular individual; teens of all genders can be reckless and risk-taking, and there are many teen boys who are extremely safe drivers.

The North Carolina Department of Transportation has the right under law to suspend teens’ driving privileges if they drop out of school or do not pass at least 70% of their courses. Should academics play a strong role in a teen’s eligibility to drive? Why or why not?

The reasons why driving privileges are revoked typically have to do with safety (underage possession of alcohol, speeding or reckless driving, etc.). In this case, if there isn’t a strong connection between dangerous driving and poor academic performance, then linking the two in terms of policy doesn’t seem particularly effective. Academic performance does relate to other health-risk behaviors (like violence and drug use), but this is one of those cases of correlation not being the same thing as causation: Other factors such as family stress and poverty can make teens more likely both to underperform academically and to engage in health-risk behaviors, but skipping school doesn’t cause you to drive more poorly.

What is the psychological difference between learning in the classroom and learning "on the road" as a driver?

Something that shows up over and over again in research with adolescents is a big difference in behavior between "cold" settings (nonemotional, intellectual contexts like a lab or a classroom) and "hot" settings (emotional situations in the real world, especially when peers and social pressure are involved). A teen may make entirely rational and safe decisions in the classroom (or when a driving instructor is in the car) but take risks on the road when they are more "amped up" by the presence of their friends.

Frequently asked questions

What is the cheapest car insurance for teens?

Country Financial, a regional insurer, offers the cheapest overall rates we found for teen drivers, while State Farm had the lowest rates for national insurers. Auto-Owners had the lowest rates for parents with teens on their policies.

How much is car insurance for teens?

Teen drivers with their own policy pay an average of $4,917 per year. However, the increased cost of adding a teen to a parent's plan is only $1,809 per year.

How can you save money on auto insurance for teens?

Insurers often provide discounts to teen drivers for getting good grades, taking an additional training course beyond basic driver's education and being away at school, where you won't be using your parents' car much. Going on a parent's or guardian's policy can lower rates by more than 60%.

Methodology

ValuePenguin collected car insurance quotes from thousands of ZIP codes across Illinois, Pennsylvania and Georgia. Sample drivers are an 18-year-old man, a 50-year-old man and a 50-year-old with an 18-year-old on their policy. All of them drive a 2015 Honda Civic EX with a full-coverage policy.

Recommendations are based on an analysis of coverage options and rates.

ValuePenguin's analysis used insurance rate data from Quadrant Information Services. These rates were publicly sourced from insurer filings and should be used for comparative purposes only — your own quotes may be different.

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