Understanding Car Insurance for Teens & How to Save | MoneyGeek

For teenagers, getting a driver's license is a rite of passage. But before teens hit the road, they have another hurdle: car insurance.

Insurance companies charge much more for teenagers because as a group, teens are more likely to get into accidents. "Everybody realizes they will have sticker shock when they go to insure their teens," says Carole Walker, executive director of the Rocky Mountain Insurance Information Association. "But being knowledgeable about discounts, teen programs, the type of car you drive and overall safety can help offset these costs during the teenage years." Learn how to keep your child safe on the road while keeping your car insurance premiums as low as possible.

Teen Drivers by the Numbers

Car crashes are the leading cause of death among U.S. teens

The percentage of teens who forego driver's ed before getting a license:

One in five

Teen drivers 16-19 are 3 times more likely to be in a fatal crash as drivers over 20

Percentage of teens who admit to texting while driving:


Although 14% of the population, teens account for 30% of the costs of vehicle injuries

Median cost of adding a teen to a car insurance policy in California:


Why Teen Drivers Cost More to Insure

Why does adding a teenage driver to a car insurance policy cause premiums to skyrocket? Because insurers know teens are less experienced, take more risks and are more likely to be involved in fatal crashes.

"Unfortunately for teens, their inexperience and immaturity has made them statistically the most high-risk group of all risk groups," Walker says. "A 16-year-old driver is up to three times more likely to be in a crash than a 20-year old. Because of this, they are the most expensive group to insure."

Traditionally, teen males have been more likely to be in fatal crashes, especially ones that involve speeding and/or drinking, according to the National Institutes of Health. But things are changing. "Right now, still males are a higher crash risk than females, but we are seeing girls catch up to boys in this regard," says Walker. "We are seeing more female drivers behind the wheel, and that is impacting crash risk. Young males still pay more for insurance than females, but as those statistics change, we'll see a change in rates too."

9 Ways to Save on Car Insurance When You Have a Teen

Many steps you can take to slash or at least reduce the increase in premiums will also protect your young driver. Here are some of the most important:

Shop around. Shop around

The truth is, you can't afford not to. According to a proprietary MoneyGeek analysis of car insurance premiums in 50 states and DC supplied by the data firm Quadrant, the median yearly premium increase for a couple with two cars and a teen in California was $2,276 a year. In a point-by-point comparison of 3,600 policies, the highest cost for adding a teen to an auto policy in California was $14,445. The lowest yearly increase? Just $217.

Avoid flashy sports cars Avoid flashy sports cars.

Your teen may have his heart set on a sports car or SUV, but avoid these if you want to keep your shirt. Insurance companies charge more - a lot more - for some of those models, which are associated with speeding and rollover crashes, respectively. In contrast, insurers consider sedans and minivans "safe driving" cars, according to the AAA. How big a difference can this make to your wallet? Hundreds and even thousands of dollars in yearly premiums.

According to MoneyGeek's analysis of California insurance data, if you're in a married couple with a teen and you own two 2014 Mustang GTs, you're looking at an average premium of $6,787. But if you own two 2008 Town and Country minivans, the average premium quote will be $4,782 - a savings of more than $2,000 a year. The cheapest quote for the two minivans? $1,664.

Evidence also suggests that insurers look at the highest-risk car in your household when assigning risk, so if you have a sports car it will drive up the premium, even if your teen is driving the minivan. "Because they are living in your household, the insurance company will assume they have access to that car and will take that into consideration," says Walker.

Look for a vehicle with good crash protection.

Don't choose just any old clunker for your child, warns RMIIA's Walker. "Many older vehicles don't have the technology and crash worthiness of newer vehicles, so they won't get the best rates," she notes. Her advice? Consult the Insurance Institute for Highway Safety's Top Safety Picks. "They have recommendations for lower cost and used vehicles that could save you money on your insurance."

Ask for Good Student and defensive driving discounts.

