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 Chris Harrigan

UPDATED: May 3, 2022

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Here's what you need to know...

  • Car insurance rates for teen drivers are usually higher than for more experienced drivers
  • Not all newly licensed drivers are eligible to be insured under their parent’s plans
  • Every state has its own laws governing teen ownership of cars

Car insurance for young drivers is more expensive because they are considered to be “high-risk” insureds who are not seasoned behind the wheel. But young drivers can save money if they stay under their parents’ car insurance policy.

The question is: How much is car insurance under my parent’s policy? Read through the guide to learn more.

Find out how much you can save under your parents’ policy by entering your ZIP code now!

How much is car insurance under a parents’ policy?

Car insurance rates for young drivers under 18 can cost $8,300 per year or $692 per month. How much is car insurance for an 18-year-old per month? For 18-year-old drivers, they could pay $7,200 per year or $600 per month.

Under a parents’ car insurance policy, you save between five and 25 percent on car insurance under a family plan. Therefore, your parents’ car insurance rates will drop at least by five percent when they add you to your policy.

Let’s see what that looks like.

Average Annual Car Insurance Rates on a Parent's Policy
Young DriversAnnual RatesAnnual Rates with 5 % OffAnnual Rates with 25 % Off
18-Year-Old Driver$7,200$6,840$5,400
Drivers Under 18$8,300$7,885$6,225

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Your parents can save up to $2,100 on a family plan discount. If you’re a student with a 3.0 or higher GPA who’s been through a driving course, you’re eligible for more discounts. A good student and defensive driving discounts can save more money under your parents’ car insurance policy.

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Does your licensed child need their own policy?

No, but you can place them under your car insurance. It’s best for the child to be under a parent’s policy.

It is an exciting time for teens who are learning how to drive. Many young drivers and parents take so much time to prepare for the test that they completely overlook how important it is to make sure that you or your newly-licensed driver is insured.

Not all newly licensed drivers are eligible to be insured under their parent’s plans, and some insurers have special requirements that need to be considered.

Whether or not your child can be added to your insurance will depend on their age, your living situation, car ownership and the company that you do business with.

While all vehicles must be listed on your policy to be covered, drivers are not typically listed on insurance policies until they are licensed.

The liability car insurance coverage will automatically extend to the teen who is driving a covered vehicle as long as they are permitted to do so.

It gets a little tricky when that teen holds an official state-issued driver’s license because the rules of each insurer are different.

Get car insurance rates from different companies in your local area by entering your ZIP code in the FREE comparison tool below!

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You Are Not the Registered Owner of the Car

Every state has its own laws governing teen ownership of cars.

In most states, a person under the age of 18 is not legally allowed to sign contracts or to own their own property unless their parent gives consent.

There are exceptions to the rule, but this is true in most cases.

If your child waits until they are 18 to get licensed or they register the vehicle in only their name, it can pose a problem with some insurance companies when it comes to adding the car to an existing policy.

Most insurance companies require that at least one primary insured person is listed as a registered owner.

If this is the case, your teen may need to purchase a separate policy and have their name listed as a named insured.

If the registered owner is the parent or the company does not have this policy, the new driver may be eligible to be added to the policy as a listed driver.

Your Teen Does Not Live in the Household

If a newly licensed driver is independent and lives on their own, they cannot be added to their parent’s plan.

If they are defined as a dependent because they are attending college, they can still be listed even if they are away at school with the car.

It can get tricky if parents are divorced because part-time custody will become an issue.

This is something that you should discuss with your lawyer.

If you think you need car insurance on your own, enter your ZIP code to compare car insurance rates with our FREE comparison tool.

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The Company Does Not Insure High-Risk Drivers

Some companies have favorable rates for drivers who have blemished records and others have rates tailored to people with experience and clean records.

If a parent has been with their insurer for several years and they have a clean record, it can be a shock to hear that the company will not cover your high-risk driver.

Some companies are much more strict than others about taking on risk.

If your child has violations or even accidents, it becomes even more of a risk to cover them.

