Jessica Sautter is a Content Writer for CarInsuranceCompanies.com with a Bachelor’s Degree from Eastern Michigan University in Elementary Education with a Major in Reading and a Minor in Mathematics.

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Chris Harrigan has an economic degree from Limestone College and an MBA from Clemson University. He previously managed auto insurance claims for Enterprise Rent-A-Car. Currently, he is using his business and insurance expertise to provide insurance data analysis and visualizations to enhance the user experience.

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Reviewed by Chris Harrigan
Former Auto Insurance Claims Manager

UPDATED: Oct 14, 2020

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Key takeaways...

  • Young drivers have very little experience behind the wheel which leads to high insurance premiums
  • The actual increase in premiums will depend on the state that you live in, the age of your young drive, and their gender
  • If you are contemplating buying your newly licensed driver their own 6-month insurance policy just to keep the risk off of your existing plan, you need to understand what this means
  • Make sure to see what discounts you are eligible for to save what you can while insuring your teenager

Young drivers have very little experience behind the wheel. Their inexperience leads to high insurance premiums.

As a parent of a young driver who is about to go from holding a learner’s permit to a driver license, it is critical that you do your homework so that you can customize the right insurance policy and still pay the right price.

Buying insurance for a high-risk driver who is newly licensed can be intimidating, especially when you begin to explore your options and compare premiums.

If you want to really know what you are buying, you will need to educate yourself on everything from policy terms to policy discounts for young drivers. After you learn the basics, you will feel confident in your comparison shopping skills.

Start comparing car insurance rates now by using our FREE quote tool above! Read the car insurance buying guide below, and you will make the right choices and selections on how to insure your new driver and what type of car insurance is appropriate.

Table of Contents

How much is insurance for young drivers?

Many people expect car insurance rates to be high when they are young, but not a lot of these people understand just how high the rates can be.

The actual increase in premiums will depend on the state that you live in, the age of your young driver, and their gender. Surveys show that the average parent will pay 84 percent more for their insurance coverage when they add a teen to their policy.

This is a national average between the increases reported to insure male and female drivers between 16 and 20 years of age.

For example, the average increase for a 16-year-old male drive is 99 percent and the average increase for females in this age range is 72 percent. Whether or not you add another vehicle can also play a role in raising your premiums even more.

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Why is insurance so expensive for young drivers?

Now that you have a realistic view of how much an existing policy can go up by adding a high-risk teen driver, you may be wondering what justifies such a steep rate hike. No one wants to admit that having teen drivers on the roadways is dangerous, but statistics do not lie.

Accident reports show that drivers who are between 16 and 19 are three times more likely to get into an accident than drivers with several years of experience.

Not only is the probability of an accident very high for young drivers, but the damages and the injuries sustained in an accident with a teen driver tend to be more serious.

According to the Center for Disease Control, young people are responsible for for as much as 58% of the motor vehicle injuries even though they represent only 14 percent of the population.

There are a number of reasons why teens cause a great deal of damage and why they are more likely to get into accidents.

One of the biggest reasons is because teens lack the hands-on experience that they need to make a sound judgment when they are driving a two-ton piece of machinery.

Another reason is that teens tend not to get enough sleep, wake early for school, and are easily pressured by the peers to act before they think.

All of these factors work together to make young drivers the highest risk classification that exists today in the insurance marketplace.

What type of policy should you buy for a young driver?

High premiums and young drivers go hand in hand, but there are ways to keep premiums down. If you are contemplating buying your newly licensed driver their own 6-month insurance policy just to keep the risk off of your existing plan, you need to understand what this means.

After you learn about the policy terms and the other alternatives, you will be able to make the best decision.

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Can a young driver carry their own insurance policy?

Teens are only eligible for their own insurance policy if they are the registered owner of the vehicle. If a parent and the teen are both registered owners, this would make it possible to buy a separate plan.

Because most states do not allow drivers who are under 18 to own property, most young drivers cannot be the named insured on a car insurance policy when they first get their license.