Many insurers offer "Good Student" discounts for students who maintain a B average or higher. These discounts are often about 10 percent, but in some cases can be as high as 25 percent, according to the Rocky Mountain Insurance Information Association. Also look for discounts for teens taking a defensive driving course or a driver's ed program. These courses may be offered in your child's high school or online. In California, for example, our data analysis found that if your teen has a B average and so is eligible for a good student discount, and also has a defensive driving discount as a result of a driver's ed course, you'll see your premium lowered by an average of $620 a year.

But check with your insurance company first before signing up for a class, advises Walker. "Don't assume your insurance will give a discount on your driver's ed program," she says. "Many companies require you to go through their course or use their technology, so check with them before you sign up."

Add your child to your car insurance policy.

"It makes more sense to add your teen to your policy," says Walker. "You can buy a separate policy for them, but it is usually much more expensive." To get a good deal, it may make sense to change insurance companies when you add a teen to your policy. The price variations can be astounding: In overall comparisons of California insurance quotes for two adults and a 16-year-old driver, for example, Farmers was the most expensive, with yearly premiums starting at $4,089, a median of 9,558, and a maximum of $28,873, according to MoneyGeek's analysis of Quadrant data. Mercury had the lowest quotes, with a minimum of $1,664 a year and a maximum of $10,040, with an average of $3,420.

Stress the importance of safe driving.

Not only is your teen likely to take fewer risks, but he won't drive up the cost of your premium further. In California, if your son gets even one speeding ticket, expect your premium to jump by an average of $1,242. If your daughter is caught speeding, it will increase less - an average of $904 a year. But this is all small change compared to a DUI, which will drive up your rates for years to come. In California, the extra insurance you'll pay over a 13-year period climbs to $40,0000, according to state government figures.

Get an app.

There's video equipment you can install in a car that will let you know if your teen drives erratically, or phone apps to monitor texting while driving. (See "Monitoring Your Teen's Driving from Afar," below). Using this equipment may also lower your car insurance premiums.

Increase your deductible...

If you can afford it, you may want to raise the deductible on your policy by $150 or more, according to the AAA. This may save several hundred dollars a month on premiums.

...But don't lower your liability limits.

Your premium may be cheaper if you buy less liability protection, but consumer advocates say it's risky - especially with a young, inexperienced driver on your policy. And in some cases, what you pay for full protection may not be that much more.

Teens: Avoid
These Driving
Danger Zones

Car crashes are the leading cause of death for U.S. teens. On average, six teens a day are killed in vehicle crashes, according to the Centers for Disease Control and Prevention (CDC), and nearly a quarter million are rushed to the emergency room each year after car accidents. Per miles driven, the agency notes, teens aged 16 to 19 are three times more likely to be in a fatal crash than more experienced drivers 20 and older. The CDC urges parents to help their teens lower their risks:


Most crashes happen during the first year a teen has a license, according to the CDC. That's why most states require at least 50 hours of supervised driving during their learner stage. Parents play a crucial role in helping their teens practice on a variety of roads, at different times of day, and in varied weather and traffic conditions. This will help them gain the skills they need to be safe.

Driving with teen friends

Teen passengers can be a dangerous distraction for novice teen drivers. Most states limit the number of teenage passengers a novice driver can transport during the learner and intermediate stages of the graduated driver's license program, which is designed to protect teen drivers. Even if your state doesn't have these restrictions, the CDC recommends that you limit your child to one teen passenger for at least the first six months of driving.

Nighttime driving

More fatal crashes happen at night, and the risk is even higher for teens, according to the CDC. Most graduated license programs have nighttime driving restrictions for teens, but often states allow teens to drive until 11 PM or midnight. The CDC recommends you get them off the road by 9 or 10 PM, at least during the first six months of licensed driving.

Not using seatbelts

Hopefully by the time your teen is driving, he will automatically put on his seat belt as soon as he gets in the car. This can reduce your teen's risk of dying or being badly injured in a crash by about half, according to the CDC.


A growing concern among public safety groups, distracted driving affects all of us, but teens are at the highest risk because of their inexperience behind the wheel and their desire to be "connected" at all times, according to the CDC. A recent survey, in fact, showed that 45 percent of teens said they texted each time they got behind the wheel. Be sure your teen knows that texting or talking on the phone is never allowed while driving- and be sure to follow this rule yourself. (See MoneyGeek's guide to preventing distracted driving).

