According to the Insurance Institute for Highway Safety,
16-year-olds are the riskiest drivers on the road -- and the most
likely to get into car accidents.
So it shouldn't come as a big shock that adding a teenage driver
to your automobile insurance policy will cause your
car insurance rates
Here are the biggest issues facing parents of teen drivers.
1. When do I have to add my teen to my insurance -- when
he or she gets a learner's permit, or a driver's
Your insurance company's guidelines and your state's insurance
rules determine when you are required to add a teen to your
Some insurers require you to add a teen to your policy once your
child has a learner's permit, but most insurers allow you to wait
until your teen is fully licensed, according to Penny Gusner,
consumer analyst at CarInsurance.com.
A learner's permit allows your teen to drive only when a
licensed adult is in the car. Once your child is licensed, most
states require him or her to have at least a minimum amount of car
insurance. So it's best to contact your insurer to find out the
The sooner your child gains valuable driving experience, the
sooner he or she will become eligible for driving discounts.
"In California, you can get your learner's permit at age 15 ½,"
says Steve Lehman, owner of Lehman Insurance Agency in Dublin,
Lehman notes that in the Golden State, teens who go three years
without accidents or tickets qualify for a good-driver discount of
20 percent. So assuming a teen driver obtained a license at age 16,
by age 19 he or she could be eligible for a California good-driver
discount "because the clock ticks from the time you first add them
to a policy" as a licensed driver.
Don't hide your teen driver from your insurance
explains why it's important to add teen drivers in your household
to your policy.
2. Can my insurance company force me to add my teen to my
policy even though I don't allow him or her to drive
"Yes," says Gusner. "Most car insurance carriers require you to
list all licensed members of your household on the policy."
Rich Webber, co-owner of Webber & Grinnell Insurance in
Northampton, Mass., agrees. "In Massachusetts, if you have a newly
licensed teen living in the household, then you have to list them,"
he says. "But you don't have to list them if they're not going to
be driving your car, their own vehicle, or any car whatsoever."
Because rules can vary by state or insurer, contact your
insurance company or agent to learn the requirements.
3. Is it cheaper to put my teen on his or her own policy,
or on the family policy?
Insuring a teen driver can easily double, triple or quadruple
your rates. But it's usually less costly to add a teenager to your
family policy than getting separate insurance coverage for your
In one hypothetical situation, CarInsurance.com found that it
would cost about $1,800 more to
insure a teen separately
, compared with adding that teen driver to a family policy.
4. If my teen isn't on my insurance and crashes the car,
is the damage covered?
Your car may be covered in the event your uninsured teen crashes
it, but expect some ramifications. For starters, your rates could
go up. An insurer may also decline to renew your coverage in the
future if you hadn't originally reported your teenager as a
But if your teen was specifically excluded from the policy, your
insurer isn't obligated to pay anything -- meaning you could be
financially responsible for fixing your damaged vehicle.
5. When do auto insurance rates for teens start to go
Insurance agents say that once young drivers get three clean
years of driving experience under their belts, their rates drop
In California, after two years without a ticket or accident,
teen drivers with Farmers Insurance save about 15 percent, says
Lehman. "After year three, they'll get another 20 percent off their
rate as a good driver discount," as required by the state. After
nine years of driving experience, Lehman adds, they'll get a
standard rating and lose the "youthful driving" surcharge.
Meanwhile, in Massachusetts, car insurance rates for teen
drivers typically drop by about 50 percent after three years of
driving with a clean record, and then fall another 50 percent after
six years of good driving, Webber says. Generally, insurance rates
also decline around age 25.
6. How can I minimize the insurance costs of a teen
To lower your child's insurance costs, seek a good-student
discount for teens with a 3.0 or higher grade point average.
Farmers Insurance says it offers a 25 percent discount for good
You may be able to get other discounts -- typically about 5
percent to 20 percent -- if your teen takes a defensive-driving
class or has a vehicle with special safety features, like air bags,
anti-lock brakes or a security alarm system.
If your teenager only uses the car sporadically or perhaps to
drive to and from a weekend job, also ask whether your insurer
offers a low-mileage discount.
7. How much will my rates go up if my teen crashes or
"You should expect a 20 percent to 40 percent increase in your
rate after that first accident or ticket," Lehman says. "Not just
because of the incident itself, but also because you may lose any
good driver discount you may have had."
Insurers have good reasons for charging more for teen drivers. A
study by the Governors Highway Safety Association found that teen
driver deaths were on the rise in 2011. To help keep
affordable car insurance
, stress to your teen the importance of avoiding distractions, like
texting or talking to friends while driving.
8. Will the type of car my teen driver uses affect my
For the lowest insurance premiums, the best cars for teen
drivers are minivans or sedans; just say "no" to sports vehicles
and new cars. Also, look for safety features like automatic seat
belts and daytime running lights.
"Parents often want to be nice to their kids or reward them for
good grades by surprising them with a new car," says Webber. "But
sometimes, a little bit of common sense helps too. Just buy an
older, safe car."