Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health insuran...

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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: Sep 7, 2021

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Here's what you need to know...

  • All states require some type of graduated licensing program for drivers under the age of 18
  • Insurance companies recognize the value of responsible supervision when it comes to newly licensed drivers
  • Not all insurance companies will insure minors

Sensible parents and guardians prepare their 16-year-olds for both the financial burden and safety responsibilities of the driving privileges enjoyed by most adults.

Actually, there are some very good reasons if it is within the parents or guardians capabilities to stretch the family budget enough to insure the 16-year-old driver.

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What are the arguments favoring drivers licenses for 16-year-old drivers?

People that are 16 years old are still legally considered minors. Parents and guardians have both the power and responsibility to insist upon conscientious behavior and follow through with good training before any driving privileges are extended.

All states require some type of graduated licensing program for drivers under the age of 18, including driver’s education.

Licensing underage people is an opportunity to teach safe driving techniques that will last a lifetime.

Waiting until the age of 18 removes the learner’s permit requirement in most states; however, some states, such as South Carolina, do still require you to carry a limited license for a period of time before obtaining a full driver’s license.

Because the learner’s permit requires the presence of an experienced driver, teaching opportunities exist for underage learners that are not as available with newly licensed drivers who are also legal adults.

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Are there any incentives from the insurance company for adults responsible for minor-aged drivers?

Insurance companies recognize the value of responsible supervision when it comes to newly licensed drivers, especially because parents are the first line of defense when it comes to preserving their teen’s clean driving record.

Although car accident insurance premiums for minors is very expensive, insurance companies have policies promoting the teaching of safe driving. In addition, student discounts offered by several providers can help keep insurance costs down for teen drivers. Discounts are given for minors who are good students.

Minors cannot legally own cars or purchase automobile insurance without a parent or guardian accepting legal liability.

Many parents and guardians who fear the financial burden of maintaining an auto insurance policy for their teenage driver will find that it is manageable and all agree that it is for a relatively short time.

In general, collision coverage rates are not increased while a teenage driver is learning to drive in conformance with regulations as defined by learner’s permit licenses.

Discounts are given for minors who are good students.

Insurance companies do not require straight A’s. Children with “B” averages will qualify newly-licensed teen drivers for the “good student” discount. Insurance companies give newly licensed drivers “accident-free” discounts.

What are the average rates for teen car insurance?

To help parents understand the average cost of an insurance policy, we are going to explore some real-world examples of teens and their auto insurance rates.

Sean is 15 ½ years old. He will begin a driver’s education class within the next few weeks. Sean has envisioned himself behind the wheel of a car or truck most of his life.

Sean’s mother, Anne is anxious about him becoming a licensed driver. Anne is a single mom and has one other child, a girl age 10.

Currently, there is one car for the household, a 2005 Subaru Forester. Anne has not done any research about insurance prices, but Sean has.

Anne pays USAA $70.00 per month for full coverage as the only driver of the Forester. Sean has been warned about the increased cost of insurance if he becomes licensed to drive.

It may be a lot of money especially taking into account that he would only be able to drive Anne’s car when she doesn’t need it. Sean is determined that there will be a way for him to legally drive.

Here are the following monthly prices when Sean was added as a driver to Anne’s auto insurance in Sacramento, California:

  • Geico – $149.00
  • AAA – $151.00
  • USAA – $155.00
  • Mercury – $207.00
  • State Farm – $242.00
  • Liberty Mutual – $284.00
  • Allstate – $286.00
  • Mid-Century – $666

The car insurance prices including Sean as a newly licensed driver are not nearly as high as what Anne has been afraid of. She thinks she can afford the additional $75.00 per month to USAA.

Another licensed driver in their little household could be a big help, and while Sean is still a minor, she can continue to set limits.

The Smith Family lives in North Carolina. Although they live in the Raleigh Durham Triangle which is very developed, public transportation has not kept pace with the population growth.

Parents Meg and Chuck are very concerned about their daughter Kate’s sixteenth birthday and believe they have no other option than to let her drive.

Before Kate becomes licensed, their monthly insurance bill for premium level coverage with State Farm is $328.00

These are the choices and monthly payments for this family when their teen begins to drive at the age of 16:

  • State Farm – $537.00
  • Nationwide  $626.00
  • Geico  $641.00
  • Farm Bureau  $710
  • Allstate  $717

If Kate is able to complete her first year as a licensed driver accident and violation free, rates will decrease approximately $100.00 per month the first renewal following her 17th birthday.

Helping a youth learn to drive safely and giving them two years of driving while under the guidance of a parent or guardian is a good investment. It is important to maintain comprehensive coverage for your teen driver to make sure that they are as protected as possible, especially if they’re in mom or dads vehicle!

As you can see throughout this guide, the average car insurance rates with a new driver are not that much higher than the annual rates that you likely already pay. You can also see about saving money on those annual rates!

Depending on your insurance provider, you may find that your annual rates are lower when maintaining separate policies instead of having one family policy. You can also save on your annual premiums by making sure that the type of vehicle your teen drives has a low rate and making sure to discuss any possible insurance discounts you may be eligible for.

It is important to remember that insurance for teens doesn’t have to break the bank!

Start comparing car insurance rates now! Enter your zip code below to get started!

References:

  1. https://www.ghsa.org/state-laws/issues/Teen-and-Novice-Drivers
  2. https://en.wikipedia.org/wiki/Learner%27s_permit
  3. https://driversed.com/
  4. https://www.allstate.com/auto-insurance/auto-insurance-for-teen-drivers.aspx
  5. https://www.dmv.pa.gov/Driver-Services/Teen-Drivers/Pages/Teen%20Safety%20Tips.aspx
  6. https://www.geico.com/
  7. https://www.statefarm.com/insurance/auto/discounts/drive-safe-save