Car insurance is one of those pesky expenses that we just won’t ever get rid of. If you’re looking at car insurance for your teen or you’re a teen yourself, then you might quickly realize that car insurance can get really expensive. In this video, we’re going to take a look at why car insurance is so expensive for teens and how to keep costs low.
I never thought that I would be passionate about car insurance until I started paying into it and realizing just how expensive these rates can be. This is especially true for teens. Now according to the CDC, teens ages 15 to 19 make up 6.5% of the US population, and they make up 8% of motor vehicle accidents. It’s true that teens are new drivers. You’re inexperienced, you just started driving so car insurance companies are going to view that as riskier because you just haven’t been on the road as long. Now as you get more driving experience, and you don’t have any accidents, and then your premium rates are going to decrease over time.
So when you’re first starting out driving as a teen, how do you get the cost of car insurance lower? There are a couple of different ways that you can save and parents are probably not gonna like this answer, but adding your teen to your car insurance policy is going to make it a lot cheaper for that teen as opposed to having them with a standalone policy. Now, we found on carinsurance.com that a 16-year-old could save an average of $2,000 per year if they were added to their parent’s policy.
If you’re a teen and you’re on your own policy, you could pay 130 to 140% more just by being on a separate policy from your parents. Now of course, if you’re a parent and you’re adding your teen to your car insurance policy, you’re on the hook for any liability if that teen gets in an accident. So there are pros and cons to both, but if you are willing to work with your teen on how to either split those expenses or just understand what kind of liability you’re taking on, you could still save a lot of money by grouping your policies together. There are a few other ways to save money on car insurance policies if you’re a teen.
The first is if you take a Driver’s Ed course, you submit that certificate of completion to your car insurance company, they could give you a discount for that. Another discount that you could take advantage of our good grades. Check with the insurance company, see if you can submit report cards and that could give you a discount to save even more on your car insurance premium. There’s obviously a lot of factors that go into how much you’ll pay in car insurance. That includes things like where you live, your driving history, what kind of car you drive, and then what kind of coverage you have. Is it just a liability or is it comprehensive? So we did a small test to take a look at five different states. And what we did is we looked at a 50-year-old driver who has a clean driving record and what it would look like if we added an 18-year-old driver to that policy. Here’s what we found out. So we’ll start with California. Without a teen, the average cost was around $1300.
With a teen, those costs were dramatically different across different insurance companies. $2700 with Mercury all the way up to $5700 with Geico. That is an insane difference just by adding a teen to a clean driving record with somebody who has a very long history of driving. That’s really a big difference. Now let’s take a look at Florida. Without a teen, a driver in Florida would be paying between $1700 and $2300 in car insurance premiums. And now when you add that teen, there is a wide difference in car insurance premiums across different companies. We saw $4800 with State Farm, $9100 with AllState which is insane, and $3500 with Geico.
Next one in Pennsylvania. Without a teen, you’d be paying around $1100, with a teen this is actually pretty, pretty balanced. With a teen, it only added a couple of hundred dollars in most cases, $1500 with Geico and then up to $1800 with Nationwide. New York without adding a teen to your policy, you’re looking at $1700. With a teen, the jump was a little bit more than what we found with Pennsylvania. You’re looking at roughly $2200 across the three insurance companies we looked at. Then we looked at Texas.
Without a teen, your car insurance premium is $1400, and with a teen, it was pretty evenly split. We saw the lowest with Nationwide at $2200 up to $2500 with State Farm. And what’s pretty clear that states that have a large population are going to see the biggest discrepancies between adding a teen or not having a teen on your policy. But either way, what you can do is you compare what a standalone policy would look like for if you’re a teenager, what a standalone policy would look like, versus being added to your parent’s insurance policy and just compare the numbers. That is the best way to figure out what kind of savings you can get. And don’t be afraid to look outside of your current car insurance provider if you’re a parent, just to see what it might look like to add your teen into that. That’s the best way that you’re going to save along with asking for a Driver’s Ed course and good grades discounts.