The Best Cheap Car Insurance and Average Costs for 18-Year-Olds

Adding a teenage driver to your car insurance can be a shocking experience. Because they have little or no driving experience and are, as a group, prone to more high-risk driving behavior, insurance rates for teen drivers are higher than any other category. However, just because teen insurance prices are high doesn’t mean there isn’t cheap car insurance for an 18-year-old. There are several strategies that can reduce the cost of insurance for a young driver.

Teens and adults alike are looking for the best car insurance rates. An 18-year-old teen, however, may have no experience behind the wheel or little, which means they have a limited driving history. Teens also have an above-average rate of at-fault accidents and moving violations, which are factors that result in higher rates to compensate for potential claims. While rates vary from state to state, nationally, it costs an average of $2,867 per year to add an 18-year-old driver to a family policy and $3,997 for an 18-year-old to have an individual policy. Expensive, yes, but adding an 18-year-old to a family policy can save an average of $1,130 a year.

Most states allow insurers to use gender as a rating factor. When it comes to 18-year-old drivers, males have higher rates because they typically have higher accident rates and file more insurance claims than female teens. Nationally speaking, 18-year-old females pay $2,686 on average annually, while 18-year-old males pay around $3,048, reflecting an average difference of $362 based on gender.

Insurance companies have a proprietary underwriting formula for determining rates, which means that the same driver could get quotes from multiple companies with significant price differences. The car insurance for an 18-year-old driver added to a family policy can range from an average of $2,526 to $3,687, which is a 32% difference in price. Keep in mind that this is a national average. Depending on the state you live in and other rating factors, your premium could be significantly more or less than either of these extremes.

Adding a teen to a family policy is one way to save a significant amount of money on insurance premiums. Because insurance companies typically offer discounts for having multiple cars on a policy and bundling policies, an 18-year-old who is added to a family insurance policy benefits from all of those discounts.

One of the best ways for teens to keep insurance costs low is to choose their vehicle wisely. Expensive, high-performance vehicles will drive up rates, and lenders require that financed or leased vehicles carry comprehensive and collision coverage. Selecting a used Toyota or similar vehicle over a new muscle car can save you quite a bit of money on car insurance.

There are many ways to save money on insurance for an 18-year-old driver. As mentioned above, adding a teen to a family policy offers significant savings over having an individual policy. However, this isn’t the only way to save money on insurance for teen drivers.

Comparing quotes from multiple auto insurance companies is one of the most effective ways to save money on car insurance. Getting multiple quotes will help you find the lowest available rates for an 18-year-old driver, with our studies showing price differences of up to 40% between the cheapest and most expensive policies for teens.

A clean driving record is absolutely necessary to keep teen insurance rates as low as possible. A single ticket or at-fault accident can cause their insurance rates to increase significantly. A relatively new way to save money on car insurance for teens is to sign up for a driving tracker. Many insurance companies now offer a variety of devices and mobile phone apps that can monitor your driving habits and reward you for safe driving. This only saves money for teens who are safe drivers, though, so consider this option carefully.

Some car insurance discounts only apply to teen drivers. For example, most insurance companies offer good student discounts. GEICO offers this discount for students who have a B average or higher. Still, each company has its own standards, so it is essential to check with your insurer to determine exactly what the requirements are for the good student discount.

Another common discount offered by many insurance companies is an "away at school” discount. This discount could apply if your 18-year-old is going to college at least 100 miles away from home and leaving their car behind. If they take their car with them to school, the discount does not apply.

Safe driving courses can also earn your teen driver a discount on their insurance. Beyond the immediate discount, taking a safe driving course can help reduce accident rates, which will save your family money over time. You will need to check with your insurance company to make sure they offer this discount before you sign up your teen for the class. Another option is to complete a teen or young adult telematics-based program, such as teenSMART from Allstate or Steer Clear from State Farm. Both promote learning safe driving habits and provide a discount upon program completion.

When thinking about what car to choose for a teen driver, an older, more affordable vehicle can help you save money on your car insurance. If you can afford to replace the car out of pocket, a liability-only car insurance policy can be an excellent way to save money on your insurance. MoneyGeek analyzed dozens of car insurance companies across hundreds of cities and all 50 states to find the cheapest liability-only car insurance companies.

If you buy a new vehicle with a loan or lease a vehicle, the lender may require that you carry comprehensive and collision coverage. In contrast, a vehicle that costs several thousand dollars to replace in the event of an accident may need to carry full coverage even if you aren’t dealing with a lender. Choosing a cheap, older model can let you use liability-only coverage to keep insurance costs low. However, having state minimum liability coverage can leave you vulnerable to a substantial financial loss from an at-fault accident.

Choosing the right vehicle for your teen can save you hundreds of dollars each year. A sports car or luxury vehicle might be fun to drive, but these cars will significantly increase insurance costs for a new driver. A safe, simple sedan is often the cheapest vehicle to insure for a teenager. For example, the cost of insuring a Toyota Camry for an 18-year-old is, on average, $2,867 each year. On the other hand, the cost of insuring a Mustang GT is about $4,171 each year. You can save an average of $1,304 annually by choosing a Camry over a Mustang.

Car insurance for 18-year-old drivers is expensive because insurance industry analytical data shows teen drivers with limited experience behind the wheel have higher rates of at-fault accidents and moving violations than drivers in other age groups. Being rated as a high-risk driver leads to the probability of filing more claims, which generates a higher cost of coverage.

Rating drivers on these factors may seem tenuous, but the number of fatal crashes, injuries and other accidents don’t lie. According to the chart below, 16- and 17-year-old drivers were involved in 3.75 fatal crashes for every 100 million miles driven. The numbers show that 18- and 19-year-old drivers were only involved in 2.47 fatal crashes, while 20- and 21-year-old drivers were involved in 2.15 fatal crashes. Driving does get safer as you get older and have more driving experience.

While there are fewer teen fatal accidents per capita, there are significantly higher rates of teen drivers involved in fatal accidents per miles driven. Older drivers outnumber younger drivers by a significant amount, but for the number of miles they drive, teens are involved in more accidents.

The number of fatal accidents among teens is higher than among adults. In some instances, teens have double or triple the number of automobile fatalities of other age groups.

Auto insurance rates are determined at the state level. This means that the same person could see a significant difference in their insurance rates by moving from one state to another. Teens in Michigan, Louisiana and New York will have some of the highest insurance rates in the nation.

Some states have much lower rates for teens. Sometimes this is because the legislature doesn’t allow insurance companies to rate customers based on age. Other times, it is because the population of an area is much lower, reducing the likelihood that a driver of any age will be in an accident. Hawaii and Iowa are the states with the lowest rates for 18-year-old drivers.