Drowsy driving

Drowsy driving leads to thousands of accidents each year, and teens are at particularly high risk. "The data is pretty clear: Young people are burning the candle at both ends, just like their parents are," says Stephen Gray Wallace, Director of the Center for Adolescent Research and Education (CARE).

"As teens move through puberty they become more nocturnal, they are predisposed to stay up later at night and sleep in in the morning," says Wallace. "This inherently leads to drowsy driving, which is dangerous driving." The CDC notes that teens are at most risk of drowsy driving late at night and early in the morning. Make sure your kids are well rested before they get behind the wheel.

Reckless driving

Aggressive driving - including speeding, tailgating, and road rage - is dangerous. And according to the CDC, research shows that teens lack the experience, judgment, and maturity to assess risky situations. In a 2015 survey of teens by Students Against Destructive Decisions (SADD) and Liberty Mutual in 2014, 36 percent of teens admitted to having an "aggressive" driving style, and 31 percent say that have retaliated or experienced road rage in response to another driver's actions.

Drunk driving

Fortunately, we've made a lot of progress in educating teens about the dangers of drunk driving, but there is more to be done. According to a study by SADD and Liberty Mutual Insurance, 86 percent of teens consider driving under the influence of alcohol to be extremely or very distracting, but a surprising 17 percent still admit to doing it. According to the National Highway Traffic Safety Administration (NHTSA), 22 percent of drivers aged 15 to 20 in fatal crashes were drinking in 2010. Remember, in most states teens are at risk of getting a DUI (which can have far-reaching negative consequences for years) even with a blood alcohol level of 0.02. (See MoneyGeek's guide "The High Cost of a DUI.")


"Teens are going to pay more because they are in the highest risk age group, but it's important to remind them that they start with a clean slate. That's why it's very important to be safe and follow the law," advises Walker. "Getting just one ticket can exponentially increase your rate. Speeding tickets and violations will affect a teen's rate even more than an adult. And too many violations can affect your ability to keep your insurance."

Parents: 8 Tips to Help Your Teen
Avoid Risky Driving

Parents have a crucial role to play in ensuring that their teens are ready for the road. Experts from the CDC, AAA, insurance associations and others offer these tips:

Talk with your teen

"The data is clear," says Wallace. "Young people with caring adults in their lives who take time to talk to them about issues like safe driving are more likely to make good choices. But these need to be ongoing conversations, not one-time conversations. You can't have one talk about driving safety and check it off your list. Things change, your kids change, they have different friends and different influences. The conversation should continue and reflect those changes."

Supervise your child as she learns to drive

Most states require at least 30 hours - and up to 120 - of supervised driving time during the learning permit stage. Most likely that supervision will come from a parent - that is, you This can be stressful for both teens and their parents. Fortunately, there's an app that can help you track the work you do together.

RoadReady (available only for iPhones) provides information on your state's licensing requirements and then helps you track the supervised hours needed to get your license. It uses GPS to log the supervised hours as they happen, noting the driving conditions (for example, in the rain or at night, which are sometimes required as part of a state's requirements). The app also provides safety tips and gives teens badges for accomplishments. Once the required hours are completed, you can export the data and print it out to prove compliance with the requirements.

Sign a pledge or family contract

Many experts also recommend signing a contract with your teen before she gets her license, so that everyone - including parents - is clear about their commitments. The CDC offers a sample contract that you can use with your teen..

It may also help to emphasize to your child (in the contract, or in conversation) that he is driving your car. "Research shows that the risk of a crash is lower if your kid thinks they are driving your car, as opposed to their car," says Beth Ebel, MD, MPH, a leading researcher on distracted driving who is also a physician at Seattle Children's Hospital and a professor of pediatrics at the University of Washington School of Medicine. "The reality is, most likely, you bought the car. They didn't buy the car. Who's paying insurance? You are." Even if you bought the car for your child, she suggests you may want to emphasize that ultimately, you own it.

Set rules with real consequences

You've asked your teen to keep the cell phone in the glove compartment. Maybe your rule is a month without driving if she texts while driving. If you find out she has done that - and there are apps that will let you know - enforce the rules.

