Car Insurance For Teens: What You Need To Know

​When a teenager gets their driver’s license, it’s an exciting milestone for both the teen and their parents. However, with the newfound freedom of driving comes the responsibility of ensuring that the teen is adequately insured. Car insurance for teens is often more expensive due to their lack of driving experience and higher risk of accidents. Understanding the ins and outs of teen car insurance can help parents and young drivers make informed decisions that balance coverage needs with affordability. Here’s what you need to know about insuring a teen driver.

Why Teen Car Insurance is More Expensive
Teen drivers are statistically more likely to be involved in accidents than older, more experienced drivers. This is due to a variety of factors, including inexperience, a greater tendency to take risks, and distractions such as texting while driving. Because of this increased risk, insurance companies typically charge higher premiums for teen drivers. Understanding the factors that influence these rates can help you find ways to manage costs.

1. Driving Experience
   Insurance companies view driving experience as a key factor in determining premiums. Teens, who are new to driving, lack the experience needed to make quick decisions on the road, which can lead to accidents. As a result, insurance premiums for teen drivers are higher than for more experienced drivers. Over time, as the teen gains more driving experience and maintains a clean driving record, insurance rates may decrease.
   
   
2. Vehicle Type
   The type of vehicle your teen drives can also impact insurance costs. Sports cars, vehicles with high horsepower, and newer models tend to have higher insurance premiums because they are more expensive to repair and more likely to be involved in accidents. On the other hand, vehicles with good safety ratings and lower repair costs can help reduce insurance premiums for teen drivers.
   
   
3. Location
   Where you live can also affect car insurance rates for teens. Urban areas with higher traffic congestion and accident rates generally lead to higher insurance premiums. Conversely, living in a rural area with less traffic can result in lower insurance costs. Additionally, areas with higher rates of vehicle theft or vandalism can also lead to increased premiums.
   
   
4. Driving Record
   Although a teen’s driving record may be short, it plays a significant role in determining insurance premiums. A clean driving record with no accidents or traffic violations can help keep insurance costs lower. Conversely, any tickets or accidents can lead to significant rate increases.

How to Save on Car Insurance for Teens
Despite the generally higher cost of insuring a teen driver, there are several strategies parents and teens can use to lower premiums and manage costs effectively.

1. Add the Teen to an Existing Policy
   Rather than purchasing a separate policy for the teen, adding them to an existing family policy can be more cost-effective. Many insurers offer multi-vehicle discounts, which can help lower the overall premium. Additionally, the family’s established insurance history can help mitigate some of the costs associated with adding a new driver.
   
   
2. Encourage Good Grades
   Many insurance companies offer discounts for students who maintain good grades. This is often referred to as a “good student discount.” Insurers believe that students who perform well academically are more responsible and, therefore, less likely to be involved in accidents. Encouraging your teen to keep their grades up can result in significant savings on insurance premiums.
   
   
3. Choose the Right Car
   As mentioned earlier, the type of car your teen drives can greatly impact insurance costs. Opting for a safe, reliable vehicle with good safety features can help keep premiums lower. Avoiding high-performance vehicles or luxury cars can also prevent steep insurance costs.
   
   
4. Install a Tracking Device
   Some insurance companies offer discounts for installing a telematics device in the car, which monitors driving habits such as speed, braking, and mileage. This type of usage-based insurance can reward safe driving behavior with lower premiums. It also provides parents with insights into their teen’s driving habits.
   
   
5. Consider Raising the Deductible
   Raising the deductible on your car insurance policy can lower the monthly premium. However, it’s important to ensure that you can afford the higher out-of-pocket costs in the event of an accident. This strategy can be beneficial if the teen is a safe driver and unlikely to file frequent claims.
   
   
6. Explore Discounts
   Many insurance companies offer a variety of discounts that can help lower the cost of insuring a teen driver. These can include discounts for completing a driver’s education course, bundling multiple types of insurance (such as home and auto), or even paying the premium in full rather than in installments. It’s worth discussing all available discounts with your insurance provider to find additional savings.

Understanding Coverage Needs
When insuring a teen driver, it’s important to strike the right balance between affordability and adequate coverage. While liability insurance is the minimum required by law, it may not be enough to cover the costs of a serious accident. Consider the following types of coverage to ensure your teen is fully protected:

• Liability Coverage: Covers damages or injuries your teen may cause to others in an accident. This includes bodily injury and property damage liability. Given the higher risk associated with teen drivers, it’s advisable to have higher liability limits to protect against costly claims.
  
  
• Collision Coverage: Pays for damage to your teen’s car resulting from a collision, regardless of fault. This coverage is particularly important if the vehicle is newer or more valuable.
  
  
• Comprehensive Coverage: Covers damage to the vehicle caused by non-collision events such as theft, vandalism, or natural disasters. This coverage is essential for protecting against a wide range of potential risks.
  
  
• Uninsured/Underinsured Motorist Coverage: Protects your teen in the event they are involved in an accident with a driver who lacks sufficient insurance. This coverage can help pay for medical bills and repairs if the other driver is at fault but unable to cover the costs.

If you’re a parent who owns a business, it’s worth considering how your business insurance could be affected if your teen driver occasionally uses a company vehicle. Commercial auto insurance is designed to cover vehicles used for business purposes, but if a teen driver uses the vehicle, it could impact your premiums. Ensuring that your business insurance policy accounts for all potential drivers, including your teen, is crucial to avoiding coverage gaps. Discussing this with your insurance provider can help you make informed decisions about how to manage risks associated with teen drivers and business vehicles.

Conclusion
Insuring a teen driver can be expensive, but understanding the factors that influence car insurance rates and exploring ways to save can help manage costs. By choosing the right coverage, taking advantage of discounts, and maintaining a clean driving record, parents and teens can work together to ensure they are adequately protected on the road. Additionally, if a teen occasionally drives a vehicle covered under a business insurance policy, it’s important to review the policy to ensure that the coverage remains comprehensive and effective. With the right approach, insuring a teen driver can be both affordable and stress-free, providing peace of mind for parents and their young drivers.

​At Appletree Insurance, we do our best in making sure that our clients are well-protected with affordable and comprehensive policies. We make sure to go the extra mile to help you with your needs. To learn more about how we can help you, please contact our agency at (603) 881-9900 or CLICK HERE ​to request a free quote. 

Disclaimer: The information presented in this blog is intended for informational purposes only and should not be considered as professional advice. It is crucial to consult with a qualified insurance agent or professional for personalized advice tailored to your specific circumstances. They can provide expert guidance and help you make informed decisions regarding your insurance needs.