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: Apr 13, 2022

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Key takeaways...

  • Due to several factors, teen drivers are considered to be in a high-risk category and get higher insurance rates as a result
  • These factors are lack of experience and driving skills, more tickets, more accidents, no driving and credit history, and the type of car they drive
  • There are many ways though a parent can lower auto insurance costs

Your teen has just received their driver’s license, and it’s an exciting day for the family. Your teenage drivers feel like they have more freedom, and you may have an extra driver who can run errands and get other kids to school. That excitement generally lasts until you call the insurance company to add the teen to your insurance policy. That’s when you get the bad news.

Adding a new teen driver to your policy can increase your premium by 50 to 100 percent or even more.

Teen boys even usually cost more to insure than girls. In many states, there’s an automatic penalty for teenage boys, but teen girls see a bigger rate increase after their first accident. But why is insurance so expensive for teen drivers?

If you’re looking to lower your auto insurance costs, enter your ZIP code above and compare at least three to four policies today! You might be surprised when you find your best option.

How Does Inexperience Drive Up Insurance Rates?

Insurance companies determine how much to charge you based on how much risk you present to them. Experienced drivers have been there, done that. So they know what not to do in everyday driving situations. Teen drivers don’t have that advantage, and it often ends in tickets or accidents and other signs of risk.

If you are in a group that has a higher risk of doing something that would require the company to pay a claim, they will charge you more. If you are considered a low risk for causing them to pay a claim, you’ll pay less.

All teen drivers, regardless of gender or location, are automatically put into a high-risk category.

But wait, you might think, “My teen is responsible and doesn’t take risks.” Unfortunately, that’s not the way an insurance company looks at it. Teens are more easily distracted, and they aren’t always as responsible as you’d like them to be.

According to the California Department of Insurance, the lack of driving experience is a significant factor in teen driving crashes and higher insurance costs.

Even if they’ve gone through a driver’s education course, teen drivers just don’t have the background needed to deal with all situations that driving presents.

This inexperience means that teen drivers often do not recognize potential hazards that could cause problems. They just don’t recognize and properly judge the risk of certain situations. The ability to process this risk comes with experience.

Of course, the only way to get that experience is to drive. So it’s a bit of a Catch-22. Unfortunately, teens often combine that inexperience with some immature decisions.

According to the National Highway Traffic Safety Administration, teen drivers are much less likely to wear their seatbelts.

In fact, their compliance rate is only about 80 percent, which means over half of all teens killed in car wrecks aren’t wearing their seatbelts.

They also have a higher incidence of allowing distractions in the vehicles. They are more likely to play loud music and have other teens in the car at the same time. They are also the most likely to be using a cell phone.

When you combine an inexperienced driver with other stimuli vying for their attention, the result is higher traffic incidents, which leads to higher insurance costs.

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Do Teen Drivers Get More Tickets?

Annual premiums are partly based on tickets regardless of age. The poor decision-making ability that many teens exhibit behind the wheel results in more tickets. In fact, drivers between the ages of 16 and 19 receive twice as many traffic citations as any other age group.

These tickets not only includes tickets for the lack of seatbelt usage, but also for speeding and running stop signs and red lights.

Anyone who receives a traffic ticket is going to see a hike in insurance premiums. Since teen drivers get more than anyone else, insurance companies charge the entire group more in premiums.

More Accidents

The most serious result of teen driver inexperience and risk-taking is a tremendous amount of crashes caused by teens each year. In fact, car accidents are the #1 killer of teens in this country.

The statistics that the Rocky Mountain Insurance Information Association reports are startling.

Sixteen year-olds are twice as likely to be in a wreck as older teens, with all teens being three times more likely to be in an accident than anyone else.

Sixty percent of all teens who die in car accidents are being driven by another teen.

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If you wonder why boys pay more, the statistics bear this out.