If your company does not extend coverage, you may be required to sign a driver exclusion and buy a new plan for the teen or switch insurers entirely.

Why adding a child to a parent’s policy is best?

To find out the actual costs, you will need to contact your agent and ask for a quote so that you can prepare yourself.

The actual cost to add a driver to an existing policy can be staggering, but it is often the more affordable route compared to buying a separate policy.

Forbes reports that there is an average of an 85 percent surcharge for adding a teen driver to a policy without adding an additional car.

The surcharge for males averages in at 98 percent while that number drops to 73 percent for females.

Multi-Car Discounts

Even if the teen has their own car, the rates for that car will be lower because of multi-car discounts.

When there is more than one car on the policy, every car receives reduced rates.

The savings can be as high as 30 percent. If you elect to buy a separate policy, you cannot take advantage of these savings.

See what discounts you’re eligible for using our FREE comparison tool. Enter your ZIP code to get started!

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Getting Prior Insurance Credits

There will come a time when your teen will need to purchase their own insurance. They might move out, want to get their independence, or buy their own car.

At that time, it will cost them more money to branch off, but they can save if they have been insured under your plan.

A teen on your insurance policy will give the driver what is called a prior insurance discount.

This discount is available from most insurers because Insurance Information Institute statistics show that people with no lapses in their coverage are more responsible behind the wheel.

As you can see, there are many things that you need to consider when you are deciding how you want to insure yourself or your teen.

You should check the rates with other insurers first just to confirm you are getting affordable rates.

Compare how much car insurance is under your parents’ policy with other companies in your local area by entering your ZIP code in our FREE comparison tool!

Frequently Asked Questions: Car Insurance Under Parents’ Policy

The final section of this guide recaps what you’ve learned about car insurance under your parents’ policy. In addition to a recap, we’ll answer frequently asked questions that people also ask on search engines across the web.

How long can you stay under your parents’ car insurance?

You can remain under your parents’ insurance into your adulthood. Some car insurance companies have multi-car policies or family plans for customers. Remaining on your parents’ car insurance policy will make your parents eligible for a multi-car discount.

Can my parents put me on their car insurance?

Yes. If you’re under the age of 18, it may be required for you to be under your parents’ policy. Is it cheaper to get on your parents’ insurance? Yes. Car insurance for young drivers is exceptionally expensive.

What is the cheapest way to get car insurance for a teenager?

The cheapest car insurance for teenagers is through their parents’ policy. If the teen is a good student and has taken driving courses, the teen will be eligible for more savings.

Can I be under my parents’ car insurance if I move out?

Yes. When teenagers go to college, they’re usually on a parents’ car insurance policy. Because you’re a distant student, you will be eligible for another discount. If not, a car insurance company may issue a multi-car discount or family plan discount.

Is my child covered under my car insurance?

You have to add your child to your list of drivers for car insurance even though you may not drive their vehicle. They won’t show up on the policy until the teen driver is licensed.

Can I be on my parents’ car insurance if the car is in my name?

Yes. Several cars on one policy is called a multi-car policy, which can save you money on car insurance rates per month.

Can I drop my child from my car insurance?

Yes. If you’re the primary policyholder, you can drop your child from your car insurance policy whether the child is living at home or has moved out.

Do I have to add my child to my car insurance?

It depends on the age of the child. Anyone under the age of 18 should be on the parents’ car insurance policy.

Can a 26-year-old be on parents’ car insurance?

Yes. Some adults skip car insurance shopping get under the same policy as their parent(s).

Before making any final decisions on your insurance company, it is important to learn as much as you can about your local insurance providers, and the coverages they offer. Call your local insurance agent to clear up any questions that you might have. Questions to consider asking include, “What is the best coverage plan for me/my family/my situation?” “What are the minimum coverage requirements in my state and what form of coverage do you recommend?” “Do you guys offer any bundle discounts if I take out both my auto insurance and home insurance with you?” and “What is the average rate of insurance quotes you guys offer?”