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Effective Strategies to get Cheaper Car Insurance for Young Drivers

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Today, one of the most difficult things a teen driver can do is find auto insurance at an affordable rate.

Not only is it difficult, but things get confusing for you, the young driver and your parents.

Parents can add a teen driver to their policy only to see it jump over $2,500 per year.

If the teen wants his or her own policy, the premium could increase to $5,000 per year.

While it is difficult for young drivers to find an affordable rate, there are a few things you can do to lower costs.

Cost of policy for a teen driver on parent's policy and the teen's own policy. Illustrated above is the average cost of a policy for parents at $1,328. If the parents add a teen driver to their policy it jumps to $2,945. If the teen decides to “go it alone” the premium skyrockets to $4,052. The illustrated prices are averages from the 5 most populated states in the U.S.

Going on your Parent’s Policy

This can be an effective strategy particularly if your parents have a good driving record without car insurance claims.

When a young driver goes on their parent’s policy you are creating a multi-policy with a discount.

Most of the time this works, sometimes it doesn’t.

I’ll go into more detail below when it doesn’t.

There are many determining factors the insurer is going to include if a parent adds the younger driver to the policy.

For instance, the insurer may assign more risk to the multi-policy since the young driver is considered high risk.

Below are example teen policies, parent policies and parent’s policy with teen added:

Teen PolicyParent PolicyParent's Policy with Teen
$7,273$1,533$3,356
$9,917$2,065$4,988
$5,530$1,208$2,631

In all instances, the parent’s policy more than doubled with a teen driver added.

As a young driver you want to talk to your agent or broker and compare the difference in price when you are on your parent’s policy and without.

If the parent is involved be sure to contact your insurer to get insurance quotes for adding additional drivers to the policy.

You might want to tell them the younger driver is going to drive the car only to college and back, for example.

The purpose of this is determined how the parent’s policy is going to be affected by adding an additional (younger) driver.

Just because a young driver is on the parent’s policy doesn’t mean you are saving a ton of money.

For instance, the average auto insurance bill rose over 150% when adding one (1) teen driver to their policy.

It’s going to be determined by ZIP code too.

If you live in California, a parent’s policy is likely to increase by 200% or more.

Six strategies for teen and young drivers to lower their auto insurance premium. Illustrated above are six strategies to use when you (teen driver) or your parents want the lowest car insurance premium possible. Going on your parent’s policy and taking a “state authorized” defense driver course are the most effective. Electronic devices are “Pay-as-you-go” or “telematic devices” such as Allstate’s Drivewise.

When Not to Add a Teen to Their Parent’s Policy

There are a couple instances where you may not want to add a young driver to a parent’s policy:

  • The parent drives a luxury sports car.
  • He or she is eager to be financially independent.

Be Sure You are Assigned the Cheapest Car in the Household

If you do decide to go on your parent’s policy that has several vehicles, make sure you are assigned to the cheapest vehicle in the household.

Why is this important?

Many insurers will assign the most expensive vehicle to the teen driver.

Unless you tell them otherwise. 

Always Comparison Shop

You may find going on your parent’s policy is not effective or you may not be willing to do it.

You want to be sure to get as many car insurance quotes to compare from top insurance companies, such as Travelers, Allstate, and Progressive.

If you are comparing auto insurance locally you want to be sure to compare quotes with top insurance firms in your area.

As a young driver getting quotes can be frustrating and time consuming particularly when you see sky-high rates being quoted to you.

Once you have five or six quotes you can find other areas where you may be able to lower the overall premium.

Below is the table with the average cost of car insurance for teen drivers state by state.

I’ve included a search feature to find your state:

StateCostStateCost
Alabama$6,909 Montana$3,471
Alaska $5,447Nebraska
$5,268
Arizona$7,273Nevada$8,908
Arkansas
$6,306New Hampshire$6,563
California
$7,443New Jersey$6,474
Colorado
$7,590New Mexico$7,325
Connecticut$9,917New York$8,998
Delaware$7,875North Carolina$3,471
Florida$8,277North Dakota$5,467
Georgia
$7,528Ohio $5,039
Hawaii $7,229Oklahoma
$7,482
Idaho $4,321Oregon$7,486
Illinois $7,337Penn$5,795
Indiana$5,727Rhode Island$10,023
Iowa $4,112South Carolina$6,188
Kansas $5,873South Dakota$6,021
Kentucky$9,528Tennessee$7,998
Louisiana$10,221Texas $6,791
Maine $4,297Utah
$6,323
Maryland$6,283Vermont
$4,472
Mass$6,109Virginia $4,276
Michigan
$11,723Washington
$5,872
Minnesota$5,099West Virginia$5,698
Mississippi$6,851Wisconsin
$6,128
Missouri$6,452Wyoming$4,604

Getting the Cheapest Insurance Rates

Raise your deductibles

If you have a vehicle which is low in value you may want to consider dropping comprehensive and collision.

If you don’t feel comfortable doing that you can raise the deductible from $100 to $1000.

DeductibleComprehensive PremiumCollision Premium
$100$128$550
$250$101$458
$500$84$375
$1000$52$280
$2500$43$197

Remember that is the amount you are going to pay before the insurance company is going to cover the costs.

If your vehicle is leased or financed then you aren’t going to be able to drop the coverage, but you may be able to raise them.