Model the kind of driving you want to see

One of the most important things you can do is model safe driving practices for your teen, according to Ebel. "I talk to middle school kids, and they often tell me their parents text while driving," she says. "What you say is less important than what you do. This is a golden opportunity for us as parents to make a change in our own behavior and model it for our kids."

Wallace agrees. "Practice what you preach. Parents are the biggest influence on their child's driving behaviors. If parents are modeling good behavior, their child will more likely engage in good behaviors because they mimic those behaviors. Same is true of bad behaviors - if you are texting, talking on the phone, driving aggressively, your teen is more likely to do the same."

Do some remote monitoring

A great way to check on your child's driving habits while also potentially getting a discount on your insurance is to use in-vehicle devices that can track driving habits or block bad habits (like texting). Some, like Alltrack USA, tell you when your teen is speeding; others include cameras that provide you with actual video footage of your teen's driving behavior (See "Still Worried Your Teen is a Risky Driver? There's an App for That," below).

Lay down the (state) law

All states have laws and penalties for driving under the influence, and many involve jail time. Nearly every state has laws against texting while driving, too, and some involve hefty fines or worse. Make sure your teen knows the laws in your state. In Alaska, for example, a first citation for distracted driving can result in a $10,000 fine and a year in jail.

Share some links

The info doesn't all have to come from you. Share statistics and some of the powerful videos from distraction.gov that target high school drivers. Some are interviews with grieving parents who've lost a child to texting; others chilling recreations of a crash while texting.

Be careful when you call your kids

Research from the American Psychological Association found that more than half the kids talking on the phone while driving were talking with their parents. Many also reported that they were texting their parents. Don't call your kids if they're on the road and tell them not to answer you if you do. If you inadvertently call while they're driving, tell them, Don't worry, it can wait.

Monitoring Your Teen's Driving from Afar

Here's something else that may reduce your insurance premium while keeping your child safe: technology to monitor your child's driving. "I think the technology that has become available is very helpful, and serious consideration should be given to deploying it if it has the potential to save lives," says Wallace. "We've asked teens what they think about parents installing a device in their car to monitor their driving behavior and the suggestion is roundly met by outrage. But when we ask the next question - what if they got a discount on their car insurance - the kids were much more open to the idea. Once there was money in play, we saw a very different reaction."

For example, American Family Insurance offers its clients a free, one-year participation in the Teen Safe Driver Program. Families install motion-detection devices in their cars, which are activated whenever unsafe, erratic driving is detected. Parents and teens can then review the footage of the incident, along with a report generated by driving safety experts online. The program is completely confidential and does not affect insurance rates or driving records.

In some states, USAA offers a 5 percent discount to members who agree to install a device in their car to collect information about how, where and when your vehicle is driven. The company guarantees the information gathered will not impact your rates.

Still Worried Your Teen Is a Risky Driver? There's an App for That

Perhaps you're not ready to install a camera or other monitoring device in your car. Another option is to use an app on your phone that can help block unsafe activities (like texting) while the car is driving.

"I personally love the use of apps for new drivers because it gives us the opportunity to limit distractions in the vehicle," says Dr. Ebel. "The new driver is already trying to figure out the complicated task of driving, so being able to limit distractions in the car through an app is very helpful."

For example, AT&T's DriveMode app silences incoming text alerts and can send an auto-reply letting the sender know that you are driving and will answer when you are safely parked. The app automatically turns on when your car is driving at least 15 mph and turns off when you stop. As the parent of a teen, you can be alerted if your child turns the app off. Another app - SafeDrive - rewards you for not texting while driving with points you can use for discounts at participating stores.

Cellcontrol is another service designed for parents, which includes a device that you insert under the dashboard. The app blocks your teen from texting while driving, and disables other features - like email — while the car is in motion. It also alerts parents if their teen turns the app off or removes the device.

Getting a Driver's License: The Ultimate Parent/Teen Project

In every state, parents are encouraged to partner with their teen as he or she learns to drive. In graduated driver's license programs, in fact, parents are expected to give their kids up to 120 hours of supervised driving. Besides having your teen sign a safe driving pledge, encourage him to take formal Driver's Ed (below), which may also lower insurance rates.