Two out of every three teens killed in 2009 were males, and more than one-third of male teens who were involved in a fatal crash were speeding.

While these numbers are frightening for parents of teens, the numbers of teens dying on the highways have been coming down in recent years. In 2009, less than 3,500 teens were killed in car accidents, which was a decrease of 60 percent since 1975.

The decrease is due to a number of factors, including:

  • Increased safety equipment in cars
  • Graduated licensing programs
  • An increased emphasis on the dangers of drinking alcohol and driving

However, even this lower amount of accidents caused over $34 million dollars in insurance payouts in 2006 due to teen-driver-involved accidents.

No History

Another reason teens pay more for car insurance is the fact that they don’t have any kind of history for insurance companies to look at.

As adults, we have driving records the insurance company can look at. A clean driving record can show an insurance company that you are a low-risk driver. Not only does this result in lower premiums, but it also results in additional discounts.

Insurance companies will also look at your credit history. Not only are they looking to see that you pay your bills on time, but they are also looking at your pattern of handling money.

According to statistics, financially responsible people tend to be low risk-takers, which results in fewer tickets and accidents.

Teen drivers don’t have the benefit of this kind of history; they don’t have much of a driving history and usually no credit history as well.

However, if new drivers will treat the teen years as a time of building a driving history in the same way you would build a credit history, they could set themselves up for lower rates in their twenties.

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Their Own Car

Another reason that teen drivers have high insurance costs is the amount of 16 and 17 year-olds who are getting their own cars. Getting a car at 16 is something of an American thing  — a rite of passage.

Parents often feel pressured to get one for their kids. Because teens are often heavily involved in extracurricular activities, sports, clubs, and social activities, it’s usually more convenient for the teen to have their own vehicle.

The way most insurance policies work is to assign a primary driver to each car on the policy. Other drivers in the household are secondary drivers for that car. If a family has two parents and three cars, the teen will usually be assigned as the primary driver for that third vehicle.

Teens who have their own vehicle drive more often than those who use their parents’ cars; more driving equals more risk for the teen to be in an accident.

Thus, you’ll see a significant increase in the premium if you get your teen their own car, than you would with your premium if you simply add them as a secondary driver to the policy.

Another problem with teens having their own cars is the type of car many teens want to drive. Sports cars are more expensive to insure even for older drivers.

Add a teen driver to a fast car, and you’ll see astronomical insurance costs. Remember that most two-door coupes are considered to be sports cars by the insurance companies.

Keeping Premiums for Teens Low

While there is no way to get insurance for a teen that is as low as their parents are likely to pay, there are many tips you can follow that can help bring costs down.

If you do decide to get your teen their own car, pay attention to safety features that can add a discount to the policy. Call your insurance company before you buy a vehicle to see how much getting that particular car will add to your insurance.

Take a good look at the deductibles you have on the policy. Raising your deductibles to $1,000 for all the vehicles can bring down your premium quite a bit, helping to offset a bit of the increase the teen will cause.

Also be sure to scour your policy for discounts. Ask someone from the company to go over your policy with you to see if you are missing any discounts.

If your teen makes good grades, be sure to mention that to the insurance company. Most companies will give the teen a much-needed discount if they make all As and Bs in high school or college.

Also look to see if you can combine any of your insurance policies. It is almost always cheaper to get your home and auto insurance from the same company than it is to get them separately.

Not only will bundling policies give you a good discount on you auto insurance, but it can also save you as much as 15 percent on your homeowner’s insurance.

The Insurance Information Institute warns that now is not the time to lower your liability insurance.

While lowering liability might seem like a good way to save money, it’s not. You have a teen driver who is more likely to cause a wreck, so you’re more likely to need a higher level of liability.

Instead, there other ways to save money on insurance, such as enrolling them in a safe driving program and setting a good example of being a safe and attentive driver yourself.

You can also set a good example for getting better and more affordable auto insurance by comparison shopping and entering your ZIP code below!