Watching your teen grow into a responsible adult is gratifying and stressful at the same time. Parents of teens may be stressing about college costs, prom expenses and the bittersweet milestone of getting your teen driver on the road in their own car.
While there are many ways to save money on a vehicle, car insurance costs for a teen driver can eat a significant portion of your household budget. Fortunately, you can also find ways to save on car insurance.
Average Costs of Insuring Teen Drivers
The average 16-year-old driver costs $5,740 per year to be added to their parents’ policy, according to recent data from Bankrate. Teen drivers cost more than adult drivers with speeding tickets, accidents or even DUIs on their license.
Most parents put their teens on their policy since it typically costs less than a policy for a teen driver on their own.
Even if your teen doesn’t have their own car, once you have a teen driver in your household, you’ll need to report them as a driver in your household, which could raise your insurance rates.
If you don’t add your teenager as a driver and they get into an accident driving your car, the insurance company can refuse to pay the claim and you could be held personally liable for the cost of the damages if another vehicle, pedestrian or property is involved.
Why Do Teen Drivers Cost So Much to Insure?
Teen drivers may know the rules of the road even better than some people who’ve been driving for decades. But that doesn’t make them the safest drivers. Experience and instincts count for a lot in different driving conditions.
Teen drivers have fatal crashes three times more frequently per mile driven than drivers 20 years old and up. Motor vehicle crashes are the leading cause of death for teens in the US, according to CDC data.
Teens also fall prey to the same bad habits as other drivers, including texting while driving, not using a seatbelt, tailgating, and speeding.
The statistics justify higher insurance premium rates for teens, but that’s not the only factor at play. Insurance companies have no way to evaluate a brand-new driver other than looking at the accident rates of other drivers in their age group.
In the same way someone’s credit score starts out lower when they have no credit history, someone with no driving history will have higher insurance rates. The insurance company has no past behavior to judge, so they assume a worst-case scenario: The driver is high risk.
The same way you can reduce your insurance premiums as an adult, you can also lower your insurance rates with a teen driver in the house. It just takes more work and some insider knowledge.
Compare Your Options
Before adding your teen to your existing policy, shop around.
In most cases, it’s cheaper to add your teen to your policy. But if you have a poor driving record and already pay high premiums, or if you have an expensive luxury or sports car on your policy, it might cost less for your teen to have their own policy with only their car listed.
Purchase a Safer Vehicle, Less Expensive Vehicle for Your Teen
Insurance companies consider many factors when setting premium rates, including your location, the drivers of the vehicles, how many miles you drive, the type of vehicle and its safety features.
Saving money on teen car insurance starts with choosing the right vehicle. The Insurance Institute for Highway Safety (IIHS) recommends mid-size, late-model vehicles with electronic stability control and side airbags. These cars tend to be safer and may also carry lower insurance premiums.
Steer clear of high-power sports cars or oversized SUVs for teens. Large SUVs can be harder to control and may encourage teens to pack all their friends into the vehicle for a road trip, which can increase the chance of distracted driving.
Meanwhile, high-powered sports cars can increase the temptation to speed or engage in risky behaviors on the road.
Skip Collision and Comprehensive Coverage
If you can afford to pay cash for an affordable used vehicle, you won’t be required to take out a full coverage policy, which typically includes collision, comprehensive and gap insurance.
Finance companies require collision coverage, which covers damage to your vehicle if it’s not covered by the other driver’s insurance, (or if there’s no other driver involved) and comprehensive coverage, which insures against hazards like storm damage, fire, vandalism or theft.
Gap coverage pays the difference if the auto loan’s balance exceeds the value of the vehicle.
Skipping collision and comprehensive coverage can save the average driver roughly $1,165 per year, according to Consumer Reports, and potentially more for a teen driver.
Increase Your Deductible
You can also save by increasing the deductible not just on your teen’s car, but on other cars on your policy. Consumer Reports said you can save between $464 to $525 per year, per car, by raising the deductible from $500 to $1,000. Just be sure you have cash in an emergency savings to cover the deductible in case of an accident.
Read Your Policy Carefully and Insure the Right Cars to the Right Drivers
Some insurers assign drivers to the vehicle they drive most often. But others will assign the teen to the most expensive vehicle. This is a household-based model. That can drive up your rates.
When you shop around for insurance, which you should do before just adding your teen to your current policy, ask how they assign drivers to vehicles.
You shouldn’t lie and say your teen drives the least expensive or safest car; each driver should be assigned to the car they drive most often, although they’re covered for all vehicles in the household.
Take a Defensive Driving Course
If the drivers on your policy take a defensive driving course, you can save 5% to 10% or more on your premiums for several years. The rules vary by state, so ask your insurer for course recommendations that can save you the most money.
Ask About Student Discounts
Some insurance companies offer student discounts. For instance, Progressive offers 5% off for students who maintain a B average or better in school in some states.
Some insurance companies offer a steep discount if your teen is away at school for part of the year and leaves their car at home.
When you’re comparing quotes from different companies, make sure to factor in these discounts.
Agree to Install Telematics
Telematics, or devices that track your driving habits and mileage, may automatically reduce your car insurance premiums for every driver in your household that uses them.
Some studies show that drivers who use telematics may even become safer drivers, which also helps keep insurance premiums low.
Cambridge Mobile Telematics reported that drivers involved in a telematics-based insurance program have more than 60% improvements in things like hard braking, speeding, and phone use while driving.
Make It a Safer Summer
Prom season, graduations and summer road trips converge at the beginning of summer, putting more teen drivers on the road. The days between Memorial Day and Labor Day are widely known as the “100 Deadliest Days” in the US.
The National Road Safety Foundation and other organizations have started a campaign to turn these months into the “100 Safest Days of Summer” by promoting safe teen driving.
Helping your teen build good driving habits now can help them reduce their insurance premiums as they garner more accident-free miles under their belt. While costs are likely to be high until they reach age 25, they can drop dramatically if your teen maintains a clean driving record.
Sources
https://www.cdc.gov/teen-drivers/risk-factors/index.html
https://www.bankrate.com/insurance/car/teen-driver-insurance-costs-explained/#costs
https://www.thehartford.com/aarp/car-insurance/defensive-driving-discount#:
https://usnddc.org/wp-content/uploads/2025/11/NDDC-Telematics-Incentivizing-Safe-Drivers-4.pdf