Drive Less

If you have a short commute to school then be sure to tell the insurer about it.

Annual mileagePremium
10,000 - 15,000 miles$1,532
15,000 - 20,000 miles $1,548
20,000 - 25,000 miles$1,579
25,000 - 30,000 miles$1,610

Also, if you are going to use the vehicle to do other things, like go to the store, etc. then try to limit the amount of driving.

The lower your mileage normally the lower your rate.

Get Good Grades

If you have a “B” average then get a copy of your report card and show it to the insurer.

Then ask for discounts.

Build Your Credit

If you haven’t already done so you might want to get a credit card to start building your credit.

CompanyPoor (300-579)DifferenceExcellent (800-850)
21st Century$2,32824%$1,865
Ameriprise$2,51254%$1,621
Auto-Owners$2,53035%$1,874
Elephant$2,24345%$1,538
Erie$2,16553%$1,400
Farmers$1,95447%$1,327
Good2go$3,23166%$1,943
Grange$2,08727%$1,638
Liberty Mutual$1,76937%$1,285
Mercury$2,09574%$1,200
MetLife$1,89646%$1,298

Once the insurer knows you are financially responsible then over time your insurance rates could decline.

Keep Your Driving Record Clean

As a younger driver you do not want to get into an accident or have a major traffic violation.

If so, this will skyrocket your rates.

Type of Vehicle

If you are shopping for a new or older model automobile you want to compare insurance rates first.

Type of VehicleCost of Premium per Year
Small SUV$2,465
Medium SUV$2,900
Hybrid$2,876
Large sedan$2,987
Electric $3,456
Pickup$3,455

Many buy a vehicle before comparing auto insurance then come to find out coverage for the vehicle is extremely high.

As you can see, there is nearly $1,000 difference in premiums among a small SUV and a pickup.

There are Companies Which Have Lower Rates

As a young driver you might get discouraged from the extremely high insurance quotes.

However, there are firms offering cheaper insurance premiums to young drivers.

CompanyDiscount
Erie Insuranceup to 20%
Allstateup to 20%
American Familyup to 10%
Progressiveup to 10%

The important thing to do is locate companies which can easily be done by comparing quotes online.

As a young driver, when you are comparing quotes there are other items you want to keep in mind.

Then you will understand how insurance companies determine your rate.

For example, below are factors insurers use to determine your rate:

  • Where you live or your location by zip code

  • If you are male or female

  • Your past driving record

  • Type of vehicle and coverage

If you have been driving for less then three years

Where a lot of young drivers (or teenagers) get stuck with high insurance rates is without a way to prove a good driving record.

The insurer is going to determine your past driving record over three years.

There are a few things you many want to keep in mind.

  • If you receive a drivers permit at the age of 16 be sure to tell the insurer since they could use that to calculate driving experience and you could get a good driver discount at the age of 19.

  • Ask the insurer about automatic payment withdrawals from your bank account or credit card for discounts.

  • If you have the financial wherewithal, pay your premium for six months or one year. This could save you ten percent or more. Plus, you are telling the insurer you are financially responsible.

  • Maintain insurance coverage as long as possible even if it is for thirty days.

A Sure Fire way for Young Drivers to get Cheaper Car Insurance

As a young driver if you cannot find affordable car insurance then ask the insurer about vehicle monitoring such as USAA’s technology from Intelligent Mechatronic Systems which is a tool that tracks driver’s performance.

Progressive has a program called Snapshot and if your are willing to put a device in your vehicle you could possibly find substantially lower rates.

There are other companies offering car monitoring and Pay-As-You-Go type of insurance plans.

CompanyNew Car ProtectionAccident ForgivenessSafe Driver DiscountAvailable States
Progressive30%all 50
Liberty Mutual30%all 50
Root50%in 30 states
Motion AutoNoArizona

If you are a young driver in California, Arizona, Utah, or Nevada then you could look into the CSE’s Insurance Group at CA’s Department of Insurance here.

How the programs work is if your mileage is set within limits, like 5,000 to 7,000 miles per year then you could get reduced rates.

If you drive less then you could qualify for better discounts.

As a young driver you want to be aware of tools or programs to lower your auto insurance.

Frequently Ask Questions

What is the most effective way for a teen driver to lower their auto insurance premium?

The most effective ways for a teen driver to lower their premium is to be added to their parent’s policy.

Then take a “state approved” defensive driver course and maintain good grades. 

Is there a time when it is cheaper for a teen driver to have a separate policy?

It is rare to save money when a teen driver has a separate policy.

If the parent drives a luxury vehicle and the teen doesn’t it may cost less to have a separate policy.

What is the average auto insurance cost for a teen driver?

The average cost for a teen policy is $2,500 or more nationwide.

The exact price is going to vary greatly by ZIP code, age, driving history, and type of vehicle. 

Sources

https://insurance.maryland.gov/teen-auto-ins-guide.pdf

https://www.nhtsa.gov/road-safety/teen-driving

https://www.iii.org/article/auto-insurance-teen-drivers

Greg Fowler

Greg Fowler

Managing Member of AutoInsureSavings LLC, Greg has been in the insurance industry for 12 years and enjoys rebuilding vehicles. His goal is to help drivers save on anything related to automobiles. Travel and enjoying the outdoors are some of his hobbies. The best way to reach him is at his Twitter or Facebook Profile.

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