Steps to Getting a License

Chances are, parents will start hearing about their child's desire to get a driver's license long before they turn 16. It pays to do a little homework ahead of time because the process is somewhat more complicated these days.

Since the 1990s, almost all states have instituted Graduated Driver Licensing (GDL) programs. These programs, which are designed to protect teens, place certain restrictions on novice drivers during their first six to 12 months behind the wheel. These programs allow teens to gain experience under less risky conditions and have contributed to lower crash rates among teens.

All teens and their parents should be aware of the GDL laws in their state. Most programs include three stages:

Learner Stage

This stage usually begins when teens are aged 14 to 16 and lasts about six months. Teens generally have a "learner's permit" instead of a license, and can only drive while supervised by an adult passenger. Almost all states require between 30 and 60 hours of supervised driving time - either with a parent or a Driver's Ed program - during this period, although four states don't require any. At the end of this stage, teens take a test to get a license.

Intermediate Stage

This stage usually begins at age 16, although a handful of states allow younger teens to get a restricted license. The driver has passed the driving test and received a restricted license that limits driving in high-risk situations - for example, late at night, with other teen passengers, or with a cell phone. This period usually lasts six to 12 months.

Full Privilege Stage

Depending on the state, teens will need to be 16 to 18 years old to qualify for an unrestricted license, according to the CDC.

You can find information on the requirements where you live on your state's Department of Motor Vehicles website. There it will tell you age limits, required supervised driving hours, and other restrictions on teen drivers. It should also provide a driver's handbook and resources to help your child study for the written test.

Driver's Education Classes

More than half of all states require novice teen drivers to complete a Driver's Education Course in order to get a learner's permit or restricted license. Some states reduce or eliminate certain GDL requirements for teenagers who complete Driver's Education courses, but safety experts advise against this. They suggest parents require their teens to follow GDL rules regardless of how they are taught to drive. Research has not shown whether Driver's Education courses reduce the risk of teen crashes, but they do provide much-needed instruction for teens.

Feds to parents: Get involved

A working group of driver education groups convened by the NHTSA recommends that these programs include 45 hours of classroom instruction and ten hours of behind-the-wheel training during the learner stage, and an additional ten hours of instruction in the intermediate stage.

This working group also recommended the active involvement of parents in their children's process of learning to drive, including:

  • Attending an orientation meeting to learn what the driver's education program requires
  • Supervising the teen's driving for at least 50 hours over six months to determine their readiness to advance to the next stage
  • Ensuring that the teen abides by all GDL requirements during the intermediate license period.
  • Negotiating a written agreement with teens that lays out the expectations, restrictions, and consequences agreed to by both parties as a condition for the teen's right to drive.

Budget cuts shrinking driver's ed

Where and how you choose to get driver's ed will depend on your state laws and your particular situation.

In the past, driver's ed was mostly taught in high schools, but budget cuts have taken a toll and now many public schools do not offer the course. If that's the case, depending on your state's laws, you may be able to complete a driver's ed course through a private driving school, online or with your parents.

Some states, like Texas and Oklahoma, allow a parent to sign up through a Parent Taught program and teach their child themselves. These programs still cost money, and the parents must fulfill basic requirements (for example, no DUIs, limited points on their license). Still, it's a good alternative for families that don't have access to a high school or private driver's ed program.

Where to find a driver's ed program

Your state's Department of Motor Vehicles is a good resource for driver's ed options. They usually provide lists of approved driver's ed programs and requirements. Be sure to compare programs and ask about tuition and any additional fees. You may want to check them out with the Better Business Bureau to make sure they haven't had a large number of complaints.

Expert Interview: Dr. Beth Ebel, University of Washington

Beth E. Ebel, MD University of Washington View bio

Beth E. Ebel, MD, MSc, MPH, is a leading researcher on distracted driving, including studies on possible solutions to prevent it. She is an attending physician at Seattle Children's Hospital and associate professor of pediatrics at the University of Washington School of Medicine. She is also principal investigator with UW Medicine's Harborview Injury Prevention and Research Center. In one recent study, she and her colleagues found that among Washington state's distracted drivers, more than 50 percent were texting behind the wheel.