After a few years of driving experience and changing ownership, new drivers can branch off and become independent. The choice to become independent can be an expensive one, but it is the freedom that many new adults are looking for.

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What happens when you buy a separate car insurance policy for young drivers?

If your child has decided to wait to earn their license until they are legally an adult and can own property, they may choose to register their car in their own name from the start.

When this is the scenario, your new driver can buy a separate 6-month car insurance policy that lists only their name as the named insured.

The named insured will be responsible for the policy payments, is authorized to make changes, and has interest in the claims payments.

Selecting the Best Term

If buying a separate policy is the only realistic option, you need to decide which term is best. You can select between 6-month car insurance policies or annual policies that renewal once every year.

While many assume that the two are very much the same thing, they are not. There are advantages and drawbacks to having shorter terms when you are a new driver.

When you select a 6 month term, the policy renewal is twice each year, so the policy will be underwritten where risk is assessed twice as much as when you choose an annual term.

If you have a clean record, the frequent renewals can benefit you as a young driver. This is because you will gain experience behind the wheel every term and may receive credits when you receive your renewal bill.

For those who have accidents or tickets, short terms are less than ideal because rates will go up sooner. There is also a chance that your company will have a rate increase and raise your rates for no reason at all.

A majority of insurers offer 6-month policies simply because they can raise rates sooner and collect more.

Is it better to combine car insurance policies?

Buying separate coverage is not always the best choice, but it is the only option if your child is independent and lives on their own. By adding the teen and their vehicle on to your plan, they will receive multi-car discounts, loyalty discounts, and possibly experience discounts.

All of these savings will add up and keep the cost of high-risk insurance as low as it possibly can be. For the car to be added, at least one of the named insured’s must be on the registration.

Reasons your teen can be covered under your policy:

  • The teen is still in the household
  • The teen is away at college
  • The teen is classified as a dependent

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How can you save money when insuring a young driver?

There is no escaping insurance premiums when your little is old enough to get their license. Just because you are required to cover your licensed teen does not mean that there are not discounts and programs that are designed to keep teen car rates down.

If you are a resourceful consumer, you do not have to watch your premium bills double, triple or quadruple just because your child is in a new stage of life. Here are some tips on keeping your premiums low no matter how much experience the drivers in your household have:

Buy a Safe Car

If you are car shopping for your teen’s birthday, you need to consider the vehicle’s safety record. Crashworthiness and the structural design of the car will affect your premiums. Make sure that you price the cost of insurance for specific models before you make an offer.

Raise Deductibles

If you have physical damage coverage and you carry low deductibles, make sure to raise these deductibles. Raising a collision deductible from $250 to $500 could save you 10 to 20 percent off of the premiums for the young driver.

Good Grade Discounts

If a young driver who is under the age of 25 attends school, they might qualify for a good student discount. Typically, you must be a full-time student to get the discount. The grade requirements may be between 3.0 and 3.5 on a 4 point grading scale.

It is possible to buy a 6-month car insurance policy for young drivers when they legally own a vehicle.

If you would like to price insurance costs and compare them to the costs of adding the new driver to your policy, use our FREE rate comparison tool below and price the cost with multiple carriers from home. By doing this, you can make an informed choice.

References:

  1. http://www.rmiia.org/auto/teens/Buying_Auto_Insurance.asp
  2. http://www.cdc.gov/motorvehiclesafety/teen_drivers/teendrivers_factsheet.html
  3. http://carinsurance.about.com/od/High-Risk-Insurance/a/What-Is-A-High-Risk-Driver.htm
  4. http://carinsurance.about.com/od/PolicyFundamentals/a/What-Is-A-Named-Insured.htm
  5. http://www.answerfinancial.com/insurance-center/agents-corner-how-to-save-money-on-auto-insurance-for-your-teen-driver
  6. http://www.iii.org/article/shopping-for-a-safe-car
  7. http://www.iii.org/article/auto-insurance-teen-drivers