What happens when kids see their parents texting and talking on phones while driving?

"Parents sometimes underestimate the impact of our own actions on our kids. What you say is less important than what you do. A parent picking up a phone in a car is like picking up a cigarette, taking a giant puff and telling their kids not to smoke.

"This is absolutely hands-down the riskiest thing your child will do for a long, long time. So, in addition to using apps and signing contracts with our teens, we need to model the behavior we want to see.

"This is a unique opportunity to model behavior for our kids. We as parents of teens are so hungry for our kids to be respectful; we should focus a little more on what we do. Our kids are not dumb; they look at you and see what you really think.

"Having these rules [for yourself] shows this is important to me and I'm not a hypocrite. This will also keep your kids safe while you're driving."

How dangerous is distracted driving?

"It is as dangerous as drunk driving. Texting and pushing buttons on your phone is like driving with a BAC [blood alcohol content] of 0.19. That represents a 23-fold increase in your crash risk.

"In addition to major crashes, texting is contributing to lots of little fender benders. A lot of times a phone is involved in these minor collisions, even though it's not getting reported to police.

"It also puts people walking and biking at risk."

Are teens most at risk?

"Kids are riskier drivers, sure. But when you look at the data, women are equally at danger as men. Lots of moms [text and take calls while driving].

In Washington State, when you look at distraction in terms of police reported crashes, risks are about equal between women and men. Women still get in fewer crashes than men, but when they get in crashes, they are as likely to be involved in distracted driving.

We did an observational study in Washington and found that women were equally - if not slightly more - likely to be on phones as men. And we may be more likely to try to multitask in the car.”

How can we prevent distracted driving?

"At the end of the day we're not going to get our kids off phones, so we need to teach them not to be on the phone while driving. This is one of those times that you have to talk and engage with your kids. As your kids get older, this is an important time with your kid. It's a great time to talk.

"Stopping distracted driving is a hard task, because facts alone are not going to change people's behavior. They know it's risky and illegal in most places, and they are annoyed by this behavior in others, but they still do it.

"So we know we need to address the problem, but how to get there remains a challenge. There needs to be a combination of aggressive enforcement and a change in norms, as we did with drunk driving. Just as you cannot drive drunk, you also cannot text, talk on your phone, check Facebook or Snap Chat while you're driving.

"It is important to have a conversation as a family about how you are going to handle things. If you as a mom expect your child to get back to you right away when you call them, they may do that while driving. It's better to let them know they can wait until it's safe.

What about apps that turn off your teen's cell phone while he's driving?

"I personally love using apps for new drivers because it gives us the opportunity to limit distractions in the vehicle. The new driver is already trying to figure out the complicated task of driving, so being able to limit distractions in the car through an app is very helpful."

How else can we help our children be safe drivers?

Practice, practice, practice. It is important for teens to practice driving with a parent in the car. Supervised driving is important. Some of the countries with the lowest crash risk have a 2-year supervised driving requirement.


NHTSA's Teen Driver's Page

Full of resources for parents and teens to become more informed, safer drivers.

Students Against Destructive Decisions (SADD)

Formerly Students Against Drunk Driving, SADD is the leading national organization committed to saving lives by empowering teens to stand up against destructive decisions.

Parent-Teen Contract Guidelines

Consider signing a contract outlining the driving rules and expectations of both teens and parents.

CDC's Teen Drivers Page

The Centers for Disease Control and Prevention offer information and guidance for parents and teens about how safe driving.

Graduated Drivers Licensing Laws

A state-by-state overview of Graduated Drivers Licensing Laws, including age at licensing and restrictions put together by the Governors Highway Safety Association (GHSA).

NHTSA's Parents Central

The National Highway Traffic and Safety Administration offers parents information about common safety problems and resources to help you address them.

Center for Adolescent Research and Education

Conducts research on youth development and decision-making, and provides resources for parents.

Quizlet Driver's Ed Study Guides

You can use this site to study for your driving test.

National Teen Driver Safety Week

NHTSA provides fact sheets, posters, graphics and other tools you can use to educate teens about driver safety.